The business environment remained basically unchanged compared to the final quarter of 2012. As in the previous quarter, sales trends were therefore not uniform across regions and businesses. At the regional level, Latin America exhibited the highest growth with a 10% increase in local currency sales. Year-on-year, sales in Asia Pacific and EMEA were unchanged, with the latter posting 2% growth in Europe and a 10% sales decline in Middle East & Africa. Sales in North America grew 5%.
As expected, the Care Chemicals and Natural Resources Business Areas continued to grow, with local currency sales increases of 13% and 4% respectively. Care Chemicals benefitted from the low sensitivity of the consumer-oriented businesses to the general economic cycle and favorable weather conditions for its European and North American de-icing business. In 2013, the de-icing season extended into late March on both sides of the Atlantic. Natural Resources was driven by double-digit local currency sales growth in Oil & Mining Services while the Functional Minerals business was weak, recording a mid-single-digit decline in local currencies year-on-year. Catalysis & Energy experienced a single-digit sales decline due to a slow start in Syngas and Specialty Catalyst, reflecting the usual high volatility in the first two quarters of the year. Plastics & Coatings, on the other hand, stabilized at low levels, with the slightly lower sales figures mainly attributable to the early Easter break and therefore fewer billing days this year compared to the previous-year period.
The gross margin was close to the level achieved one year ago, at 29.2% compared to 29.3% in the first quarter 2012. The negligible decline was due to higher costs of underutilized production capacities. Year-on-year, sales prices increased marginally while raw material costs rose 1%. Compared to the fourth quarter 2012, sales prices and raw material costs remained stable.
EBITDA before exceptional items from continuing operations was flat in local currencies and 1% lower in Swiss francs year-on-year, reaching CHF 209 million compared to CHF 211 million. The respective EBITDA margin reached 13.7% compared to 13.9% for continuing operations in the previous-year period.
Exceptional items were lower, decreasing to CHF 22 million in comparison to CHF 33 million in the first quarter of 2012 as a result of lower restructuring costs in the continuing businesses. The net result from continuing operations therefore improved to CHF 38 million from CHF 16 million one year ago, also helped by a better financial result which more than compensated for higher taxes.
The operating cash flow followed the normal seasonality with an increase in net working capital in the first half-year followed by cash generation in the second half-year. A build-up in inventories led to a cash outflow of CHF 72 million compared to a CHF 6 million cash inflow in the previous-year period. Capital expenditure was lower year-on-year, at CHF 44 million versus CHF 54 million, reflecting a cautious investment philosophy in the current volatile economic environment.
Net debt stood at CHF 1.656 billion, a reduction from the CHF 1.789 billion recorded at year-end 2012. The reduction was exclusively achieved through the early redemption of the CHF 300 million convertible bond 2009-14 in February/March which entailed a conversion into share capital instead of a repayment. As a result of lower net debt, gearing (net financial debt in relation to equity) improved to 56% from 67% at year-end 2012.