Energizing chemistry for accelerated growth

Transcription

1 LANXESS - UniCredit German Investment Conference Energizing chemistry for accelerated growth Matthias Zachert, CFO Munich, September 23, 2010

2 Safe harbor statement This presentation contains certain forward looking statements, including assumptions, opinions and views of the company or cited from third party sources. Various known and unknown risks, uncertainties and other factors could cause the actual results, financial position, development or performance of the company to differ materially from the estimations expressed or implied herein. The company does not guarantee that the assumptions underlying such forward looking statements are free from errors nor do they accept any responsibility for the future accuracy of the opinions expressed in this presentation or the actual occurrence of the forecasted developments. No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, none of the company or any of its parent or subsidiary undertakings or any of such person s officers, directors or employees accepts any liability whatsoever arising directly or indirectly from the use of this document. Chart 2

3 Agenda Strong platform for growth Capitalizing on four megatrends Strategy for sustainable growth Promising outlook and ambitious targets Chart 3

4 LANXESS A leading specialty chemicals company based on three powerful segments LANXESS Energizing Chemistry Performance Polymers Advanced Intermediates Performance Chemicals Globally No. 1-3 Europe No. 1-2 No. 1-4 in niches Global technology leader in synthetic rubber and polyamide Supporting trends: - Mobility, growing population in Asia - High Performance Tires - Vehicle weight reduction - Tire-labeling, replacement pick-up Leading suppliers of custom synthesis and basic chemicals (agrochem-related) Supporting trends: - Increasing crop demand based on growing world population - Need of farmers to raise yields - Industry consolidation Competitiveness across the portfolio Application-orientated specialty chemicals Strong brands and technology leader Supporting trends: - Scarcity of purified water - Rising middle class in APAC - Ongoing market consolidation * pre exceptionals Chart 4

5 Consistent delivery of four-phase strategy since 2004 short-term medium-term long-term 4. Acquisitions Portfolio 3. Portfolio optimization Costs Performance improvement Targeted restructuring Organic growth * EBITDA margin pre exceptionals Chart 5

6 transformation and growth: + ~80% EBITDA* EBITDA* [ million] ~80% 465 ~ Growth Growth Transformation Crisis * Pre exceptionals Chart 6

7 LANXESS performance metrics reflect a successful transformation Performance Organic investment External growth Summary & conclusion EPS [ ] ROE 2 [%] ~4 ~ e Net cash flow 1 [ m] 67 ~390 Tax rate [%] > e 1 Cash flow before changes in working capital less capex, based on LTM as of June 30, 2010; 2 Based on LTM as of June 30, 2010 Chart 7

8 Strict CAPEX allocation criteria ensure continuous improvement of profitability Performance Organic investment External growth Summary & conclusion [ m] [EBITDA* margin] > 15% 10-15% 5-10% < 5% CAPEX split by profitability of BUs ~25% ~20% ~35% ~20% ~40% ~30% ~25% ~5% ~55% ~40% ~5% * e* 70% CAPEX by type 40% e Expansion / others 60% 30% ROCE of historic CAPEX above 25% Maintenance * Based on average CAPEX and average EBITDApre margins by BU for respective time frame Chart 8

9 Strong focus on growth markets Performance Organic investment External growth Summary & conclusion Strategic development of asset base* to Asia and Latin America LANXESS sales 72% 61% 20% 13% North America 5% 14% 3% 12% EMEA Asia 10.1% 23.9% 2005 H Latin America e incl. Singapore Sales LANXESS Share of sales in BRIC Optimized regional asset base Share of sales in BRIC doubled since 2005 Chart 9

