DGAP-News

H&R AG expects significant earnings growth in 2015 - Seite 2

the distribution of consolidated sales revenues by segment. As in the past,
most of the company's consolidated revenues - around 72% (2013: 76%) -
continued to be generated by the ChemPharm Refining segment's two
refineries in Germany. The ChemPharm Sales segment's international business
accounted for around 23% of consolidated sales revenues in financial year
2014, a higher percentage than in the previous year (2013: 19%). The
Plastics segment again contributed around 5% of sales revenues.

"2014 was a year of both highs and lows. After a modest start to the
financial year, we gathered momentum over the summer and fall before we
felt the increasingly negative impact of the dramatic decrease in the oil
price toward year-end," says Niels H. Hansen, Chairman of the Executive
Board of H&R AG.

Operating income (EBITDA) was EUR 31.5 million in financial year 2014
(2013: 32.6 million), i.e., within the projected earnings range published
in December 2014. The change in EBIT was quite positive; it rose by EUR 9.9
million to EUR 5.8 million (2013: EUR -4.1 million). Consolidated income
after minority interests totaled EUR -15.4 million (2013: EUR -14.0
million), below the level reported in financial year 2013 due to the impact
of deferred taxes.

The overall earnings trend was affected by several - sometimes opposing -
factors:
Contract production at the Salzbergen site and the associated decoupling
from raw-material and product-price volatility had a stabilizing effect on
earnings. Positive momentum was also generated by the change to using
higher-value raw materials at the Hamburg site, which shifted the
allocation ratio of our output in favor of higher-margin main products.
Finally, the lower procurement prices, combined with higher base-oil
prices, resulted in satisfactory margins overall.

By contrast, at year-end, the sharp drop in the price of crude oil
(compared to the previous year) led to a relative increase in the cost of
materials, due to the fact that the production process in the ChemPharm
Refining segment lasts several weeks. These "windfall losses" totaling EUR
-13.4 million in the fourth quarter of 2014 alone (full year 2014: EUR
-16.1 million) resulted from the difference between production costs and
replacement costs for unprocessed inventories and unsold products between
the purchase date and the production date, more than offsetting the
positive impact of contract production and the improved product mix. The