LANXESS German Investment Seminar Improved demand and effective self-help measures. Matthias Zachert Chief Financial Officer

Transcription

1 LANXESS German Investment Seminar Improved demand and effective self-help measures Matthias Zachert Chief Financial Officer January, 2010

2 Safe harbour 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 Agenda Strategy review Update on Market-trends and relevant regulations Business and financial review Q Outlook/Guidance Chart 3 1

3 LANXESS A leading specialty chemicals company based on three powerful segments LANXESS Energizing Chemistry Sales 6.6 bn; EBITDA* 721 m; employees (2008) 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 Tyres - Vehicle weight reduction - Tyre-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 Consistent delivery as four-phase strategy is implemented Portfolio Costs EBITDA* margin target >10% 9-10% <5 % Portfolio optimization Targeted restructuring Performance improvement Organic growth 4. Acquisitions Acquisition Acquisition of Gwalior/India a strategic fit in a growing market Acquisition of Jiangsu Polyols Chem. Co/China Purchase of Petroflex/Brazil, strengthening worldwide presence in synthetic rubbers with Latin American activities Purchase of chrome chemicals activities of Dow Chemical in South Africa Purchase of iron oxides pigment facilities from Jinzhuo Chemicals/China Portfolio optimization Individual businesses given new perspectives by divestment to investors. Eight non-core businesses/affiliates divested with ~ 1.5 bn sales Targeted restructuring Challenge09-12, 360 m savings until 2012 Four restructuring packages successfully implemented Cost reduction of approx. 165 m achieved until 2008e ( 205m annually from 2009**) Performance improvement Price-before-volume strategy implemented Working capital management remains tight * pre exceptionals ** adjusted for impact of Lustran Polymers exit Chart 5 2

4 Including acquisitions, reduced headcount by ~200 employees versus FY 2008 Headcount development since 2003 LANXESS Headcount ,423 19,659 18,282 16,481 14,610 Including ~800 HC from Petroflex 15,420 14,797 Including ~400 HC from Gwalior and Jiangsu Polyols 14,604 Dec 2003 Dec 2004 Dec 2005 Dec 2006 Dec 2007 Mar 2008 Dec 2008 Sep 2009 Chart 6 Portfolio management has continuously strengthened the company bn of sales divested Divested Acquired Leadership Position Cyclicality Profitability Expectation Business Driver Fibers Paper Textile Processing Chem. Lustran Polymers CISA Petroflex Jinzhuo Chemicals (IPG) Gwalior Chemicals (BAC) Jiangsu Polyols (BAC) Weak Moderate Weak Good Good Good Good Good Good High Moderate Moderate High Low Low Moderate Low Low Low Medium Medium Low High High High High High Market shifting to Asia High industry consolidation Market shifting to Asia Overcapacities, Commoditization Upstream Integration Global mobility trends Expansion of Asian exposure Strengthening global position Expansion of Asian exposure Chart 7 3

5 LANXESS Improvement trend of financials, based on strategy implementation In m EBITDA * Net financial debt 1, Net fin. debt / EBITDA * 2.5x 1.2x 0.8x 0.6x 1.2x Gearing 101% 54% 36% 30% 61% Underlying EPS ** ROCE 5.4% 12.9% 15.9% 17.7% 15.0% Financial metrics continuously improved * pre exceptionals ** EPS pre exceptionals, based on actual taxrate Chart 8 Agenda Strategy review Update on Market-trends and relevant regulations Business and financial review Q Outlook/Guidance Chart 9 4

6 Replacement markets improved steadily in recent months 25% 20% 15% 10% 5% 2009 replacement market growth rates* (% YoY change) Growth [tyre units] Passenger car and light truck replacement markets seem to have surpassed the trough After slump in H1 2009, replacement market turns back to positive growth rates Replacement cycle likely to improve further in % -5% Feb 09 Mar 09 Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09-10% -15% -20% China Nafta EMEA Source: Michelin company website data, 2010 Q1; * moving average volume trend Chart 10 New EU tyre legislation will increase transparency of tyre performance and thus reinforce high performance tyre trend New EU tyre labeling Labeling regulations now approved by the European Parliament: As of November 2012, new tyres on sale in Europe will be classified and labeled for: - fuel efficiency - wet grip - noise performance Tyres produced after July 1, 2012 must either have a sticker or be accompanied by the label Labeling classes from A to G will influence consumer behavior Additional countries (U.S., Japan) evaluate comparable tyre labels LANXESS high performance rubber will support this trend Tyre manufacturers will start preparing for this legislation from now on Source: Press release European Parliament Chart 11 5