10 Portfolio transformation towards higher earnings growth Performance Organic investment External growth Summary & conclusion Reinforcing higher profitability and leadership, lowering cyclicality ACQUISITIONS Chrome International Petroflex (PBR), South Africa (LEA), Jinzhuo Chemicals (IPG), 2008 Gwalior Chemicals (BAC), 2009 Jiangsu Polyols (BAC), 2009 DIVESTMENTS Fibers, 2006 Transforming Paper Chemicals, 2006 Textile Processing Chemicals, 2006 Lustran Polymers, 2007 Shedding lower margins, weak leadership positions and higher cyclicality Chart 10

11 LANXESS: value adding acquisitions with focus on BRIC Performance Organic investment External growth Summary & conclusion LANXESS acquisitions EBITDA 1 multiples Earnings accretion Acquisitions ex ante ex post 2 ex ante ex post Petroflex ~7.5 ~3.1 two years one year Gwalior ~7.5 ~6.9 one year one year Others 3 ~3.8 ~3.2 one year one year Positive development of past acquisitions provides comfort Five acquisitions Total annual sales ~ 600 m Acquired businesses achieved average EBITDA pre margins of 14-18% LANXESS is committed to its investment grade policy 1 EBITDA pre exceptionals; 2 After synergies or one year after transaction; 3 Main contributor Chrome International South Africa (CISA) Chart 11

12 Organic growth trend above five percent annually Performance Organic investment External growth Summary & conclusion [ bn] 8 6 Portfolio adjusted sales* evolution 2004 to 2008 CAGR sales growth above 5% Sales adjusted: - Removal of acquisitions - Removal of divestments % +2.7% +2.6% +11.4% actual sales sales forecast LANXESS on growth path * CAGR calculation on 2004 to 2008 sales net of acquisitions and divestments Chart 12

13 LANXESS is on the track of rising profitability metrics will continue to improve Performance Organic investment External growth Summary & conclusion Extrapolation from past to future growth Productivity well increased over past years Stronger portfolio leads to higher margins LANXESS is committed to continue this trend Profitability metrics Sales 1 Year Extrapolation e CAGR Future 5.1 bn ~ bn ~5.4% EBITDA pre 447 m ~ 800 m ~10.2% Margin 2 6.6% ~12% ~10.5% LANXESS will gain in absolute EBITDA strength Past performance improvements provide comfort for future sales value net of divested businesses; 2 EBITDA pre exceptionals Chart 13

14 Strong platform for growth Higher-margin portfolio Flexible and globally competitive cost structures Strong regional mix with focus on BRIC Entrepreneurial performance-driven culture Chart 14

15 Agenda Strong platform for growth Capitalizing on four megatrends Strategy for sustainable growth Promising outlook and ambitious targets Chart 15

16 LANXESS capitalizing on global megatrends Mobility Agriculture Urbanization Water Chart 16

17 Innovative solutions required for tires Opportunity / increase in demand Global tire production [bn units] Standard tires (High-)performance tires ~ +53% ~ +25% e 2015e LANXESS solutions Neodymium butadiene rubber (Nd-PBR, Buna CB) and solution styrene-butadiene rubber (S-SBR, Buna VSL) are synthetic high-performance rubbers with optimal properties for performance tires (PBR) Tire labeling* Europe U.S. Japan Vulcuren Rhenogran Rhenocure A new crosslinker and anti-reversion agent enhancing tire performance over its product life (RUC) Accelerators that improve the production of performance tires (RUC & RCH) Sources: JD Power; * EU: General Safety Regulation 661/2009 published July 2009, implementation to be completed by December 2010; U.S.: proposed; Japan: Total coverage aimed by end of December 2011 Chart 17

18 New technologies reduce vehicle weight and improve performance Opportunity / increase in demand Global production of light vehicles [mn units] ~ +30% ~ +10% LANXESS solutions Hybrid technology: Durethan offers new design opportunities and reduces weight of certain structural components by up to 50% versus metal alone (SCP) e 2015e Share of materials in automotive production [%] High-tech plastics Other materials Ferrous metals Polyamide composite insert (Organo sheet) Polyamide composite insert: Next generation hybrid technology yields up to 20% further weight reduction e 2015e Sources: JD Power; Polymotive; PlasticsEurope; LXS estimates Chart 18

