Expected Developments

Future Orientation of the Group

As of now, ALTANA does not plan to make any fundamental changes to its Group strategy or organizational structure for the next two years. The company will continue to focus on growing specialty markets and offering innovative chemical solutions tailored to customer requirements. This approach is expected to drive business development.

Entering new market segments or application areas is not anticipated to fundamentally alter the sales structure in the medium term, nor the balanced regional distribution of sales.

However, bolt-on acquisitions could lead to changes in sales and market structures, particularly the integration of a new business division. Additionally, existing business activities might be sold or discontinued.

The area of occupational safety and the focus on environmentally compatible management will continue to be components of the ambitious objectives that influence the strategic orientation of the ALTANA Group.

Economic and Industry Outlook

In anticipation of global economic development at a low but stable level, ALTANA expects a further slight improvement in demand in 2025. While geopolitical conflicts from recent years persist, and additional economic risks could arise from expected trade conflicts, inflation rates have continued to stabilize over the past year, with inflationary pressures generally expected to decrease further. The supply chain and energy supply situation are not anticipated to worsen. According to the International Monetary Fund (IMF), global economic output is expected to grow by 3.3 % in 2025, which is roughly the same growth rate projected for 2024 (3.2 %).

As in the previous year, economic growth in industrialized nations is expected to be weaker than in emerging and developing countries. The IMF forecasts a growth rate of 1.9 % for all industrialized nations in 2025 (previous year 1.7 %), a trend observed across various economies, though with differing intensities. In the U.S., growth is projected to be 2.7 % in 2025, following a 2.8 % increase in 2024. This growth is attributed to stable domestic demand, supported by a less restrictive monetary policy and a stable labor market. In the Eurozone, the IMF expects growth of 1.0 % in 2025 (2024: 0.8 %). For Germany, the IMF forecasts modest growth of 0.3 % in 2025, after the economy contracted by 0.2 % in 2024. Weaker momentum in the manufacturing sector, combined with greater uncertainty due to the geopolitical situation, is expected to have a more significant impact on growth. However, positive trends such as declining inflation and a subsequent easing of monetary policy are likely to provide some counterbalance.

According to the IMF forecast, emerging markets are projected to grow by 4.2 % in 2025, maintaining a rate above the global average and consistent with the previous year (2024: 4.2 %). However, growth expectations vary among individual economies. China is anticipated to experience slightly lower growth of 4.6 % in 2025, down from 4.8 % in 2024. This outlook reflects uncertainties in the local real estate sector and trade policies, though government fiscal measures may mitigate these effects. In contrast, India remains one of the world’s most dynamic economies, with a projected growth rate of 6.5 % in 2025, mirroring the previous year’s performance. Latin American economies are forecasted to grow by 2.5 % in 2025, a stable outlook compared to 2.4 % in 2024. Brazil, which saw a better-than-expected growth of 3.7 % in the past fiscal year, is projected to grow by 2.2 % in 2025, slightly below some other countries in the region.

The IMF highlights the difficult-to-predict impacts of trade restrictions, new tariffs, and counter-reactions to these, driven by new protectionist trends in global politics, as the primary macroeconomic risks for 2025. The effects of significant deregulation in certain markets are also hard to estimate in terms of their impact on global economic growth. Furthermore, the IMF sees the risk of escalation in existing and the emergence of new military and political conflicts in 2025. A rapid increase in energy, raw material, and food prices as a result could reignite inflation, severely impacting economies with low levels of economic activity. The IMF has not explicitly named the risks arising from climate change, but their relevance has not diminished. Major natural disasters are occurring more frequently and, as the range of extreme weather events across all continents in 2024 showed, pose a threat to all economies.

Global growth in the general chemical industry is expected to be slightly lower in 2025 than the forecast for overall economic development. The American Chemistry Council (ACC) projects global chemical production to increase by 3.1 % in 2025, following growth of 3.5 % in the previous financial year. Weaker growth is anticipated for industrialized nations compared to emerging and developing countries.
In North America, growth is expected to be 2.0 %, and in Europe, 1.4 %, both lagging behind the Asian region, which is projected to grow by 3.7 %.

