Lanxess AG. Exhibit 1 FY Leverage and coverage metrics

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1 CREDIT OPINION Lanxess AG Update to Discussion of Key Credit Factors Update Summary RATINGS Lanxess AG Domicile Koeln, Germany Long Term Rating 3 Type LT Issuer Rating - Fgn Curr Outlook Stable Please see the ratings section at the end of this report for more information. The ratings and outlook shown reflect information as of the publication date. Contacts Francois Lauras VP-Sr Credit Officer francois.lauras@moodys.com Anke Richter Associate Managing Director anke.richter@moodys.com The 3 rating reflects our expectation that the 2.4 billion acquisition of Chemtura will help further improve the group s underlying operating profitability and cash flow generation, which already benefited from material cost savings achieved in the past three years through a comprehensive restructuring programme. Following the establishment of the Arlanxeo joint venture with Saudi Aramco, which helped reduce Lanxess s exposure to volatile synthetic rubber markets, the Chemtura acquisition will expand its specialty chemicals portfolio and should enhance the resilience and quality of its earnings. Near-term, the deal, which was predominantly funded with cash and senior debt, leads to a marked increase in leverage. According to our estimate based on the proportionate accounting of Arlanxeo, net debt to EBITDA will be around 3.3x and retained cash flow (RCF) to net debt in the low twenties at yearend However, Lanxess s future results will benefit from the incremental profit contribution from Chemtura, augmented by merger synergies. We therefore expect Lanxess to generate substantial free cash flow from 2018 onwards, which should enable it to reduce total debt to EBITDA below 3x and rebuild headroom to potentially pursue external growth opportunities, as it seeks to further expand and strengthen its business portfolio. Exhibit 1 FY-2018 Leverage and coverage metrics Total Debt/EBITDA Net Debt/EBITDA RCF/Total Debt RCF/Net Debt 50% 6x 5x 40% 4x 30% 3x 20% 2x 10% 1x 0% 0x * Moody's estimate based on proportional consolidation of Arlanxeo Source: Moody's Investors Service; company's filings PC* 2017F* 2018F*

2 Credit Strengths» Savings from ongoing restructuring programme and Chemtura merger synergies to underpin future operating profitability» Portfolio realignment including Chemtura acquisition to enhance business risk profile and future quality of earnings and cash flow» Positive free cash flow after capex and dividend (FCF) to help reduce leverage post Chemtura acquisition and regain headroom within current rating category» Management s strong track-record at executing restructuring and conservative financial policies Credit Challenges» Exposure to oversupplied synthetic rubber market, albeit reduced following the formation of the Arlanxeo 50:50 joint venture with Saudi Aramco» Operating margins remain at low end of investment grade-rated chemical peer group despite steady improvement of the past three years» Risks associated with integration of Chemtura acquisition and delivery of merger synergies» Increased financial leverage post Chemtura acquisition exacerbated by transaction related and synergy implementation costs weighing on EBITDA generation Rating Outlook The stable outlook reflects our expectation that the successful integration of Chemtura will allow Lanxess to consolidate its financial metrics during 2018 and regain headroom within the current rating category for further potential external growth activity. Factors that Could Lead to an Upgrade» the successful integration of Chemtura in parallel with the completion of ongoing restructuring programmes resulting in some material improvement in Lanxess s business risk profile and operating profitability evidenced by its EBITDA margin rising sustainably into the mid-teens together with» permanent strengthening in financial metrics including RCF to total debt in the mid-20s (based on the proportionate consolidation of Arlanxeo) Factors that Could Lead to a Downgrade» failure to sustain the ongoing recovery in operating profitability and/or another large debt funded acquisition leading to» some permanent deterioration in financial metrics (leaving aside further potential near-term volatility in pension adjustment), including total debt to EBITDA rising towards 4x and retained cash flow (RCF) to net debt falling below 20% based on the proportionate consolidation of Arlanxeo This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on for the most updated credit rating action information and rating history. 2

