Business performance by segment

Polyols are basic feedstocks used in the production of polyurethane (PU) foams and PU systems that have a wide range of applications in a large number of industries. Flexible PU foams are used, among other things, in the manufacture of comfortable mattresses. Rigid PU foams are employed in the refrigeration industry for insulation purposes and in the construction industry as sealing foam. Special prepolymer foams are used, for instance, in the production of polishing pads for the automotive industry, while PU systems are employed e.g. in thermal insulation applications, in block constructions incorporating thermal insulation panels, and as polyurethane adhesives for a variety of applications.

The Polyols & Derivatives segment comprises the Polyols, Polyurethane Systems and Alkylphenols business units. The dominant business unit in this segment is the Polyols business unit of PCC Rokita SA, Brzeg Dolny (Poland), with its polyether polyol production and distribution activities. This segment also includes PCC PU Sp. z o.o., Brzeg Dolny, the operations of which focus on polyester polyols. Following a resolution passed in 2022, this company was merged with PCC Rokita SA at the beginning of January 2023 and integrated into its Polyols business unit. The Polyols & Derivatives segment also includes the specialty foam and polishing pad manufacturer PCC Prodex GmbH, Essen, Germany, and the systems house PCC Prodex Sp. z o.o., Brzeg Dolny, as well as the intermediate holding company PCC Insulations GmbH, Duisburg, Germany, under the umbrella of which all operations involving the production and distribution of insulation and other building materials have been pooled. These include PCC Therm Sp. z o.o., Brzeg Dolny, PCC Bulgaria EOOD, Sofia, Bulgaria, and the corresponding business unit of the Czech company PCC Morava-Chem s.r.o., Český Těšín. The business activities of these affiliates, the development of which had been delayed in previous years due to the pandemic, were still being built up in 2022. This also applies to the activities of PolyU GmbH, Oberhausen, Germany, which focuses on the development of customer-specific polyol-based specialty products. An important milestone was reached in 2022 with the commencement of production of these specialty products by PCC Synteza S.A., Kędzierzyn-Koźle, Poland, the core business activity of which is the manufacture of alkylphenols. The Polyols & Derivatives segment is completed by IRPC Polyol Company Ltd., Bangkok, Thailand, in which the PCC Group holds a 50 % interest through a joint venture with the Thai IRPC Public Company Ltd. The joint venture is included in the consolidation using the equity method. The number of employees in the Polyols & Derivatives segment at the end of the fiscal year was 351 (previous year: 335).

The Polyols & Derivatives segment generated sales of € 259.8 million in fiscal 2022, on a par with the previous year (€ 255.7 million), with its share of Group sales decreasing to 19.6 % (previous year: 26.1 %). Nevertheless, this figure far exceeded our sales expectations for 2022. On the earnings side too, the Polyols & Derivatives segment closed fiscal 2022 significantly better than anticipated. However, this fell somewhat short of the record level of the previous year 2021, which was achieved on the back of the outstanding performance of the Polyether Polyols business unit, mainly due to persistently high demand from the furniture and mattress industries. Demand generally remained at a high level beyond the turn of the year, but increasingly plateaued from the second quarter. This led to selling prices for all polyether polyol grades declining, with additional pressure ensuing, particularly for standard grades, due to increasing competition from e.g. China. In this challenging market environment, the Polyols business unit of PCC Rokita SA nevertheless performed well and once again posted net income well into the black.