Based on the economic and industry-specific conditions, we assume that general demand in the markets relevant to ALTANA will develop slightly positively, albeit with regional and market-specific differences. The extent to which changes in inventory storage behavior along the value chain influence the actual demand for divisions’ products largely depends on the short- to medium-term development expected by our customers. Movements in inventory levels can have a significant impact on business development.

The price of crude oil is challenging to predict. The average price per barrel fell in 2024 but remained at a high level. According to the IMF, a further slight decrease in the price of oil is expected for 2025. The availability, pricing, and consumption volume of chemical products are subject – to varying degrees – to the influence of the crude oil market. In addition, the expectations of market participants regarding the future development of the price of oil can lead to significant changes in warehousing along the entire value chain of the chemical industry.

As in previous years, the key exchange rates for ALTANA in 2025 may also be subject to pronounced volatility. In addition to the development of regional interest rates and economic performance, political influence can also be decisive for exchange-rate movements. Specific risks, but also opportunities, can arise from a deviation of the actual exchange-rate development from our planning assumptions.

Expected Earnings, Asset, and Financial Situation

Expected Sales and Earnings Performance

Due to the anticipated moderate growth in the global economy, we also expect demand for our products and services to continue to develop positively in the 2025 fiscal year. Operating sales growth, that is, sales growth adjusted for exchange-rate and acquisition effects, is expected to be in the mid-single-digit percentage range. The main driver of growth should be an increase in sales volumes.

No significant exchange-rate effects are expected for 2025 compared to the previous year, nor have any further potential acquisitions been taken into account when determining the growth rates.

We assume there will be no significant shifts in cost ratios in relation to sales for the key functional cost figures. We forecast that the cost of materials ratio will remain at approximately the same high level as in the past fiscal year.

In 2025, we anticipate a modest increase in personnel costs, slightly exceeding the projected operating sales growth. This adjustment is primarily attributed to planned salary increases within our workforce. Conversely, we expect other cost variables to grow at a rate below that of operating sales, thanks to rigorous cost management and the realization of synergies. Overall, our objective is to achieve a slight reduction in operating costs relative to sales for 2025. The EBITDA margin in 2025 should be slightly above the previous year’s level in operational terms, but still below our strategic target range of 18 % to 20 % due to the inflationary effects of previous years and further integration costs for the acquisitions made in the last two years. Absolute EBITDA is expected to increase by a mid-single-digit percentage compared to the previous year.

After 2025, we expect operating growth momentum for Group sales in line with our strategic goals in the mid-single-digit percentage range and a continuous improvement in our profitability, which we expect will return to our long-term target range from 2027.

Expected Asset and Financial Situation

Overall, there should be no significant shifts in the balance sheet structure in 2025 compared to the end of 2024. The level of our investments in property, plant and equipment and intangible assets should remain within our long-term target range of 5 % to 6 % of sales over the next two years. The absolute values of net working capital are expected to develop in line with the general business performance, although our aim is to slightly reduce the relative level compared to the end of 2024.

Based on the expected business development, we will continue to generate a clearly positive cash flow from operating activities in the coming years, which should be higher than the previous year’s figure. We will use the cash inflow primarily to finance investments and, if necessary, further acquisitions. We expect the key figures for value management to improve compared to the previous fiscal year. This is mainly due to a further increase in underlying sales compared to the prior year. For the relative and absolute ALTANA Value Added (AVA) as well as the Return on Capital Employed (ROCE), we expect a corresponding slightly positive development.

Expected Development in the Area of Occupational Safety and the Environment

In the realm of occupational safety, we set the following target ranges for the three work accident indicators for 2025: WAI 1: 0 to 2.2; WAI 2: 0 to 1.5; and WAI 3: 0 to 27.0. These values refer to the ALTANA Group excluding the Von Roll Group and Silberline companies acquired in 2023 and 2024, respectively. The target values for the ALTANA Group including these acquisitions are as follows: WAI 1: 0 to 2.8; WAI 2: 0 to 1.9; and WAI 3: 0 to 35.0.