7 Demand for high performance rubber is expected to consistently grow over the next years Global tyre production in million units Performance and High Performance Tyres Regular Tyres High performance tyre segment will grow above market as the following aspects gain momentum: Mobility trend in BRIC countries Overall increasing car park Government regulations on fuel efficiency / high performance tyres High performance rubber extends the magic triangle of tyre production Source: LMC 2009 Q3; LANXESS estimates Chart 12 Global vehicle park continues to grow mobility trend remains in tact 1 bn vehicles Global light vehicle park shows sustained growth trend APAC Americas EMEA Increasing vehicle park: Global growth expected around 3% APAC with highest growth rates (approx. 5%) Americas and EMEA with lower growth rates of around 2% Major tyre producers invest in new capacities to serve growing demand Secured demand for tyres Source: J.D. Power 2009 Q3 Chart 13 6

8 Agenda Strategy review Update on Market-trends and relevant regulations Business and financial review Q Outlook/Guidance Chart 14 Resilience shown in recession scenario EBITDA pre margin 2 20% 15% 10% Average operating segment margin * above 10 % Avg. 10.5%** Q Avg. 14.5%** Q Q Q Avg. 11.7%** Avg. 9.6%** Despite unprecedented downturn, operating margins demonstrate resilience Early implementation of cost saving measures lowered Break-Even Price-before-volume strategy supports margins 5% Performance Polymers Advanced Intermediates Performance Chemicals LANXESS * Q to Q3 2009, ** excl. inventory devaluation Chart 15 7

9 Cost structure fully aligned to current demand level [ m] Q Q yoy in % Sales 1,814 (100%) 1,373 (100%) -24% Cost of sales -1,409 (78%) -1,050 (76%) -25% Selling -180 (10%) -135 (10%) -25% G&A -69 (4%) -57 (4%) -17% R&D -25 (1%) -26 (2%) +4% EBIT 108 (6%) 64 (5%) -41% Net Income 56 (3%) 23 (2%) -59% EPS 0.67 (0%) 0.28 (0%) -58% EBITDA 183 (10%) 130 (9%) -29% thereof exceptionals -9 (0%) -13 (1%) +44% EBITDA pre exceptionals 192 (11%) 143 (10%) -26% Continued sequential improvement Sales decline yoy on lower prices (-16%) due to easing input costs and volume impact (-11%), slightly offset by currency effects (+3%) Cost of sales, selling and G&A expenses clearly show effects of flexible asset and cost management with accelerated implementation of restructuring and Challenge programs Sequential EBITDA* improvement against typical seasonal pattern 2008 data adjusted for change in pension accounting * Pre exceptionals Chart 16 Strong operating cash flow above 2008 [ m] 9M M 2009 Profit before Tax* Depreciation & amortization Gain from sale of assets Result from equity investments* 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 Professional working capital management delivers strong operating cash flow Healthy cash inflow driven by working capital management Cash tax refunds due to collection of pre-paid taxes Other assets and liabilities reflect restructuring cash-out in 2009 (expenses in 2008) and higher payments for personnel commitments Investing cash flow 2009 incl. investment in near cash assets Financing cash flow 2009 reflects 500 m 2014 bond * 2008 restated, change in pension accounting ** 2008 restated, net of projects financed by customers and finance lease Chart 17 8

10 Solid financing and good working capital management [ m] Dec 31, 2008 Sep 30, 2009 Dec 31, 2008 Sep 30, 2009 Non-current Assets 2,169 2,357 Intangible assets Property, plant & equipment 1,646 1,763 Equity investments Other investments 2 1 Other financial assets Deferred taxes Other non-current assets Current Assets 2,423 2,765 Inventories 1, Trade accounts receivable Other financial assets Other current assets Near cash assets Cash and cash equivalents Total Assets 4,592 5,122 Increase in pension provisions due to regionally lower discount rates Investment in INEOS ABS deconsolidated Stockholders Equity 1,339 1,424 thereof minority interest Non-current Liabilities 1,953 2,665 Pension & post empl. provis Other provisions Other financial liabilities 986 1,567 Tax liabilities Other liabilities Deferred taxes Current Liabilities 1,300 1,033 Other provisions Other financial liabilities Trade accounts payable Tax liabilities Other liabilities Total Equity & Liabilities 4,592 5,122 Cash position invested in highly rated and liquid money market funds Chart 18 New bond further improved maturity profile Long term financing secured m bond and 130 m Schuldschein 3 strengthen cash position Cash used to selectively early repay bank debt as well as invest in near cash assets 2011 term loam reduced by 150 m New m bond used to refinance 2011 term loan and 2012 bond each by 100 m Drawn Cash Near cash assets Undrawn Short- term Facilities Liquidity and maturity profile Bond 2 & Schuldschein 23 Bond 2 Term Loan Schuldschein 3 Synd. Credit Facility 1.4 bn Bond LANXESS financing long term and on solid footing 1 Committed credit lines, 2 Major instrument 3 English: promissory note Chart 19 9