19 Leading solution provider to agrochemicals Opportunity / increase in demand LANXESS solutions 3 2 Grain* demand [bn tons] CAGR** 1.5% Fuel Feed Leading worldwide outsourcing partner for the agrochemical players Technology leadership in high-end and complex chemistry Rapid ramp-up capabilities 1 Food Basic Chemicals Leading supplier of Isocyanate intermediates for agrochemicals e 2020e Chemical crop protection is serving efficiency increase to meet demand in volume growth of grain Levanyl Levanox Seed colorants embraced by our customers (FCC) Sources: USDA, Syngenta, LANXESS prognosis; * Grain = corn, soya, wheat and rice; CAGR=Compound Annual Growth Rate ( ) Chart 19

20 Improved living standards in expanding urban areas fuel growth for LANXESS specialty chemicals Opportunity / increase in demand Urban population worldwide [bn] + ~40% LANXESS solutions Non-hazardous, environmentally friendly pigments for use in construction materials (IPG) 2010e 2030e Consumer households worldwide [bn] (Upper) middle + ~70% (Upper) middle Lower middle Lower middle Poor Poor e Additives for fashionable high-quality leather (LEA) Biocidal and disinfectant formulations (MPP) Phthalate-free plasticizers (FCC) Halogen-free flame retardants (FCC) Sources: United Nations 2010; McKinsey 2010 Chart 20

21 Addressing global water management Opportunity / increase in demand Global water supply and demand [bn m 3 ] 4,200 Current clean supply Shortfall 2,700=39% 4,500 Current demand 6,900 Shortfall 2030e demand Continued and future water pollution and shortfalls endanger human life Bayoxide 33 Levoxin LANXESS solutions Water filtration, ion exchange resins and membrane technology* (ION) for: Drinking water Seawater Ground water Industrial water Food & beverage Bayhibit and Baypure (FCC) for : Cooling water Waste water For removal of arsenic (IPG) from: Drinking water Non-drinking water As corrosion prevention (BAC) for: Industrial water (in steam power plants) Sources: Charting our Water Future, The 2030 World Water Resource Group; * Plant under construction Chart 21

22 Agenda Strong platform for growth Capitalizing on four megatrends Strategy for sustainable growth Promising outlook and ambitious targets Chart 22

23 Dual-track growth strategy Organic growth Targeted investments in profitable existing business lines Product innovation Efficiency programs Pricing power External growth Targeted accretive investments to complement and strengthen our portfolio Chart 23

24 Global reach through ongoing targeted investments Investment projects (Date of announcement) Organic growth September 2008 Expansion of caprolactam, Antwerp, BE February 2010 New formaldehyde plant, Krefeld- Uerdingen, GE April 2010 Expansion of compounding, Wuxi, CN May 2010 Expansion of Chlorotoluenes, Leverkusen, GE June 2010 New compounding facility, Jhagadia, IN External growth January 2010 New membrane plant, Bitterfeld, GE (Groundbreaking) March 2010 Nd-PBR debottlenecking, Dormagen, GE, Port Jérôme, France, Orange, US and Cabo, BR May 2010 New butyl rubber plant, Singapore (Groundbreaking) June 2010 Butyl rubber debottlenecking, Antwerp, BE Chart 24

25 Feasibility study for additional growth project in Asia Organic growth External growth New Nd-PBR plant in Asia Global growth for Nd-PBR is projected to be ~10% p.a. Projected global demand to exceed supply by 2014 Nd-PBR is essential for highperformance tires LANXESS owns leading Nd-PBR product and production technology Additional capacity of kt high-tech Nd-PBR in Asia Final decision within next six months Tire labeling* Europe U.S. Japan * EU: General Safety Regulation 661/2009 published July 2009, implementation to be completed by December 2010; U.S.: proposed; Japan: Total coverage aimed by end of December 2011 Chart 25