The polyurethane systems house PCC Prodex Sp. z o.o. benefited in 2022 from persistently robust demand from the construction industry, again improving its performance compared to an already good previous year. By contrast, the affiliates operating in the specialty foam, polishing pads, insulation systems and other businesses involving construction materials remained in loss-making territory in 2022. Part of the reason for this lay in the fact that the development of the PCC Insulations Group was additionally held back by delays in the ETA (“European Technical Approval”) certification of the insulating foam developed by the company, which was anticipated in the first half of 2022. This certification is now expected to be granted in the first half of 2023. Sales and earnings development of the Thai joint venture IRPC Polyol Company Ltd. was again positive in 2022, albeit with results coming in significantly below the previous year. Here, too, the main reason was declining demand coupled with increasing competitive pressure from China. PCC Synteza S.A. recorded declining demand for its alkylphenols over the year under review. Due to the exceptionally strong start to the year, this affiliate nevertheless posted a positive earnings result in 2022, matching the very good level of the previous year. The product portfolio of PCC Synteza S.A. was expanded in 2022 to include polyolbased specialty chemicals developed by its sister company PolyU GmbH. This cooperation should result in further growth opportunities for both companies in the coming years.

We plan to continue diversifying and expanding the product portfolio of the Polyols & Derivatives segment in the future in order to strengthen this segment’s basis for success going forward. Among other things, the focus will be on the development of products for customer-specific applications together with geographic expansion, particularly in the still dynamically growing Asian markets and also – in the longer term – in the USA. This applies not only to the Polyols & Derivatives segment, but also across all segments and core business areas in the Group. In fiscal 2022, the focus was on the establishment of a production plant for oxyalkylates (a group of chemicals comprising special non-ionic surfactants and polyester polyols) in Malaysia in cooperation with the Malaysian joint venture partner PETRONAS Chemicals Group Berhad (PCG). Construction of this plant with a production capacity of 70,000 metric tons by the joint project company PCG PCC Oxyalkylates Sdn. Bhd. progressed according to plan in 2022. Commissioning is scheduled for the third quarter of 2023. This will then enable PCG PCC Oxyalkylates Sdn. Bhd. to contribute to further growth in the Polyols & Derivatives and Surfactants & Derivatives segments.

Surfactants – or surface-active agents – have an extremely wide range of applications. They reduce the surface tension of a liquid or the interfacial tension between, for example, a solid surface and a liquid. The many and varied actions they produce include foaming, wetting, emulsifying and cleaning. Surfactants are basic components of laundry and home care detergents, cleaning agents and personal care products. They are also used, for example, in the textile and agrochemicals industries, as well as in the production of lubricants, paints, coatings, adhesives and plastics.

The Surfactants & Derivatives segment comprises the Anionic Surfactants, Non-ionic Surfactants and Amphoteric Surfactants (Betaines) business units, as well as downstream business activities in the consumer goods sector. This segment includes PCC Exol SA, Brzeg Dolny, and its US subsidiary PCC Chemax, Inc., Piedmont (South Carolina). Since 2022, PCC SE has also been managing PCC Consumer Products S.A. and its subsidiaries within the Surfactants & Derivatives segment. Its consumer goods production activities include house-hold and industrial cleaners, laundry detergents and personal care products, both under PCC’s own brand names and as private label products. The Surfactants & Derivatives segment generated sales of € 231.8 million in 2022. Compared to the previous year (€ 158.1 million), this represents an increase of 46.6 %. The share of total sales of the PCC Group increased by 1.4 percentage points to 17.5 %. The number of employees remained essentially constant at 513 (previous year: 511).

The dominant affiliate in this segment is PCC Exol SA, which again improved its performance in 2022 compared to the already exceptionally successful previous year. PCC Exol SA benefited from significantly increased sales volumes, particularly in respect of its feedstocks for the personal care and home care industries. Demand for specialty products for industrial applications likewise remained at a high level. This field of business is to be further expanded going forward and is expected to contribute to additional growth in future years. Over the course of fiscal 2022, PCC Exol SA was also able to benefit from falling commodity purchase prices based on declining quotations for the basic input materials ethylene and propylene. As a result, PCC Exol SA once again closed fiscal 2022 with an extremely successful set of figures, outstripping the previous year at all earnings levels. This also applies to its U.S. subsidiary and to the Surfactants & Derivatives segment as a whole, thus more than compensating for the losses made by the Consumer Products business unit. The largest affiliate of the Consumer Products business unit is PCC Consumer Products Kosmet Sp. z o.o. At this affiliate, rising input material purchase prices had a negative impact on earnings, especially in the first half of the year. It was only with the successful implementation of significant price increases on the sales side that PCC Consumer Products Kosmet Sp. z o.o. was able to return to a positive earnings position from the middle of the year onward, at least at the monthly level, with profits then rising steadily over the course of the rest of the year. Overall, however, PCC Consumer Products Kosmet Sp. z o.o., and thus the entire Consumer Products business unit, remained in loss-making territory in 2022.