The target for the specific energy parameter in 2025 is 1.44 MWh / t for the ALTANA Group, including the Von Roll Group and Silberline sites, following an actual value of 1.50 MWh / t in the previous fiscal year. In subsequent years, further reductions in specific energy consumption in the order of 2 % per year are sought. For greenhouse gas emissions, a value of 131,275 tons of CO₂ equivalents for Scope 1 and 2 is set for 2025 in accordance with the SBTi target range.

Risks

Management and control of the ALTANA Group are geared to the strategy that has been defined and the target levels derived from it. Due to changes in the economic environment or internal and external factors of influence, it might not be possible to implement the strategy successfully or to achieve targets in the planned time frame or to the planned extent. To be optimally prepared for such situations, ALTANA systematically identifies, evaluates, and considers risks within the framework of decision-making processes.

To anchor our risk policy at all decision-making levels, we established a Group-wide risk management system that brings together various information, communications, and monitoring systems. Core elements of our risk management include strategic corporate planning, internal reporting, our internal control system, compliance organization, and risk management in the strict sense.

Our strategic corporate planning is closely tied to our medium- to long-term financial planning. The extent of the fulfillment of our targets is examined in monthly reports on the company’s business performance and in our short-term financial planning. Apart from an analysis of the current business situation, in these reports our expectations for the current fiscal year are discussed extensively at the divisional level on a regular basis. As a result, deviations from planned developments can be recognized and countermeasures introduced if necessary.

Our internal control system defines, among other things, organizational and procedural requirements that serve to prevent damage to the company. It is intended to ensure the correctness of internal and external financial reporting as well as non-financial key figures, the effectiveness and efficiency of the company’s business activities, and compliance with the relevant legal regulations and internal guidelines. It comprises all principles, instructions, and measures introduced for this purpose. In connection with our established compliance organization, it aims to prevent possible violations of guidelines and laws on the part of employees.

At ALTANA, risk management in the strict sense is viewed as the systematic compilation, evaluation, documentation, communication, and, if not already in place, deri­vation of measures regarding the relevant risks as well as the determination and assessment of the risk-bearing capacity. Thus, it is an essential component of the company’s system of early risk recognition in accordance with section 91 (2) of the German Stock Corporation Act. This system was voluntarily examined by the auditor again in 2024. The audit deemed that the Management Board took the measures required under section 91 (2) of the German Stock Corporation Act, in particular to set up a monitoring system, in an appropriate form and that the monitoring system is suitable in all material respects for identifying developments that could jeopardize the company’s continued existence at an early stage with sufficient certainty.

Risks that are identified are evaluated in a uniform way. So-called evaluated risks are assessed based on the probability of their occurring and the potential damages. Individual risks are assigned to certain risk groups. Risks or risk groups rated as very high are risks which could cost the company more than € 25 million in the next twelve months. Individual risks that could cost the company between € 12 million and € 25 million are rated as high risks; risks that would cost between € 5 million and € 12 million are categorized as medium risks; and risks that would cost less than € 5 million are deemed low risks. The prioritization resulting from the assessment determines focal points for the development and initiation of countermeasures to prevent or reduce the potential effects of risks.

The individual risks and risk fields described below could have a material adverse effect on the Group’s earnings, financial, and asset situation in the years to come and thus give rise to a negative deviation from the forecast development. For risks categorized as “medium,” “high,” and “very high” we address changes in our appraisal compared to the previous year.

The total short-term assessed risks of the ALTANA Group increased by 10 % in the reporting year compared to 2023, primarily due to risks related to potential negative economic developments. The acquisitions made in 2023 and 2024 were fully integrated into the risk management system, ensuring that all relevant risks were accounted for within the respective risk areas.

Economic and Industry Risks

The development of the general economic conditions worldwide has a decisive impact on our business performance. The performances of the economies of the U.S., China, and Germany – industrial nations important for ALTANA – have a particularly strong influence on the direction and intensity of demand for our products.

A global economic crisis leading to an economic collapse would bring about significant sales decreases with corresponding influences on our earnings. Recessions limited to certain regions in sales markets important for us could also significantly impair our business performance. With the global orientation of our sales activities, we try to shape our dependence on regional or national markets in such a way that the effects of geographically confined economic crises on the Group are limited.