26 Targeted acquisitions Organic growth External growth Strengthen portfolio Small to mid-sized businesses to strengthen our portfolio Complement portfolio Attractive mid-sized businesses to broaden our portfolio Essential criteria - Cultural fit - Apply our competencies - Accretive to financial metrics Accretive acquisitions Chart 26

27 Agenda Strong platform for growth Capitalizing on four megatrends Strategy for sustainable growth Promising outlook and ambitious targets Chart 27

28 Achievement of all targets set in the past Good Start in 2004 Realistic Good Start Short-term in 2004 Targets Realistic Short-term Targets Media/Analyst Conference November Target*** 2004 Target*** Target*** 2006 Target*** EBITDA* Margin < 5% ~ 7% 9-10% EBITDA* Margin < 5% ~ 7% 9-10% CapEx / Sales CapEx / Sales Net Financial Debt** / EBITDA* Net Financial Debt** / EBITDA* ~ 5% 4-5% ~4% ~ 5% 4-5% ~4% ~ 4.5 < 3 < 2.5 ~ 4.5 < 3 < spin-off target achieved in 2006 * Excluding exceptionals ** Net * financial Excluding debt exceptionals excluding pensions: financial obligations (including convertible) less cash & cash equivalents ** Net financial debt excluding pensions: financial obligations (including convertible) less cash *** The financial targets do not include any impact of potential divestments & cash equivalents *** The financial targets do not include any impact of potential divestments Analyst Conference LANXESS Chart-No. 10 Analyst Conference LANXESS Chart-No. 10 and LANXESS will deliver on new ambitious targets LANXESS Business EBITDA* margin: Peer group profitability in 2009 (currently 12-14%) No business < 5 % EBITDA* margin in 2009 Media/Analyst Conference November CMD target achieved in 2008 Finance Investment grade rating * EBITDA figures pre exceptionals; excluding acquisitions Chart 28

29 Additional ~80% EBITDA* increase to ~ 1.4 billion by 2015 EBITDA* [ million] ~800 ~1,400 Our strategy for accelerated growth Premium products Global cost competitiveness Active portfolio management Price-before-volume strategy Product and process innovation Focus on BRIC Disciplined organic and external growth Sound financial discipline ~80% * Pre exceptionals Chart 29

30 In 2015 LANXESS will strive for an EBITDA of ~ 1.4 billion New EBITDA target bridge [ m] Performance Polymers BTR Singapore and debottlenecking PBR debottlenecking of Nd-PBR SCP caprolactam and compounding Advanced Intermediates BAC expansions ~ 1,100 ~ 1,400 Additional EBITDA will be the result of: - announced CAPEX projects - additional organic and external growth over next five years ~800 Performance Chemicals ION India and Germany 2010 Additional organic and external growth 2015 Reaching a new profit level References to EBITDA are pre exceptionals; projects are exemplary Chart 30

31 Ambitious growth target for 2015 EBITDA pre exceptionals 2015 ~ 1.4 billion Chart 31

32 Chart 32

33 Portfolio management allows for regrouping of LANXESS businesses along chemical segmentation Performance Polymers Advanced Intermediates Performance Chemicals Butyl Rubber Performance Butadiene Rubbers Technical Rubber Products Semi-Crystalline Products Basic Chemicals Saltigo Material Protection Products Inorganic Pigments Functional Chemicals Leather RheinChemie Rubber Chemicals Sales: > 500 mn Sales: 200 mn 500 mn Sales: < 200 mn Ion Exchange Resins Chart 33

34 LANXESS has a broad customer portfolio with varying demand patterns LANXESS sales distribution by industry, 2009 Others Agro Tire Construction Automotive Consumer Goods Chemicals Chart 34

35 Focus on premium products enables robust pricing power Marketing & sales Targeted repositioning of products towards innovative, high-value premium solutions Providing premium products and solutions with added-value for the customer Effective brand strategy supported premium positioning Examples of gold standard : Successful marketing of premium products Chart 35