11 Agenda Strategy review Update on Market-trends and relevant regulations Business and financial review Q Outlook/Guidance Chart 20 Macro view: signs of economic improvement with risk of setbacks View on LANXESS group level Global markets have stabilized, growth momentum mainly in Asia (especially China) Other regions are expected to continue slow recovery over a longer period of time Customers will manage inventories tightly in Q4 Some pre-buying in Q3 potentially burdening Q4 Seasonal earnings pattern affects Q4 Flexible asset and cost management effective to mitigate lower utilization Risk of setback remains Chart 21 10

12 FY guidance reflects better Q3 performance and LANXESS self-help measures Guidance for FY 2009 Based on previously mentioned assumptions, LANXESS expects FY EBITDApre of 400 m m Additional financial expectations for 2009 Capex*: ~ 300 m D&A: ~ m Tax rate: sustainable at ~25% Working Capital: moderate cash inflow for FY 2009 Exceptionals: ~ 40 m for FY 2009 FX: FY avg. U.S. dollar at USD / EUR Hedging: ~50% at USD / EUR * Without projects financed by customers Chart 22 Chart 23 11

13 Appendix 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 25 12

14 LANXESS has a broad customer portfolio with varying demand patterns LANXESS sales distribution by industry, 2008 Others Agro Tyre Construction Automotive Consumer Goods Chemicals Chart 26 Price before volume intact input cost pass-through with slight time lag 9M yoy EBITDA bridge [ m] M 2008 Volume Price Challenge09-12 Input Costs 9M 2009 Others Q3 yoy EBITDA bridge [ m] Year to date, price and input cost development in balance In Q3 input cost deflation and savings from Challenge09-12 more than offset selling price effect Full compensation of sequentially risen input cost with time lag Q Challenge09-12 Volume Price Input Costs Q Others Chart 27 13

15 Asian business substantially expanding in 2009 Sales by region Q (in %) LANXESS sales by region Asia bouncing back Asia 25 Germany 20 [ m] Asia North America Germany LatAm EMEA (excl. Germany) LatAm 10 North America 15 EMEA (excl. Germany) 30 Jan 2008 Jul 2008 Jan 2009 Jul 2009 Chart 28 Challenge09 proceeding ahead of plan, 30 m savings accelerated from with additional savings coming from 2010 Savings in [ m] vs ~ ~140 Challenge09 Challenge09 expansion Challenge12 50 Challenge09 measures proceed ahead of plan 30 m of savings planned for 2010 now expected in 2009 Contribution due to faster implementation of operational restructuring projects Flexible asset and cost management support Chart 29 14

16 Net financial debt increased due to financing of acquisitions Net financial debt under tight control Net debt*: 1, Temporary increase in cash on hand to secure unconditioned liquidity Liquidity as of June now split into: - Cash & cash equivalents - Near cash assets Net debt remains below 2008 level despite acquisition of Gwalior and Jiangsu Polyols Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Mar-09 Jun-09 Sep-09 Non current financial liabilities Current financial liabilities Cash and cash equivalents Near cash assets Net financial debt continuously managed * Adjusted for liabilities for accrued interest and specific exchange hedging of financial liabilities; in Sep-2009, non current financial liabilities adjusted by 11 m and current financial liabilities adjusted by 32 m Chart 30 Rating-agencies confirm LANXESS achievements BBB Standard&Poor s Liquidity is strong Will manage investments and balance sheet in light of the currently difficult economic environment Has successfully restructured business activities Moody s Baa2 Lanxess Baa2 rating continues to reflect the issuer's adequate debt and cash flow metrics for the current rating category The group's strong liquidity profile remains highly supportive of the stable outlook Fitch Ratings BBB Improved business risk, cost position and capital structure Product portfolio has moved up the value scale over the past four years Fitch takes comfort in Lanxess's strong liquidity Source: Rating-Agencies Chart 31 15

