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Rockwood Holdings' CEO Discusses Q2 2012 Results - Earnings Call Transcript

Page 11, our Surface Treatment business again continues to do very well under the guidance of our excellent management team there. Margins improved to 21.2% as a result of higher prices and higher volumes in the United States and Asia. We fully expect this business to continue as a strong performance for the balance of the year. Our new state-of-the-art plant for this business being built in Michigan will come on stream by the end of this year and it will strengthen our position in the important U.S. markets.

Page 12, our Performance Additives sector where we have significant exposure to the construction market, volumes are slightly down, but prices are up. We have said previously in our calls for the last two years that we do not expect material improvement in this sector until 2014. Considering the outlook for the business, we have also moved the start off of our new Color Pigment business from 2014 to early 2015. This is the plant that we are building in Georgia.

Now please go to page 13. Our TiO2 business, we maintained our EBITDA margin at around 25% for the quarter, since higher prices offset the negative impact of lower volumes and some higher raw material costs. To give you more details, prices for the quarter, they’re 27% higher than the comparable quarter last year, while volumes are 28% lower. On a sequential basis, prices were about the same as the first quarter of 2012.

We also completed the acquisition of the new TiO2 plants in early July. This plant in Erlangen in Germany has a capacity of 107,000 metric tons per year and we consider this to be a significant strategic addition to our business, and will enhance our position for the long-term. The specific benefits of this business are, number one, as you recall last year when demand for TiO2 was strong, we were totally sold out at our two existing facilities. They did not have the opportunity for further growth. The addition of this new plant, which was not operating at full capacity, will give us excellent opportunity for growth when demand for TiO2 gets back to 2011 levels or even higher.

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