36 Raw material prices continued their rise in Q [%] Global raw materials index* Since Q3 2009, raw material prices have consistently been rising LANXESS increased selling prices Further raw material price increase is expected Q Q Q Q Q Q Q Q Q Q Q Continuous rise of raw materials * source: LANXESS, average 2006 = 100% Chart 36

37 Substantial volume and price increase in tandem Q2 yoy sales variances Price Volume Currency Portf. Total Performance Polymers 37% 28% 7% 0% Advanced Intermediates 8% -3% 2% 7% Performance Chemicals 1% 34% 5% 0% LANXESS 19% 22% 5% 2% Q2 yoy EBITDA bridge [ m] 112 Q Volume Price Input Costs Others Q % 14% 40% 48% Pricing power enables passthrough of raw material cost inflation: - Butadiene: >200% yoy - Cyclohexane: >75% yoy Substantially higher volumes Substantial price and volume increases drive earnings Price before volume intact Other costs increase on hedging expenses and risen provisions for performance payment Chart 37

38 Q financials: another set of strong figures [ m] Q Q Q yoy in % Sales EBITDA pre except. margin Net Income Capex* Net Financial Debt Net Working Capital Employees 1, % ,289 14,797 1, % [ m] % vs. YE ,096 14,338 1, % ,528 14, % >100% >100% 5.3% 20.3% 39.4% 0.6% Consistently strong business momentum Further yoy and sequential EBITDA increase, with demand momentum driven by LatAm; Asia with continued growth, offsetting usual seasonality Net financial debt increased on cash outs for dividend, interest and working capital build-up Working capital increase - in line with business expansion - due to planned shut down preparation - due to higher prices and - due to FX effect * net of projects financed by customers Chart 38

39 Strong demand meets a flexible and adjusted cost structure [ m] Q Q yoy in % Sales 1,238 (100%) 1,828 (100%) 48% Cost of sales -977 (79%) -1,354 (74%) 39% Selling -137 (11%) -162 (9%) 18% G&A -54 (4%) -67 (4%) 24% R&D -25 (2%) -31 (2%) 24% EBIT 43 (3%) 196 (11%) >100% Net Income 17 (1%) 131 (7%) >100% EPS >100% Substantial sales increase driven by both, prices (+19%) and volumes (+22%), supported by foreign currencies (+5%) Operational expenses increase substantially lower than massive business expansion Strong EBITDA pre due to good demand as well as flexible and adjusted cost base EBITDA 108 (9%) 265 (14%) >100% thereof exceptionals -4 (0%) -4 (0%) 0% EBITDA pre exceptionals 112 (9%) 269 (15%) >100% Strong top-line with good cost management Chart 39

40 Performance Polymers: strong sales with very good margins [ m] Sales EBIT Depr. / Amort. EBITDA EBITDA pre exceptionals Margin Capex * Q Q Q % % % 33 Strong price and volume driven sales increase in all BUs Leadership positions of businesses lead to attractive margins Significantly strengthened demand for rubber in LatAm in Q2, as well as persisting strong demand in Asia BTR enjoys continued high capacity utilization PBR with strong price increase, offsetting Butadiene hikes SCP, TRP also manage raw material inflation and continue to benefit from increased momentum of OEM recovery Capex to increase substantially in Q3 and Q4 as planned Sales by BU Sales bridge year on year [ m] BTR PBR 37% 28% 7% 0% 958 SCP TRP 559 Q (approximate numbers) Price Volume Currency Portfolio Q * net of finance lease Chart 40