17 Price before volume intact input cost pass-through with slight time lag Q3 qoq sales variances Price Volume Currency Portf. Total Performance Polymers 8% 12% -2% 0% Advanced Intermediates 1% -2% 0% 1% Performance Chemicals -2% 13% -1% 0% LANXESS 4% 9% -2% 0% 18% 0% 10% 11% Q3 yoy sales variances Price Volume Currency Portf. Total Performance Polymers -26% -7% 3% 0% -30% Advanced Intermediates -7% -12% 1% 1% Performance Chemicals -3% -17% 2% 0% -17% -18% Sequentially, strong volume increase and good pricing momentum are only slightly mitigated by negative currency effects, year on year prices and volumes remain lower As raw material prices rise, pricing is adjusted upwards in Q3 vs. Q2 after raw material deflation in Q1 Performance Polymers proves premium character of businesses: simultaneous improvement in prices and volumes LANXESS -16% -11% 3% 0% -24% Chart 32 Chinese markets are on a recovery path Production growth yoy (in %) YTD September 2009 Basic Chemicals September 2009 Agrochemicals Coatings/Pigments Specialty Chemicals Synthetic Rubber Rubber products Tyres Chemical Industry Production Growth in September 2009 exceeds YTD development: 6% in Basic chemicals 22% in Coatings/Pigments 27% in Synthetic Rubber 20% in Rubber Products 27% in Tyres Goodyear: expecting industry growth in 2010, particularly value-added tyres (larger rim sizes, fuel-efficient tyres) Source: CPCIA Chart 33 16

18 Raw materials are expected to rise again as of Q3 Global raw materials index* [%] Q Q Q Q Q Q Q Q Q Q Q Q3 Q Q Q Q In Q1 2009, raw materials decreased, lag-effect helped keeping selling prices stable In Q2 2009, raw materials stabilized at very low level as selling prices came down, following raw materials price decline in Q1 In Q3 2009, raw material prices rose, sequentially selling prices were increased Price pass-through with typical time-lag * Source: LANXESS, average 2006 = 100% Chart 34 Q financial overview: sequential earnings improvement [ m] Q Q Q yoy in % Sales EBITDA pre except. margin 1, % 1, % 1, % -24.3% -25.5% Sales increased 11% vs. Q2 driven by Asian momentum (China), but remain 24% below previous year Net Income Capex* % -24.6% EBITDA sequentially improved, flexible asset and cost management deliver margin [ m] % vs. FY around 2008 level Capex under strict control Net Financial Debt Net Working Capital Employees 864 1,289 14, ,109 14, ,134 14, % -12.0% -1.3% Net debt slightly up due to acquisitions Working capital stable Continuous tight management of businesses delivers improved metrics * Net of projects financed by customers and finance lease Chart 35 17

19 9M 2009 financial overview: Successful through the economic downturn [ m] 9M M 2009 yoy in % Sales EBITDA pre except. margin Net Income Capex* Net Financial Debt Net Working Capital Employees 5, % ,289 14,797 3, % ,134 14, % -49.4% -87.9% -4.7% [ m] yoy in % -9.8% -12.0% -1.3% Financial metrics robust in recessionary environment Currency and portfolio effects mitigate negative impact from lower volumes and raw material driven selling price declines, leading to sales decrease of 28% Solid EBITDA and margin prove resilience of businesses and tight cost management Net income positive despite very low level of underlying demand Net debt still below level of FY 2008 despite acquisitions Incl. acquisitions, headcount reduced by ~200 versus FY 08 * Net of projects financed by customers and finance lease Chart 36 Cost base tightly managed [ m] 9M M 2009 yoy in % Sales 5,114 3,665-28% Cost of sales -3,910-2,884-26% SG&A % R&D % Other op. income/expense % thereof exceptionals % EBIT % Net Income % EPS % EBITDA % thereof exceptionals % EBITDA pre exceptionals % Resilient through the recession Positive currency (+3%) and portfolio (+1%) effects only mitigate severe decline in price (-10%) and volume (-22%) Costs of sales contain ~ 45 m inventory devaluation R&D kept at high PY level, deviations in other expense line items reflect cost saving efforts and lower business activity EBITDA lower than in 2008, but resilient in light of world-wide recession, inventory devaluation and destocking effects 2008 data adjusted for change in pension accounting Chart 37 18