3 Key Indicators Exhibit 2 12/31/ PC* 12/31/ FC 12/31/ 12/31/ 12/31/ 12/31/2012 Revenues (USD Billion) $7.3 $8.5 $8.8 $10.6 $11.0 $11.7 PP&E (net) (USD Billion) $2.3 $4.0 $4.0 $4.4 $4.5 $4.4 EBITDA Margin % 13.3% 12.7% 10.5% 8.5% 8.3% 13.2% ROA - EBIT / Average Assets 5.0% 5.2% 4.4% 3.2% 2.4% 10.6% Debt / EBITDA 4.0x 3.2x 4.3x 4.8x 2.8x EBITDA / Interest Expense 7.9x 8.2x 7.0x 5.2x 7.5x Retained Cash Flow / Debt 15.9% 16.8% 21.1% 15.1% 12.5% 25.7% Retained Cash Flow / Net Debt 47.7% 46.5% 25.6% 18.4% 15.0% 33.5% *Moody's estimate as of 12/31/ based on proportional consolidation of Arlanxeo All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations. Source: Moody's Financial Metrics Profile Headquartered in Cologne, Germany, Lanxess AG is a leading European chemical company with reported sales of 7.7 billion and reported EBITDA of 945 million for the financial year ended 31 December ( 7.9 billion and 833 million, respectively, for the financial year ending 31 December ). It has a current equity market capitalisation of approximately 6.1 billion. Exhibit 3 Exhibit 4 Pro-forma New Lanxess EBITDA pre End market exposure for New Lanxess with 50% Arlanxeo vs. New Lanxess without Arlanxeo Advanced Intermediates EBITDA 326 mn EBITDA margin 19% Arlanxeo EBITDA 373 mn EBITDA margin 14% Tire Automotive Chemicals ~20% 18% Specialty Additives EBITDA 151 mn EBITDA margin 18% Performance Chemicals EBITDA 223 mn EBITDA margin 17% Source: Moody's Investors Service; company's filings ~20% ~15% Consumer Goods ~10% ~15% Agro ~15% ~20% Construction ~10% 12% 13% ~5% ~20% 26% 30% Engineering Materials EBITDA 159 mn EBITDA margin 15% ~15% Others ~10% ~15% ~10% New Lanxess with 50% Arlanxeo New Lanxess without Arlanxeo Source: Moody's Investors Service; company's filings Following recent Chemtura acquisition, starting from Q Lanxess has reorganized its reporting structure into five business segments:» Advanced Intermediates comprises businesses in the field of basic and fine chemicals. The segment includes Saltigo and a portfolio of Advanced Industrial Intermediates, into which Chemtura s organometallics business was integrated.» Specialty Additives - a newly created business segment, which pools all units that manufacture additives. In particular, it covers Additives (i.e. lubricant additives, plastic additives and phosphorous flame retardants, and bromine solutions), Rhein Chemie (i.e. colorant and rubber additives).» Performance Chemicals combines application-focused specialty chemicals used in such areas as disinfection, protection and preservation of wood, construction materials, coatings etc. It comprises of Inorganic Pigments, Leather Chemicals, Material Protection Products and Liquid Purification Technologies business units. 3

4 » Engineering Materials a newly formed integrated engineering plastics business, which includes High Performance Materials and Urethane Systems units.» Arlanxeo - comprised of Tire & Specialty Rubbers and High Performance Elastomers business units, that manufacture synthetic rubbers used in automotive engineering, tires and construction industries. It is a 50/50 joint venture with Saudi Aramco, which is currently controlled and fully consolidated by Lanxess under IFRS. Detailed Rating Considerations COMPREHENSIVE RESTRUCTURING FOLLOWED BY CHEMTURA ACQUISITION ENHANCE LANXESS S BUSINESS RISK PROFILE In response to the challenging operating environment faced in particular by its synthetic rubber business, Lanxess initiated, in May, the three-phase Let s LANXESS again realignment and efficiency programme. Phases 1 and 2 were focused on creating a more efficient organisation while enhancing the operational competitiveness of the group by rationalising its global asset base. Phase 1 was completed by year-end and the annual savings of 150 million targeted by management were realised in full in, i.e. a year earlier than originally expected. Phase 2 should generate further benefits of 150 million p.a., with a run rate of 50 million already achieved by yearend and the full run rate expected to be reached by Phase 3 had for main objective to improve the balance and competitiveness of the group s business portfolio. In particular, Lanxess was anxious to improve raw materials and market access for its rubber business by forming some partnerships and/or marketing alliances. This led to the establishment of the Arlanxeo 50:50 joint venture with Saudi Arabia's national oil company, Saudi Aramco (unrated), to which the synthetic rubber business was transferred in April. This enabled Lanxess to reduce its exposure to the global synthetic rubber market that has been recently affected by significant overcapacities. Arlanxeo should also have significant operational benefits and, in particular, address the lack of backward integration that was a constraint on the business s performance in the past. As contracts with current suppliers run out over the next few years, Arlanxeo will gradually be able to source feedstock from Saudi Aramco on competitive terms. This access to key raw materials will improve the cost position of the joint venture and the predictability of its cash flow, which has historically been affected by the volatility of feedstock costs, such as butadiene. In September, Lanxess announced a further major step in the repositioning of its portfolio with the acquisition of US based specialty chemical company, Chemtura Corporation for an enterprise value of around 2.4 billion (including net financial liabilities and pension obligations), which was equivalent to 9.4x EBITDA. Completed in April 2017, the transaction falls in line with Lanxess s strategy to expand its specialty chemicals portfolio and enhance the resilience and quality of its earnings. Chemtura, which historically generated relatively stable EBITDA margins averaging around 15% (on a Moody s adjusted basis) in the period 2011-, significantly expands the footprint of Lanxess s growing and profitable additives business. This acquisition also boosts Lanxess s presence in North America and Asia. It adds to its portfolio of industrial lubricant additives and flame retardants, creating the second and third largest player globally in those segments respectively. The combined business enjoys strong backward integration, with long-term secured access to its bromine feedstock needs, and complementary product portfolios giving rise to cross selling opportunities. As a result, the above initiatives have shifted the focus of Lanxess s core portfolio towards businesses that are characterised by a less concentrated and volatile feedstock base than the rubber business, a higher degree of vertical integration, strong technological capabilities, leading market positions, a more diversified end-market exposure and lower capital intensity. EFFICIENCY SAVINGS AND CHEMTURA SYNERGIES TO UNDERPIN FUTURE OPERATING PROFITABILITY In -15, the recovery in Lanxess s operating profitability had been constrained by cumulated cash restructuring charges of around 260 million (: 164 million/ : 96 million) incurred in connection with Phase 1 and 2 of the restructuring. By contrast, results benefited from lower cash restructuring expenses reduced to 50 million while efficiency savings reached an annual run rate of 190 million by year-end against 150 million in December. Also, the Performance Chemicals and High Performance Materials businesses posted strong growth in underlying results, largely driven by higher volumes combined with the 200 million acquisition of the 4