41 Advanced Intermediates: solid performer with good quarter [ m] Sales EBIT Depr. / Amort. EBITDA EBITDA pre exceptionals Margin Capex * Q Q Q % % % 6 SGO with stable prices while BAC increased prices substantially Agro customers with ongoing high levels of inventory trigger volume decline Continued improved demand of non-agro BAC customers Margin benefits from strong price increases and good cost position EBITDA and margins well above previous year s solid level Sales by BU SGO Sales bridge year on year [ m] 8% -3% 2% 7% 285 (approximate numbers) 324 BAC * net of projects financed by customers Q Price Volume Currency Portfolio Q Chart 41

42 Performance Chemicals: volume driven recovery of specialty chemicals [ m] Sales EBIT Depr. / Amort. EBITDA EBITDA pre exceptionals Margin Q Q Q % % % Volume driven sales improvement in all BUs as markets recover Every business achieved higher earnings, with LEA, IPG and RUC being the strongest absolute contributors to EBITDA increase LEA with strong price increases, based on chromium ore All other Business Units with rather stable prices like 2009 IPG enjoys very high capacity utilization rates Capex Sales by BU Sales bridge year on year [ m] RUC ION MPP IPG 1% 34% 5% +0% 537 RCH 385 (approximate numbers) LEA FCC Q Price Volume Currency Portfolio Q Chart 42

43 Strong balance sheet [ m] Dec 31, 2009 June 30, 2010 Dec 31, 2009 June 30, 2010 Non-current Assets 2,382 2,575 Intangible assets Property, plant & equipment 1,809 1,921 Equity investments Other investments 1 8 Other financial assets Deferred taxes Other non-current assets Current Assets 2,686 2,974 Inventories 849 1,099 Trade accounts receivable 733 1,024 Other financial assets Other current assets Near cash assets Cash and cash equivalents Total Assets 5,068 5,549 Stockholders Equity 1,445 1,622 thereof minority interest Non-current Liabilities 2,504 2,554 Pension & post empl. provis Other provisions Other financial liabilities 1,462 1,337 Tax liabilities Other liabilities Deferred taxes Current Liabilities 1,119 1,373 Other provisions Other financial liabilities Trade accounts payable Tax liabilities Other liabilities Total Equity & Liabilities 5,068 5,549 Near cash assets used for interest- and dividend payment as well as early repayment of bank debt Overall, foreign currencies with inflationary influence on balance sheet positions (USD and Brazilian Real) Increase in pension provisions due to lowered discount rates for Germany (5.25% to 5.00%) Working Capital increase in line with stronger business activity, influenced also by pricing and strengthened USD and Real Chart 43

44 Improved business momentum reflected in healthy cash flow [ m] Q Q Profit before Tax Depreciation & amortization Gain from sale of assets Result from equity investments -3-8 Financial (gains) losses Cash tax payments / refunds Changes in other assets and liabilities Operating Cash Flow before changes in WC Changes in Working Capital Operating Cash Flow Investing Cash Flow thereof Capex Financing Cash Flow Strong operating cash flow Significantly better profit before tax on stronger business activity Cash outflow for working capital as expected, in-line with business recovery and higher raw material prices Operating cash flow finances working capital increase and capex payout Investing cash flow reflects conversion of near cash assets to cash Chart 44

45 Tire producers are reacting swiftly Bridgestone Thailand: plus ~2.0 m tires/year China: plus ~1.3 m tires/year India: plus ~3.6 m tires/year plus ~1.1 m truck tires/year New plant in China ~ 52 m investment ~2.1 m tires/year New plant in China ~ 72 m investment ~2.0 m tires/year New plant in China ~ 230 m investment ~10.8 m tires/year Russia: ~4.2m tires/year New plant in China 185 m investment ~4.0 m tires/year Romania: expanding capacity by 60% China: doubling car tire capacity, truck tire capacity +20% LatAm: car tire capacity +20%, truck tire capacity +25% New plant in Hungary: 230 m investment 10.0 m tires/year Investments in China and Brazil Taiwan: ~5.5 m tires/year Additional increases in China, Thailand and Vietnam New plants in China and India ~ 1,300 m investment New plant in Brazil 300 m investment Increase capacity in Russia 2.0 m tires/year Source: Companies websites Chart 45