Thus, the U.S. and China, the most important countries for us, each currently account for no more than 20 % of total Group sales. The distribution of our business activities in the core regions of Europe, Asia, and the Americas also has a balanced structure.

Furthermore, we continually update our appraisal of the regional economic development in our internal reporting system to be able to react to foreseeable effects by controlling our procurement, production, and sales activities. We react to long-term shifts in the regional significance of sales markets by adjusting our sales, production, and organizational structures.

In addition to general economic risks, there are market-related sales risks concerning individual product groups or application areas. Particularly medium- to long-term trends that structurally lead to a decrease in demand in our target markets can mean that we will not achieve our growth and profitability targets. We try to counteract industry-related sales risks by broadly diversifying our offer. We supply many different industries, which in turn sell their end products in various markets. Therefore, our dependence on the underlying markets is limited. Based on the available information, no single consumer segment, such as the automotive sales market, the graphic arts industry or the construction sector, accounts for significantly more than 20 % of our sales.

The analysis of our industry-specific and application-related sales is a component of our annual planning process. In addition, we examine changes in future growth potential arising from demand trends and technological developments, and adjust our strategic orientation in the divisions if necessary.

The risk of a global economic crisis or regional economic downturns remains significant, with the probability of occurrence assessed as unchanged from the previous year. However, projected loss values have increased, partly due to a sharp rise in business volume resulting from acquisitions, leading to a very high increase in assessed risks. As a result, the risk assessment for both individual global and regional economic crises and the overall risk group has been adjusted from medium to high.

Sales Risks

Sales risks result primarily from changes in the market and customer structure and an associated increase in the intensity of competition, as well as from marketing risks for products or product groups due to specific demand trends or technological changes.

This can lead to decreasing sales revenues, which can be caused by declining sales volumes or falling prices. To the extent that it is not possible to adjust the cost structure in the short term, this can give rise to a drop in profitability.

We counter sales risks by continually optimizing our product and service portfolio, above all on the basis of our innovative ability. In the process, it is decisive that we cooperate closely with our customers at an early stage of development work to adapt to market needs. With our innovation strategy, we can counter increased competition in our markets.

A loss of, mergers of, or backward integration of customers can lead to major changes in the customer structure. Due to our very diversified customer structure, however, these risks are limited. In addition, we cooperate closely with our core customers within the framework of our key account management.

In the category of sales risks related to market and technology, both the estimated potential loss and the probability of occurrence have decreased slightly compared to the previous year. However, the overall assessed risk remains classified as high. For the risk group in sales and distribution, the probability of occurrence has slightly declined, partly due to a reduced risk associated with the integration of the Von Roll Group. In contrast, the potential extent of damage has increased slightly due to changes in the customer structure and the integration of the Silberline Group. As a result, this sub-area continues to be classified as a medium risk.

Risks from Business Combinations, Participations, and Other Investments

Apart from operating growth, acquisitions of companies, business activities, and individual technologies play a key role in the implementation of the strategy for sustainable prof­itable growth at ALTANA. Depending on the size of the activities acquired, inadequate integration can place a burden on the Group’s earnings situation and limit its financial headroom. In addition, a business performance that is worse than what was expected when the acquisition was made can lead to impairments of assets with a negative impact on earnings. Another significant acquisition took place in January 2024 with the purchase of the Silberline Group, following the acquisition of the Von Roll Group in September 2023.

To minimize the effects of the risks from business com­binations, we examine our acquisition targets systematically and comprehensively and analyze them in detail in a multi-stage approval process.

In addition, the restructuring of business activities or the implementation of long-term efficiency measures may result in impairment losses on assets.

To implement its strategic goals, ALTANA is constantly expanding and renewing its development, production, and other facilities. The projects, some of which are very complex, are always subject to certain risks regarding adherence to the schedules, budgeted costs, and the realization of the expected goals. The projects regularly undergo extensive approval and monitoring routines. The total potential losses increased substantially compared to the previous year, partly due to newly launched projects in the BYK division. In contrast, the probability of occurrence has decreased significantly compared to the previous year. Risks from capital expenditures continue to be assigned to medium risks.