Similar to the Polyols & Derivatives segment, the PCC Group also plans to further diversify its product portfolio in the Surfactants & Derivatives segment and thereby continuously expand the proportion of higher-value specialty products. In the same vain, selling and distribution activities are expected to be increasingly application-oriented across all segments, boosted by the introduction of regional managers. This applies to both the Western European and Eastern European regions (excluding Russia). In addition, PCC is continuing to strive for increased internationalization, particularly in the Asian market, but also in the MENA region and, in the longer term, in the USA as well. By concluding a joint offtake agreement with its most important ethylene oxide supplier, PCC Exol SA together with PCC Rokita SA had secured its long-term supply of this essential input material by the end of 2021. However, this contract also necessitates a further expansion of production capacities on the PCC side in the coming years, the utilization of which is to be prepared in good time in step with continued expansion in both our customer and product portfolios.

Chlorine is one of the most important and most-produced raw materials used in the chemicals industry. Within the PCC Group, the chemical is used, among other things, for the production of propylene oxide for polyols manufacture, and as a feedstock for the manufacture of monochloroacetic acid (MCAA) and phosphorus derivatives. Chlorine is also employed as a disinfectant and, like various chlorine co- and downstream products, is used in water management and petrochemistry.

The Chlorine segment is divided into four business units: Chlorine, Other Chlorine Downstream Products, Monochloroacetic Acid (MCAA) and Phosphorus and Naphthalene Derivatives. This segment includes the corresponding Chlorine business unit of PCC Rokita SA, the business unit Phosphorus and Naphthalene Derivatives of PCC Rokita SA, plus MCAA SE and PCC MCAA Sp. z o.o., all located at the Brzeg Dolny site. Sales in this segment amounted to € 388.5 million in 2022, up 85.8 % versus the previous year (€ 209.1 million). The share of Group sales increased to 29.3 % (previous year: 21.3 %). As of year-end, the segment had a payroll of 464 employees (previous year: 505).

The Chlorine & Derivatives segment was again by far the main sales and earnings generator within the PCC Group in 2022. Average selling prices for all chlorine products reached historic highs in some markets. This development was driven by the continuing high and, in some areas of application, even increasing demand for chlorine derivatives, coupled with declining supply. The shortage resulted, among other things, from temporary force-majeure-related production shutdowns at some competitors and the war-related cessation of chlorine production in Ukraine. In addition, the polyvinyl chloride (PVC) industry reduced its chlorine production upstream of PVC production in anticipation of a slowdown in the construction industry. This further reduced the volume of chlorine by-products, with a corresponding impact on the selling prices of these feedstocks. In addition, demand for the chlorine by-product hydrochloric acid rose very sharply from the third quarter of 2022 due to the restart of several coal-fired power plants, driving up hydrochloric acid prices dramatically. As a result of these developments, the Chlorine business unit of PCC Rokita SA closed fiscal 2022 with a very successful set of figures and significantly up on the previous year.

This also applies to the Phosphorus and Naphthalene Derivatives business unit of PCC Rokita SA, which likewise benefited from significantly higher average selling prices, particularly for certain phosphorus derivatives. Although selling prices came under increasing pressure in the course of 2022 due to renewed competition from China, this business unit nevertheless achieved historically good results overall in the fiscal year under review.