46 Strengthening butyl with a world-scale production facility in Singapore and smart debottlenecking in Belgium Performance Polymers Advanced Intermediates Performance Chemicals Facts BTR greenfield plant and debottlenecking Greenfield BTR plant, Singapore, ~200 employees Capacity: 100 kt/a Start of production: Q Debottlenecking in Belgium, capacity increase 14 kt/a Market perspective Market growth stronger than GDP growth Supply / demand balanced to tight New world-scale plant needed every ~3 years Rationale Strengthening market position among top leaders Most competitive BTR site Ideal infrastructure / raw material supply CAPEX ~ 420 m Expected sales Sales multiple > 330 m 1.3x Attractive tax regime Improving natural hedge against FX fluctuations Project ROCE* above group average * ROCE in average profitability year Chart 46

47 BU PBR debottlenecking for Nd-PBR as efficient option to expand into a growing market Performance Polymers Advanced Intermediates Performance Chemicals Facts Debottlenecking of ~50 kt Nd-PBR in Cabo, Brazil; Dormagen, Germany and Orange, USA Capacities on stream between Q and Q Project CAPEX: ~ 20 m only Market perspective Market growth ~10% Supply / demand balanced to tight Rationale Nd-PBR as global standard for high-performance tires Underpins LANXESS leading position in merchant rubber market Attractive payback time of investment <5 years Orange +15 kt Nd-PBR Cabo +20 kt Nd-PBR CAPEX ~ 20 m Project ROCE* Debottlenecking of Nd-PBR Pt. Jérôme SSBR Expected sales Dormagen +15 kt Nd-PBR Sales multiple ~ 70 m ~0.3x above group average * ROCE in average profitability year Chart 47

48 BU SCP Investing in upstream-integration to strengthen focus on high-tech plastics end-compounds Performance Polymers Advanced Intermediates Performance Chemicals Facts Investments in - compounding in Wuxi, China and Jhagadia, India - caprolactam and KA-oil in Antwerp, Belgium Capacities on stream in 2011 Total CAPEX of projects: ~ 50 m Market perspective Market growth of high-tech plastics expected >6% Supply / demand balanced to tight Rationale Expansion of upstream-integration secures efficient raw material supply Expansion of compounding in India and China serves rapidly growing demand CAPEX ~ 50 m Project ROCE* SCP investments into growth Expected sales Sales multiple ~ 80 m ~0.6x above group average * ROCE in average profitability year Chart 48

49 Capacity expansion and backward-integration further improves profitability of BU BAC Performance Polymers Advanced Intermediates Performance Chemicals Facts Expansion of Chlorotoluenes and derivatives in Leverkusen, Germany - Additional 42 kt from Q on New Formalin plant in Uerdingen, Germany - Additional 150 kt from Q on Market perspective BAC: global competitiveness Chlorotoluenes and derivates markets offering opportunities for organic growth and market share increase Rationale Aromatic network offers sustained cost advantage, also compared to Chinese competitors New Formalin plant to become independent from suppliers CAPEX ~ 50 m Project ROCE* Expected sales Sales multiple ~ 50 m ~1.0x above group average * ROCE in average profitability year Chart 49

50 LANXESS strengthens its position in India with an investment project for attractive ion exchange resin business Performance Polymers Advanced Intermediates Performance Chemicals Facts Investments in - new plant in Jhagadia, India - new facility in Bitterfeld, Germany New capacities from India on stream end of 2010, new products from Bitterfeld end of 2011 Market perspective Attractive market growth rates New capacities in low-cost country with infrastructure Rationale Population growth in Asia Increasing urbanization Rising energy consumption Purification of available water is mandatory to satisfy future demand CAPEX ~ 60 m Project ROCE* ION The clean water enabler Expected sales Sales multiple ~ 60 m ~1.0x above group average * ROCE in average profitability year Chart 50