20 Performance Polymers: year on year comparison starts to ease [ m] 9M M 2009 Sales EBIT Depr. / Amort. EBITDA EBITDA pre exceptionals Margin Capex * 2, % 84 1, % 81 Sales by BU SCP BTR TRP PBR Positive currency and portfolio effects only mitigate price and volume declines Selling prices declined on the basis of raw material indexed sales contracts (Butadiene) and stronger Asian exposure 9M volume decline mitigated by slight restocking in Q3, replacement tyres remain soft Selling price decline mitigated by lower input costs EBITDA pre and margin below previous year, also impacted by inventory devaluation in H1 of ~ 35 m 2,539 Sales bridge year on year [ m] -18% -22% +4% +2% offset 1,663 by input costs (approximate numbers) 9M 2008 Price Volume Currency Portfolio 9M 2009 * Net of finance lease Chart 38 Advanced Intermediates: nine months of evidence of resilience under difficult economic circumstances [ m] 9M M 2009 Sales EBIT Depr. / Amort. EBITDA EBITDA pre exceptionals Margin Capex * % % 23 Sales by BU Sales remain impacted by demand weakness in other industries than agro-chemicals (auto, construction) but start to improve sequentially SGO managed to keep profitability on comparable level vs BAC s exposure to agro-chemicals mitigated impact from other customer industries Very solid margins for both business units, improved versus previous year Sales bridge year on year [ m] BAC SGO -5% -14% +2% +0% offset by input costs (approximate numbers) 9M 2008 Price Volume Currency Portfolio 9M 2009 * Net of projects financed by customers Chart 39 19

21 Performance Chemicals: Diversified portfolio provides stability across the cycle [ m] 9M M 2009 Sales EBIT Depr. / Amort. EBITDA EBITDA pre exceptionals Margin Capex 1, % 46 1, % 51 Sales by BU RUC ION MPP IPG RHC LEA FCC Lower sales as stable pricing and positive currency effects only partly offset drastic volume reduction MPP, IPG and LEA continue to be the strongest contributors to sequential EBITDA improvement EBITDA pre margin holds up nicely Slightly increased capex contains investments for ION facility in India Sales bridge year on year [ m] +0% -28% +3% +0% 1,538 1,148 (approximate numbers) 9M 2008 Price Volume Currency Portfolio 9M 2009 Chart 40 Performance Polymers: volume and price increase in tandem highlights strength of businesses [ m] Sales EBIT Depr. / Amort. EBITDA EBITDA pre exceptionals Margin Capex % Q Q Q % % -2% +0% % (approximate numbers) Q Price Volume Currency Portfolio Q % 25 Sales rebound versus Q2: rise of volumes and prices in tandem Stronger than expected September due to pick up of demand for winter tyres (PBR) and some pre-buying (BTR) after announced price increases BTR with solid volumes at PY level, due to Asian demand and a strong September EBITDA & margin significantly improved - effective cost management Sales bridge quarter on quarter [ m] Sales bridge year on year [ m] % -7% +3% +0% 656 mitigated by input costs (approximate numbers) Q Price Volume Currency Portfolio Q Chart 41 20

22 Advanced Intermediates: stable performance [ m] Sales EBIT Depr. / Amort. EBITDA EBITDA pre exceptionals Margin Capex * Q Q Q % % % 6 Effect of volume decline fully offset by flexible asset and cost management Softening of agro industry translates into lower Q4 sales, while long term trend expected to remain intact SGO with positive pricing versus 2008 and some volume increases in agrochemical markets but more modest in pharma While herbicides have lost momentum, other industry segments over-compensate (automotive, coating) Sales bridge quarter on quarter [ m] Sales bridge year on year [ m] 285 Q % -2% -1% +1% 284 (approximate numbers) Price Volume Currency Portfolio Q % -12% +1% +1% offset by input costs (approximate numbers) Q Price Volume Currency Portfolio Q * Net of projects financed by customers Chart 42 Performance Chemicals: earnings above previous year [ m] Sales EBIT Depr. / Amort. EBITDA EBITDA pre exceptionals Margin Capex 385-2% Q Q Q % % % -1% +0% 425 (approximate numbers) Q Price Volume Currency Portfolio Q % 19 Sequential volumes increase with stable pricing IPG, RCH and LEA with biggest share in sequential EBITDA improvement All businesses (especially FCC) benefit from flexible asset and cost management EBITDA pre and margin above previous year Sales bridge quarter on quarter [ m] Sales bridge year on year [ m] -3% -17% +2% +0% offset by input costs (approximate numbers) Q Price Volume Currency Portfolio Q Chart 43 21