5 Chemours Clean and Disinfect business for the former and favourable sales mix effects for the latter. This helped offset ongoing pressure in synthetic rubber resulting from overcapacity new synthetic rubber capacities are brought on stream. In, Lanxess s EBITDA (as adjusted by Moody s) increased by 18% to 980 million. sed on the proportionate consolidation of Arlanxeo, which, in our view, better reflects Lanxess s reduced economic exposure to the rubber business following the inception of the JV, the group s EBITDA margin rose by 280 basis points (bp) to 13.3% year-on-year. This compares with a smaller gain of 220bp to 12.7% using the full consolidation method applied under IFRS. In the first half of 2017, the group reported a 25% increase in EBITDA pre exceptionals to 695 million (including the full consolidation of Arlanxeo), which was driven by higher sales volumes (+5.9%) as well as first time contributions from Chemtura consolidated from 21 April and the Clean and Disinfect specialties business acquired in August. This helped offset raw material cost inflation that were only partially mitigated by price increases, and softer conditions in the agrochemical sector. In this context, we view Lanxess s full year 2017 guidance of EBITDA pre exceptionals ranging between 1,225 1,300 million as achievable. Exhibit 5 FY-2018 EBITDA and EBITDA margin 1,250 EBITDA 15% EBITDA margin 13.3% 12.0% million 1, % 12% 10.5% 8.3% 8.5% 9% 500 6% 250 3% 0% 0 PC* 2017F* 2018F* * Moody's estimate based on proportional consolidation of Arlanxeo Source: Moody's Investors Service; company's filings However, we expect that the increase in Moody s adjusted EBITDA will be constrained by restructuring costs of 60 million related to the centralisation of Lanxess s chromium value chain, implementation costs of 50 million for the Chemtura synergies and a 60 million inventory step-up (all classified as exceptionals by Lanxess). sed on the proportionate consolidation of Arlanxeo, we estimate that Moody s adjusted EBITDA will be close to 970 million (v. our estimates of 887 million in ). Looking ahead, Lanxess s future operating profitability will be boosted by a full-year contribution from Chemtura, which generated Moody's adjusted EBITDA of 255 million on sales of around 1.5 billion in, equivalent to an EBITDA margin of approximately 17.1%. In addition, Lanxess is confident to extract cost synergies of around 100 million from the integration of Chemtura for a one-time cost of 140 million. These should be achieved in full by 2020, with 25 million in 2017 and a further 25 million in Synergies should arise from reductions in corporate/regional costs (circ. 30 million), marketing and sales (circ. 20 million) as well as production platforms and procurement optimisation. For instance, in early October, Lanxess announced the closure of the Ankerweg site in the Netherlands, with a view to consolidating all its production of base oils for industrial lubricants at its Elmira site in Canada. GROWING CASH FLOW TO HELP REBUILD HEADROOM FOR FURTHER POTENTIAL EXTERNAL GROWTH OPERATIONS In May, Lanxess successfully executed a 433 million capital increase, which helped offset the cumulative cash deficit reported in the period , as a result of heightened capital investments. In addition, despite restructuring cash outlays of around 190 million, the group generated FCF of 150 million in -15, as it cut back on capex and achieved a substantial reduction in working capital. This enabled it to lower net debt (as adjusted by Moody s) by around 560 million over the two-year period. In, Lanxess s financial position was further strengthened by the receipt of 1.2 billion in cash from Saudi Aramco in exchange for a 50% stake in the Arlanxeo joint venture. This resulted in substantial deleveraging. sed on the proportionate accounting of Arlanxeo, we 5