Procurement Risks

Among the main procurement risks are a restriction in the availability of individual raw materials and transport services as well as significant price increases for raw materials and logistics, which we cannot or can only partially pass on to the markets in the short term and which may thus have a negative influence on the Group’s earnings situation.

We continually analyze the situation on the raw-material markets that are relevant for ALTANA. By doing so, we can identify price trends and structural shifts on the part of suppliers at an early stage and devise suitable measures. We take this knowledge into account when we arrange supply contracts. In addition, we bear in mind the volatility of raw-material prices in our customer relations. To be able to pass on price increases to the markets in the short term, we use the flexibility of price mechanisms and price lockup periods.

The probability of occurrence for procurement risks increased slightly compared to the previous year, while the potential extent of damage rose sharply. This was driven by the risk of rising raw material costs as well as quality defects in already procured raw materials. Despite these changes, the overall classification of procurement risks remains unchanged and continues to be categorized as high.

Financial Market Risks

Financial market risks primarily concern short-term and significant changes in exchange-rate relations and interest rates, as well as default risks and the covering of financial resource needs.

Due to exchange-rate fluctuations, the translation of foreign currency positions into the Group currency, the euro, can have a negative effect on the Group’s sales and earnings performance (translation risks). Such negative effects can also result from business conducted in a foreign currency (transaction risks). Interest-rate changes influence financing costs. Defaults on trade accounts receivable or financial receivables can also have a negative effect on the Group’s earnings situation and its financial resources. If there is a lack of availability of financial resources for the implementation of acquisitions or major investment projects, we might not reach our strategic targets.

We safeguard against material transaction risks by concluding forward foreign-exchange contracts in cases where we assume that the underlying business can be realized with a sufficient degree of certainty. More information on our evaluation and accounting procedures for hedges can be found in the complete Consolidated Financial Statements (point 27).

To minimize credit default risks, we systematically examine the credit rating and payment behavior of our counterparties. The latter include customers, the banks we do business with, and other business partners where payment default can have an influence on our financial situation.

We safeguard availability of financial resources through central control and monitoring of our Group-wide financial resources. Additionally, a financial framework is made available through the use of various financing instruments. It can be used to cover unplanned financial requirements that arise in the short to medium term, for example due to acquisitions or a crisis-related decline in operating activities.

The group of financial market risks is still assessed as a medium risk. The assessment of the main individual risk in this risk group – negative earnings effects from exchange-rate changes – remains classified as low. A review of other individual risks did not result in a change in the overall classification of this risk group. The continuing high inflows from operating activities and the existing general financial resources will continue to be sufficient to cover the expected outflows for capital expenditures, repayments, and dividends.

Innovation Risks

ALTANA’s position as an innovation and technology leader is a major success factor for the company. It is important for a supplier of highly specialized chemical products to continually introduce new products on the market and to be perceived by our customers as a competent and innovative partner. If this was no longer the case in the future, risks could result for our sustainable growth, the attainment of our profitability targets, and ALTANA’s positioning in the relevant markets.

With our innovation culture, which is put into practice at all levels of our organization, we highlight the importance of innovation and safeguard its status. Both at a decentralized and at Group level, we can continually evaluate and control our research and development activities based on financial and non-financial criteria. By investing above-average amounts in research and development, we can continually introduce products on the market that are tailored to customers’ individual and current needs and thus positively influence our competitive position.

It is important to protect knowhow we develop with patents to convert our knowledge edge into economic success. This includes safeguarding technologies as well as methods and product properties we currently use so that other companies cannot patent them.

For the group of innovation risks, both potential losses and the probability of occurrence have increased significantly compared to the previous year. This rise is primarily attributed to higher risks associated with the stake in Landa Corporation Ltd. Overall, we classify the group of innovation risks as still belonging to the medium risk group.