In the MCAA business unit, sales and earnings were also significantly higher than in the previous year, surpassing our expectations. Demand for monochloroacetic acid, which is used among other things for the production of skin-friendly surfactants (betaines), remained at a high level in 2022. A decline in orders from a major customer (a supplier to the PVC industry) was offset by increased sales to other customers. PCC MCAA Sp. z o.o. likewise reaped the rewards of strong demand in the US market. This Group company also benefited from the high sales volumes for hydrochloric acid, a by-product of its production process. And MCAA manufacturing together with various input factors were further optimized in 2022. As a consequence, PCC MCAA Sp. z o.o. ended fiscal 2022 with a successful set of figures, with results significantly better than expected.

Silicon metal is used, for instance, as an aluminum alloying element and in the chemical industry in siloxane and silicone production. A strong increase in demand for silicon metal and the silicon powder produced during its manufacture is predicted over the long term, due – among other things – to new applications relating to climate protection.

The Silicon & Derivatives segment is divided into the Silicon Metal and Quartzite business units and comprises PCC BakkiSilicon hf., Húsavík (Iceland), with its silicon metal production facilities, and PCC Silicium S.A., Zagórze (Poland), which extracts the basic raw material for silicon metal from its quartzite quarry. Also managed within this segment is PCC Seaview Residences ehf., Húsavík, which arranges housing for local employees. Overall, the Silicon & Derivatives segment generated sales of € 112.4 million in the past fiscal year, thereby exceeding the previous year’s figure of € 48.1 million by 133.8 %. This significant increase was mainly due to the first full-year operation of the silicon metal plant in Iceland. Its share of Group sales amounted to 8.5 % (previous year: 4.9 %), and its payroll number increased to 223 (previous year: 214).

The main revenue generator in this segment is PCC BakkiSilicon hf., with its silicon metal plant in Húsavík, Iceland, boasting a nominal annual capacity of 32,000 metric tons. The past fiscal year saw this Group company produce almost all year round with its two furnaces. The first few months of 2022 were very successful, mainly due to the exceptionally high selling prices for silicon metal, which even made exports as far away as Japan possible. April 2022 also saw the successful conclusion of the talks already initiated in the previous year with all stakeholders on restructuring the financing of PCC BakkiSilicon hf. As a result, the equity base of PCC Bakki-Silicon hf. was significantly strengthened while the interest burden was substantially reduced, so exerting a permanently positive effect on the development of the company. Although the stake held by PCC SE in PCC BakkiSilicon hf. was reduced from 86.5 % to 65.4 % as part of this restructuring, PCC SE nevertheless has remained by far the majority shareholder of this Group company.

In the course of the year, rising energy prices and other factors led to a significant drop in demand for silicon metal, particularly from the European aluminum industry, but also from other customers. In addition, increasing silicon metal volumes from China and Brazil were entering the European market, putting selling prices under ever greater pressure. Indeed, in some cases, the prices of these imported quantities were even lower than the production costs for silicon metal in Europe. This was because not only electricity prices but also, for example, the purchase prices paid for coal, which is used as a reducing agent in the silicon metal production process, rose significantly here as a result of the war in Ukraine. Some European silicon metal producers therefore shut down production. As a minimal precaution, PCC BakkiSilicon hf. temporarily took one of its two furnaces out of operation in mid-December. As a result of these developments, this Group company and thus the entire Silicon & Derivatives segment slipped into the red in the course of the second half of 2022. In the meantime, there are signs of a gradual recovery in demand, with – on the other side of the equation – raw material purchase prices also showing a downward trend. Nevertheless, additional measures will be required on the part of PCC BakkiSilicon hf. to reduce its overheads and improve production efficiency in order to return to profitability and sustain that position. Ongoing diversification of its customer portfolio will also remain a major focus of this company. In the long term, there are still signs of strong growth in demand for silicon metal, not least from new areas of application such as in the battery sector, and thus a further significant improvement in the economic environment for this business.

