Nabaltec_E_GB2016 - Foreword of the CEO

04 FOREWORD OF THE CEO FOREWORD OF THE CEO In Financial Year 2016, we faced big challenges together with some uncertainty. It was caused by the insolvency of Sherwin Alumina LLC, the key supplier of our US subsidiary Nashtec, and the resulting unpredictable aspects of such a procedure in the US. It culminated in a complete production halt for Nashtec. Since it was not clear at the time how quickly the situation of our subsidiary Nashtec could be clarified, we refrained from issuing a 2016 revenue and earnings forecast to you, our shareholders, for the company as a whole. Our decision to proceed cautiously in 2016 – carefully and without undergoing overhasty risks – ended up paying off. Our revenues were up 5.2% to EUR 159.2 million and we posted EBIT of EUR 12.2 million. With an EBIT of 7.7% our earnings power was down slightly from the year before, which is an entirely satisfactory result in view of the extraordinary situation in the US with the insol- vency of Nashtec LLC’s raw materials supplier and the associated production freeze, as well as the increase in contributions to retirement benefit obligations. The situation has since been clarified. In March 2017, we were able to acquire all shares in our US subsidiary Nashtec. The agreements which have been reached lay the groundwork for a permanent stand-alone solution. Accordingly, we now once again see ourselves in a position to issue a forecast for 2017. We expect revenue growth in the low single digits and an EBIT margin in the high single digits. 2017 will be entirely characterized by investments and rapid implementation of the stand-alone solution in the US. The production halt there, which we were able to compensate for with deliveries from Germany as of the third quarter of 2016, should be lifted at the end of 2017. This will slow our revenue growth somewhat in 2017, but at the same time create potential to once again participate in market growth in 2018. Notwithstanding the extraordinary developments in the US, we were able to keep our business on course with strong growth and strong earnings, and our market position was not only held but actually improved. The market drivers in our target industries remain intact, and the positive future growth outlook and climate for our customers are undiminished. This was evident in part from the fact that the business divisions “Functional Fillers” and “Technical Ceramics” contributed equally to growth in 2016. |||| Nabaltec AG | Annual Report 2016

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