51 Several smaller investments complement portfolio growth Performance Polymers Advanced Intermediates Performance Chemicals Facts TRP / TSR JV in China for highly cost-efficient NBR SGO Leverkusen expansion of facility for active ingredients and intermediates in cooperation with Syngenta RCH Russian expansion of rubber additives and release agents Market perspective TRP serves Chinese NBR market with double-digit growth SGO serves agricultural megatrend: population growth by 2050 by 2 bn RCH enters new regional market Rationale Investments in growth regions, close to customers Attractive investment returns TRP, SGO, RCH and further projects CAPEX ~ 25 m Project ROCE* Expected sales Sales multiple ~ 125 m ~0.2x above group average * ROCE in average profitability year Chart 51

52 Continuous investment in sustainable growth Direct emissions in CO 2 equivalents [million tpa*] % CO 2 -neutral energy production in modern power plants through combined heat and power generation - Plant already inaugurated in Porto Feliz, Brazil - Further plants under construction in Nagda and Jhagadia, India LARA as lighthouse project in Krefeld-Uerdingen, Germany Global climate gas emissions reduced by more than 50% compared with 2007 German -80% CO 2 reduction target** set for 2012 already achieved Latest process technology combines profitability with high environmental standards * metric tons per annum; ** 80% reduction in climate gas emissions by 2012 vs Chart 52

53 LANXESS is globally the largest merchant butadiene buyer purchasing power secures supply LANXESS represents high single digit % of global butadiene demand [kt] Reliable sourcing Butadiene as a raw material is generally tight in supply ~7% of demand ~50% of demand ~10% of demand LANXESS global sourcing and purchasing power ensures reliable supply Multi-supplier strategy gives additional comfort Demand for butadiene Capacity to extract butadiene consumption Source: ICIS Cracker Report with McKinsey LANXESS Model Chart 53

54 LANXESS funding status has increased over the last few years Clear improvement of funded status [ m] Funding: ~37% Funding: ~71% ,073 1, Significant improvement of funding ratio: ~71% achieved German CTA established in 2007 Conservatively managed pension assets Ongoing monitoring and optimization of pension structure Defined benefit obligation External plan assets Underfunding Chart 54

55 No question mark on pensions Pension returns Expected return on pension assets has increased due to the acquisition of Petroflex in Brazil Pension liabilities Liability discount rates have increased due to the addition of Petroflex in Brazil CTA (Germany) Voluntary funding of CTA since 2007 by a total amount of 90 m Asset structure Pension plan model More conservative ratio of equity to fixed income: From ~70/30 to ~30/70 Deliberate change from defined benefit to defined contribution plans (country by country) Decreasing interest rates triggered increasing pension liabilities in 2010 (non-cash) Chart 55

56 Abbreviations Performance Polymers Advanced Intermediates BTR PBR TRP SCP Butyl Rubber Performance Butadiene Rubbers Technical Rubber Products Semi-Crystalline Products BAC SGO Basic Chemicals Saltigo Performance Chemicals MPP IPG FCC LEA RCH RUC ION Material Protection Products Inorganic Pigments Functional Chemicals Leather Rhein Chemie Rubber Chemicals Ion Exchange Resins Chart 56

57 Contact detail Investor Relations Oliver Stratmann Head of Investor Relations Tel. : Fax. : Mobile : Oliver.Stratmann@lanxess.com Verena Simiot Assistant Investor Relations Tel. : Fax. : Mobile : Verena.Simiot@lanxess.com Tanja Satzer Constantin Fest Joachim Kunz Private Investors / AGM Tel. : Fax. : Mobile : Tanja.Satzer@lanxess.com Institutional Investors / Analysts Tel. : Fax. : Mobile : Constantin.Fest@lanxess.com Institutional Investors / Analysts Tel. : Fax. : Mobile : Joachim.Kunz@lanxess.com Chart 57