PCC Silicium S.A. also ended the past fiscal year with a loss. The main reason for this was the sharp drop in sales of quartzite grades not suitable for silicon metal production; customers in the ferroalloy industry scaled back their production as a result of high energy costs and falling demand in the course of 2022, which led to a corresponding reduction in purchase volumes. By contrast, sales of ballast for the construction of roads and rail tracks remained at a very high level due to the large number of new infrastructure projects initiated in the region in 2022. However, the margins in this business area are significantly lower than for quartzite. In addition, significantly higher costs for internal transportation (partly as a result of sharply higher fuel prices) and for external services such as rock blasting had a negative impact on earnings.

The PCC Group can draw on expertise in the trading of petro- and carbon-derived commodities spanning almost three decades. The trading portfolio of PCC Trade & Services GmbH includes basic chemical feedstocks as well as coking plant by-products such as crude tar and crude benzene, and solid fuels such as coke breeze, small coke and anthracite in small nut sizes. In addition, this company also provides logistics services. Other services managed under this segment include the Conventional Energies business, which primarily supplies PCC SE’s own plants in Poland with process steam and electricity, plus a wide range of other internal services, including in the fields of information technology, infrastructure management, analytics, maintenance and repair, and waste disposal.

The Trading & Services segment is divided into the two business units of Commodity Trading and Services and comprises the trading companies PCC Trade & Services GmbH, Duisburg (Germany); distripark.com Sp. z o.o., Brzeg Dolny (Poland); PCC Morava-Chem s.r.o., Český Těšín (Czech Republic); and the Turkish sales company PCC Exol Kimya Sanayi ve Ticaret Limited Şirketi, Istanbul. The port company AO Novobalt Terminal, Kaliningrad  (Russia), is also consolidated within this segment. In addition, we manage the Conventional Energies business in this segment through the corresponding business unit of PCC Rokita SA, i.e. its Energy business unit, and the energy utility PCC Energetyka Blachownia Sp. z o.o., Kędzierzyn-Koźle (Poland). The Services business unit also includes a number of other companies that provide predominantly intra-Group services, including PCC IT S.A., PCC Apakor Sp. z o.o., LabMatic Sp. z o.o. and Ekologistyka Sp. z o.o., each based in Brzeg Dolny. Overall, the Trading & Services segment generated sales of € 191.5 million in the past fiscal year, thereby exceeding the previous year’s figure of € 189.2 million by 1.2 %. The share of total consolidated sales decreased by 4.8 percentage points to 14.5 %. The number of employees amounted to 1,099 (previous year: 1,043).

The main revenue generator in this segment is the commodity trading company PCC Trade & Services GmbH. The business of this affiliate, which had sourced a large proportion of the commodities it traded from Russia in previous years, was critically impacted from March 2022 by the Russian war of aggression on Ukraine. Following the outbreak of the war, PCC Trade & Services GmbH worked flat-out on shipping out the quantities already stored in the Russian port of Kaliningrad and in Ventspils (Latvia), as well as those still in transit there under old contracts. In strict compliance with the sanctions imposed on Russia, old contracts on the sales side continued to be honored from these supplies until the beginning of July 2022. At the same time, trade in raw materials from other provenances continued with, in addition, new sources of supply to replace Russian volumes being investigated. While the sales volume of PCC Trade & Services GmbH declined sharply year on year as a result of these upheavals, the company still managed to almost match the high revenues generated in the previous year. The main reason for this lay in a significantly higher average selling price level, driven by high demand coupled with supply scarcities, due in particular to the import ban on Russian raw materials. Despite this challenging market environment, PCC Trade & Services GmbH ended fiscal 2022 on a decidedly positive note and in much better shape than expected. The other trading companies of the PCC Group also achieved positive results in 2022, likewise surpassing our expectations.

However, the Trading & Services segment as a whole closed fiscal 2022 with a loss, as expected. Among the main causes here were the high costs of CO2 certificates and the high electricity charges prevailing in Poland, coupled with high personnel costs in some of the business units of PCC Rokita SA managed within this segment. At the level of PCC Rokita SA, however, these costs were more than offset by other business results.