Other Risks

Production risks concern technical disruptions or human failure in production that can be harmful to people or the environment. Our goal is to minimize the effects of machine failure on the value chain by operating production lines independently from one another. It is compulsory for our staff to receive training in the clearly defined process and quality standards in the areas in question. In addition, we conclude property damage as well as plant and equipment breakdown insurances. The production risks group showed a further slight decrease in the potential amount of damage, while the probability of occurrence saw a marginal increase. Despite these changes, this risk group remains categorized as a medium risk.

Information technologies form the basis of nearly all ALTANA’s business and communications processes. Breakdowns or other disruptions of IT systems can lead to far-reaching impairments in all the Group’s value-added stages, which can have significant effects on business performance (IT risks). In addition, potential risks arise from data loss or theft of business secrets. ALTANA attaches great importance to smooth availability of IT applications and services. To guarantee this, corresponding processes and organizational structures have been established. These are continuously adapted to the changing risk situation and new techno­logical possibilities. In addition to its own internal organization and expertise, ALTANA relies on close cooperation with leading international IT service providers. The effectiveness of the security measures is regularly reviewed by means of internal and external audits. Emergency plans are in place in the event of significant disruptions or data loss. In the coming years, our focus will remain on security and protection measures, which we will continue to develop in line with the threat profile.

Delivery of faulty products can cause damage to people, property, or the environment and thus cause liability risks. This can have significant effects on the Group’s asset situation. We minimize this risk by standardizing production processes to a large extent and by taking comprehensive quality control measures. In addition, we continually conduct analyses to assess the hazardous potential of our input materials and products, and we conclude insurances.

Changes in political and regulatory framework conditions can lead to restrictions on trade or foreign-exchange transactions. Due to political unrest, it can be more difficult or even impossible to access the Group’s assets in the country or countries in question. On account of regulatory adjustments, it might no longer be possible to process or sell certain products or ingredients, or only with strong restrictions. We continually examine the political environment in the countries important for us and take current tendencies into account when evaluating business relationships. We only make direct investments in countries in which we assume the political environment is highly stable. We actively take part in legislative procedures and discussions important for us that focus on changes in the regulatory environment. As a result, we can anticipate possible new requirements early on.

Risks in the realm of regulatory and EH&S (Environment, Health & Safety) continue to be assessed as low. However, political risks remain in the high-risk category, with a slight increase in the probability of occurrence and a significant rise in the potential extent of damage compared to the previous year. The intensification of trade conflicts between the U.S., China, and the EU is identified as a key factor driving this increased risk potential.

Additionally, risks associated with natural disasters, pandemics, and armed conflicts have slightly increased in potential impact, placing them in the high-risk category for the reporting year. A moderate rise in the expected damage from armed conflicts has been noted, alongside a marginal increase in the probability of losses due to natural disasters linked to climate change.

Risks in logistics are still considered to be low due to the increased reliability of logistics chains. Both the probability of occurrence and the potential damage of the risk group fell slightly compared to the previous year.

Legal violations (compliance risks) can give rise to liability risks or tarnish our reputation, which can have a significant effect on the Group’s earnings and asset situation. We counter these risks within the framework of our Compliance Management System, inter alia by regularly informing and training our employees about relevant legal requirements. The potential losses and the probability of occurrence increased slightly compared to the previous year. The risk group is still classified as medium risk.

An important basis for long-term success are competent and committed employees. Should we no longer be able to recruit or retain suitable specialists or managers in the future, risks could arise for the successful implementation of our strategy (personnel risks). To counter these risks, ALTANA offers a sophisticated work environment and an attractive compensation system, which is supplemented by various pension plans and wealth creation schemes. Moreover, we regularly offer further education and training programs to budding junior staff members, as well as to specialized and managerial staff.

Compliant Group Accounting

Essential accounting-related risks arise particularly when extraordinary or non-routine issues are handled. These include the first-time consolidation of acquired businesses or parts of companies as well as the recording of the sale of Group assets. Accounting of financial instruments is also subject to risks due to the complex evaluation structure. Risks also arise from fraudulent acts.

At ALTANA, a separate department of the Group’s holding company coordinates and monitors Group accounting. A core component of the control system are the guidelines, process descriptions, and deadlines that this department defines centrally for all companies, guaranteeing a standardized procedure for preparing the financial statements. For complex issues, the instruments needed for uniform accounting are retained centrally for all Group companies. For recording extraordinary processes and complex special issues, we regularly obtain external reports, advice, and statements.