23 Strong operating cash flow [ m] Q Q Profit before Tax Operating cash flow only Depreciation & amortization slightly below previous year Gain from sale of assets -1 0 despite lower profit before tax Result from equity investments -3-7 Changes in other assets and Financial (gains) losses 8 22 liabilities due to higher Cash tax payments / refunds restructuring expenses in 2008 Changes in other assets and liabilities Inflationary raw material prices Operating Cash Flow before changes in WC lead to slight cash outflow from Changes in Working Capital working capital Operating Cash Flow Increase in financial losses due Investing Cash Flow to financing of new bonds thereof Capex `09 investing cash flow contains Financing Cash Flow investment in near cash assets Cash flow tightly managed despite inflationary raw material pricing Chart 44 Exceptional items incurred in Q and Q [ m] Q Q Exceptional thereof D&A Exceptional thereof D&A Performance Polymers Advanced Intermediates Performance Chemicals Reconciliation Total Chart 45 22

24 Exceptional items incurred in 9M 2008 and 9M 2009 [ m] 9M M 2009 Exceptional thereof D&A Exceptional thereof D&A Performance Polymers Advanced Intermediates Performance Chemicals Reconciliation Total Chart 46 Serving global markets with world-wide rubber manufacturing network Butyl Rubber Zwijndrecht, Belgium Sarnia, Canada Singapore (planned) Performance Butadiene Rubbers Port Jerome, France Dormagen, Germany Orange TX, USA Technical Rubber Products La Wantzenau, France Dormagen, Leverkusen and Marl, Germany Orange TX, USA Cabo, Brazil Duque de Caxias, Brazil Triunfo, Brazil Petroflex Cabo, Brazil Duque de Caxias, Brazil Triunfo, Brazil Production site R&D centre Chart 47 23

25 LANXESS and Petroflex team up for a real global BR / S-SBR supplier LANXESS Sinopec Goodyear Michelin BSFS Korea Kumho Petrochina Sibur Group Polimeri Petroflex Efremov Ube Industries LG Daesan India Petrochem. JSR Corporation Top 15 BR / S-SBR producers 2007* LANXESS improves its market position Status as largest merchant market world wide supplier is reinforced * capacity in kt; source: IISRP (International institute of synthetic rubber producers, Inc) Chart 48 LANXESS benefits from Petroflex additional emulsion rubber assets Top 15 NBR / E-SBR producers 2007* Korea Kumho Goodyear Zeon Corp Petroflex ISP Elastomers Petrochina Polimeri Dwory LANXESS Sibur Group Shen Hua Chemical JSR Corporation LG Daesan Carom/Balkan petroleum Lion Copolymer LANXESS improves its market position Emulsion rubbers can be produced in the same lines Many of the market players combine NBR and E-SBR in their portfolio * capacity in kt; source: IISRP (International institute of synthetic rubber producers, Inc) Chart 49 24

26 Is LANXESS a swing producer? Tyre manufacturers produce insufficient synthetic rubber for their captive use Rubber producing capabilities of selected tyre manufacturers: Importance in LANXESS portfoilio major major minor major major Michelin Goodyear Bridgestone Continental Pirelli Hankook BTR none none none none none none PBR 1 little 2 none capable none none none S-SBR capable capable capable none none none E-SBR little capable capable none none none NBR none none none none none none LANXESS is not a swing producer 1 Nd-PBR 2 Know how present, licensing to others Chart 50 Does natural rubber cannibalize synthetic rubber? Risk of substitution Low substitution risk High substitution risk BTR PBR 1 S-SBR E-SBR NBR EPDM Overall, very limited substitution possibility 1 Nd-PBR Chart 51 25

27 Similar tyre labelings are being proposed in several countries Proposed tyre labels Europe U.S. Japan For fuel efficient tyres For fuel efficient tyres Chart 52 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 53 26

28 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 27