The Logistics segment is divided into three business units: Intermodal Transport, Road Haulage and Rail Transport. PCC Intermodal SA is one of Poland’s leading providers of container transport services. The logistics network based on several wholly owned container terminals extends from Eastern Europe to the Benelux countries. And the PCC Group’s tanker fleet specializes in the Europe-wide road haulage of liquid chemicals.

The Logistics segment includes the Polish company PCC Intermodal SA, Gdynia, and its German subsidiary PCC Intermodal GmbH, Duisburg, as well as PCC Autochem Sp. z o.o., Brzeg Dolny, and in Russia ZAO PCC Rail, Moscow. Sales in the Logistics segment amounted to € 137.9 million in 2022, up 17.7 % on the previous year (€ 117.2 million). The share of Group sales amounted to 10.4 % (previous year: 12.0 %). The number of employees increased by 35 to 652 as of the reporting date.

The Logistics segment is dominated by PCC Intermodal SA, the portfolio of which includes regular combined transport operations both within Poland and on international routes with points of departure in Rotterdam, Hamburg and Duisburg, among others. Conditions on the international container market remained difficult in 2022. Although the global backlog of containers, which was largely caused by the coronavirus pandemic and the associated lockdowns, did increasingly dissipate in 2022, many construction sites on the railroad lines in Poland and Germany and, more recently, increasingly in the Dutch-German border area have repeatedly led to delays in rail transport services. In Poland, the situation was further exacerbated by the prioritization of coal and grain shipments over all other transports. In this difficult market environment, PCC Intermodal SA was nevertheless able to hold its own to excellent effect, thus closing 2022 with a very successful set of figures and outstripping the already good level of the previous year. The Intermodal Transport business unit continued to be a focus of investment by the PCC Group in 2022. With the acquisition of further locomotives and platforms and the continuous expansion of the existing terminals, important foundations for further growth were also laid in 2022. With the construction of further terminals on the horizon, this trend is expected to continue into the future. One such project south of the Polish seaports of Gdynia and Gdańsk was thus duly progressed with PCC Intermodal SA acquiring the land required for this undertaking in the summer of 2022. In preparation for the further pursuit of this project and its financing, the equity base of PCC Intermodal SA was also strengthened by means of a debt-equity swap implemented by PCC SE. In addition, public funding has been applied for in respect of this project. Additional growth potential for the Intermodal Transport business should also result from the expansion of the activities of PCC Intermodal GmbH. In the third quarter of 2022, this company received approval from Germany’s Ministry for the Environment, Nature Conservation and Transport of the State of North Rhine-Westphalia to operate as a railway undertaking (RU). At the beginning of 2023, the safety certificate required under the General Railway Act (AEG) for the operation of such an RU on higher-level networks was then also issued. With this, PCC Intermodal GmbH will be able to carry out transport operations with its own locomotives from 2023 onward, thereby further enhancing the overall competitiveness of the PCC Intermodal companies.

Despite sharp increases in personnel and fuel costs, the tanker haulage company PCC Autochem Sp. z o.o. posted a positive business performance last year beyond our expectations. In addition, this affiliate recorded extraordinary income in the single-digit million range from an insurance settlement for the tanker cleaning facility destroyed by a major fire in the previous year. The revenue and earnings performance of the Russian freight car operator ZAO PCC Rail showed a marked improvement on the previous year due to higher freight car tariffs in Russia. The outbreak of the war in Ukraine led to demand for transportation in Russia accelerating. At the same time, as the war wore on, uncertainties about the further economic development of this intra-Russian business continued to grow. Added to this was the progressive obsolescence of the PCC-owned stock of freight cars. ZAO PCC Rail therefore sold its entire fleet at the end of 2022 and discontinued its freight car hire operations.