The financial statements of the individual Group companies are prepared decentrally by the local accounting departments. Hence the individual companies are responsible for preparing the financial statements, in keeping with Group guidelines and country-specific statutory accounting requirements.

The work steps needed to prepare the financial statements are defined such that important process controls are integrated. These include guidelines pertaining to the separation of functions and allocation of responsibilities, to control mechanisms, and to IT system access regulations. The respective management explicitly confirms to the Group’s management that the annual financial statements are correct and complete. In addition, important financial statements are audited by the company or Group auditors in charge.

The local financial statements are recorded and consolidated via standardized formats and processes in a central IT system. At the divisional and holding company levels numerous manual and IT-assisted control mechanisms are applied. They encompass an analysis and a plausibility examination of the registered data and the consolidated results by Group accounting as well as by the controlling department and other departments with expertise in this area. Required corrections of the information in the financial statements are generally made at the level of the individual company to ensure the data are uniform and reconcilable.

The company auditor and the Group auditor examine issues, processes, and control systems relevant for the generation of financial statements. The Group auditor reports on the audit directly to the Supervisory Board and the Audit Committee. In certain cases, audits are carried out by the central Internal Audit department.

After each process related to the preparation of the financial statements, optimization potential identified at the different levels is analyzed and adjustments of the processes are made.

Opportunities

The identification and evaluation of opportunities for our future business development is integrated into the different planning, analysis, and control processes.

Within the framework of strategic planning, we analyze demand trends as well as market and technology developments with regard to options for action that could enable ALTANA to create value. In addition, the divisions contin­ually examine possibilities of developing new sales markets. During the financial-planning process, the effects of action options are evaluated and discussed so that we can optimally exploit future opportunities. Finally, possible opportunities for short-term business development, along with the attendant risks, are dealt with in detail at all levels of management.

Below, major opportunities are described that could lead to ALTANA’s surpassing its short-, medium-, or long-term goals. The order corresponds to our assessment of the effects on our business performance.

Economic and Industry Development

Should the economic environment in the established industrial regions important for ALTANA, particularly in Asia, the Americas, and Europe, develop better than we anticipated, unexpected growth impetus could arise. As a result, demand for our products and services could develop more positively and exceed our forecast. The same applies to growth in the important emerging countries in Asia and South America. If the growth rates in these nations were higher than expected, we might be able to benefit from this due to our market positions.

In addition to regional factors, growth impetus can also result from individual branches of industry. Further potential could be opened up, in particular, if the automotive sector and the construction industry showed a positive development, or if there was an increase in the use of silver and gray colors in the consumer sector.

Innovation

We must continually streamline our product and service portfolio to be able to continue to pursue our strategy for profitable and sustainable growth in the long term. Should ALTANA manage to enhance its innovativeness more quickly than expected or to increase its share of new products for which there is a high demand beyond the target level, there would be even better prospects for growth. Furthermore, customers could demand innovative products manufactured and sold by us more quickly and to a greater extent than we had expected. The same applies if we entered new markets or opened up new application fields for our products.

Business Combinations and Portfolio Measures

Acquisitions play a key role in ALTANA’s long-term value creation. In recent years, we have been able to continuously develop the Group strategically through acquisitions and intend to continue to do so in the coming years. The acquisition of the Silberline Group in January 2024 will enhance the regional presence in the effect pigments product area, particularly in North America and Asia.

In the future, we intend to continue to boost our growth by acquiring businesses and activities. This is an essential prerequisite for us to achieve our strategic growth targets. Should opportunities arise in the future that exceed our expectations, this can help us strengthen our market positions and open up new market segments. This can also have a positive impact on the achievement of our strategic goals.

Synergies

The ALTANA Group is largely decentralized. Still, in some areas of the value-creation chain and in certain management functions, central units support the divisions and play a coordinating role or provide shared platforms. To the extent that we manage to push forward the networks within the Group more strongly than expected, this may spawn further potential to improve efficiency.