The Holding & Projects segment manages nascent projects with potential for the future, such as the current construction of an oxyalkylates production facility in Malaysia together with our joint venture partner PETRONAS Chemicals Group Berhad (PCG); a further plant in the USA is in the planning phase. This segment also includes our start-up PCC Thorion GmbH, which is developing an innovative material made from nano-silicon powder for enhancing the performance of lithium-ion batteries.

The segment is divided into the two business units of Portfolio Management and Project Development. Alongside the Group holding company PCC SE and the intermediate holding company PCC Chemicals GmbH, this segment also includes PCC Renewables GmbH and the project company PCC Thorion GmbH, both based in Duisburg. In addition, various other project companies and our environmentally compatible small hydropower plants are managed under this segment.

In the past fiscal year, the Holding & Projects segment generated earnings before interest / financial result, taxes, depreciation and amortization (EBITDA) of € –8.4 million (previous year: € –7.8 million). This essentially reflects the EBITDA performance of the Group holding company PCC SE. The number of employees in the segment at the end of the fiscal year was 89 (previous year: 86).

The Holding & Projects segment also includes two project companies that are accounted for in the consolidated financial statements of PCC SE using the equity method: the joint venture OOO DME Aerosol, Pervomaysky, and the joint venture PCG PCC Oxyalkylates Sdn. Bhd., Kuala Lumpur. The development of the Malaysian project company, which we operate together with our joint venture partner PETRONAS Chemicals Group Berhad (PCG), one of Southeast Asia’s leading chemical producers, progressed according to plan in 2022. Construction of the planned production plant for oxyalkylates (special non-ionic surfactants and polyether polyols for a wide range of industrial applications) with an annual capacity of 70,000 metric tons is scheduled for completion in 2023. Commissioning is scheduled for the third quarter of this year. This will then enable PCG PCC Oxyalkylates Sdn. Bhd. to contribute with its oxyalkylates production to further growth in the Polyols & Derivatives and Surfactants & Derivatives segments. The aim with this project is to drive forward expansion of core businesses of the PCC Group in the high-growth region of Southeast Asia across all relevant segments.

At the joint venture OOO DME Aerosol, which operates a plant for the production of dimethyl ether (DME) in the Tula region of Russia, business development in 2022 was impacted by Russia’s war of aggression on Ukraine and the associated sanctions imposed by the European Union and other players. As a result, sales can now only be made to countries in which the purchase and import of DME from Russia is not sanctioned. Nevertheless, continuous plant operation was maintained and a positive annual result was achieved for the first time. OOO DME Aerosol also benefited from positive currency translation effects.

In the Renewable Energies business, which we manage within the Project Development business unit, an important milestone was reached in 2022 with the final commissioning of the fifth small hydropower plant in North Macedonia. This commissioning had been repeatedly delayed since March 2020 due to lengthy regulatory approval proceedings. Permits remain pending for three sites in Bosnia and Herzegovina, and there is still no end in sight to this protracted process. There is still only one power plant in operation there. At least the now six operating affiliates continued to deliver relatively stable cash flows in 2022. In view of the general increase in energy demand and the current climate protection initiatives, PCC SE expects to see increasing flexibility in the potential utilization of these assets in the future.

In the past fiscal year, the project company PCC Thorion GmbH launched a collaboration with the Fraunhofer Institute for Solar Energy Systems ISE and the universities of Freiburg and Duisburg for the development of an innovative nano-silicon powder material based on our silicon metal from Iceland. The aim of the project is to increase the performance of lithiumion batteries. Assuming successful project implementation, this could extend the value chain in our Silicon & Derivatives segment and also significantly increase its profitability.

With the establishment in 2022 of the US project company PCC Chemicals Corporation, Wilmington, DE, the foundation was laid in the Holding & Projects segment for further expansion in the Polyols & Derivatives and Surfactants & Derivatives segments, that is to say the core businesses of the PCC Group. In addition, a site was identified in 2022 for the construction of a production plant for oxyalkylates for the high-growth US market. However, the final investment decision is still pending.