6 estimate that Moody's adjusted net debt to EBITDA fell to 1.4x at year-end, when the group held cash and short-term investments of around 2.5 billion. In 2017, although we expect Lanxess to be broadly FCF neutral, its leverage will rise significantly as a result of the Chemtura acquisition. The deal was predominantly funded with existing cash balances and senior debt (including two 5- and 10-year bonds of 500 million each), with the exception of a 500 million 60-year hybrid bond, which receives a 50% equity treatment under Moody s 'Hybrid Equity Credit' Rating Methodology. Exhibit 6 FY-2018 Free cash flow development 1, Funds from operations WC Capex Dividend Free cash flow million PC* F* 2018F* * Moody's estimate based on proportional consolidation of Arlanxeo Source: Moody's Investors Service; company's filings We estimate that based on the proportionate accounting of Arlanxeo, the group s total debt to EBITDA will be around 3.7x at yearend We note that this leverage measure is heightened by the fact that EBITDA will only include an eight-month contribution from Chemtura in Also, EBITDA will be further dampened by around 80 million of non-recurring costs related to the Chemtura transaction (including a 60 million inventory step up) and a 60 million charge incurred in centralising the chromium value chain and restructuring the leather chemicals activities. However, looking further ahead, we expect that Lanxess s operating profitability will benefit from the ongoing delivery of the Chemtura synergies and additional savings from the Phase 2 and leather chemicals restructurings, while the costs associated with executing these initiatives gradually reduce. While results reported under IFRS will be affected by the treatment of Arlanxeo as discontinued operations from April 2018, we expect that Lanxess s EBITDA (as adjusted by Moody s and based on the proportionate consolidation of Arlanxeo) will grow materially to over 1.2 billion in This should allow Lanxess to generate substantial FCF in excess of 300 million and reduce debt, so that it rebuilds material headroom within the 3 rating category to potentially pursue external growth opportunities, as it seeks to further expand and strengthen its core business portfolio. We estimate that in the absence of any further acquisition, RCF to total debt would be just under 30% at year-end Liquidity Analysis Lanxess maintains a solid liquidity profile. At the end of Q2 2017, it had cash and cash equivalents of 759 million and financial debt of 592 million falling due within 12 months, including a 500 million bond maturing in May While we expect Lanxess to remain FCF positive after capex and dividends in the next months, its liquidity position continues to be supported by the full availability of a 1.25 billion committed revolving credit facility maturing in May 2022 with two one-year extension options. The terms of this facility do not contain any financial covenant. 6

7 Rating Methodology and Scorecard Factors The principal methodology used in rating Lanxess is Moody's Global Chemical Industry rating methodology, which can be found at the website and was updated in December. Other methodologies and factors that may have been considered in the process of rating these issuers can also be found in the Credit Policy & Methodologies directory. Moody's Global Chemical Industry Methodology grid indicates a 1 rating for the year ended December based on our estimates reflecting the proportionate consolidation Arlanxeo. The one notch differential with the actual rating reflected the weak leverage metrics that were affected by the pre-financing of the Chemtura acquisition closed in April For the forecast period, which reflects the Chemtura acquisition, the grid indicates a 2 rating. This illustrates the headroom, which we expect Lanxess to regain within the current rating category over the next months, and may be used to accommodate further external growth activity. For illustrative purposes the chart on the last page of this publication maps the company utilising the full year historical financials as well as our projections for the next months. Please note that both historicals and projections are based on our estimates of the proportionate consolidation of the Arlanxeo joint venture. Exhibit 7 Rating Factors Lanxess AG Chemical Industry Grid [1][2] Factor 1 : Scale (20%) Moody's Month Forward View as of 10/16/2017 [3] Current as of 12/31/ Measure Score Measure Score a) Revenues (USD Billion) $7.3 $10 - $10.5 b) PP&E (net) (USD Billion) $2.3 $3.2 - $3.5 a) EBITDA Margin % 13.3% 13.5% - 14% b) ROA - EBIT / Average Assets 5.0% 8% - 8.5% Factor 2 : Business Profile (20%) a) Business Profile Factor 3 : Profitability (10%) Factor 4 : Leverage & Coverage (30%) a) Debt / EBITDA B 2.4x - 2.6x b) EBITDA / Interest Expense 7.9x 9.5x - 10x c) Retained Cash Flow / Debt 15.9% 26% - 29% Factor 5 : Financial Policy (20%) a) Financial Policy Rating: a) Indicated Rating from Grid 1 2 b) Actual Rating Assigned 3 3 [1] All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations. [2] The ratios are computed on the basis of Moody's estimates reflecting the proportionate consolidation of Arlanxeo. [3] This represents Moody's forward view; not the view of the issuer; and unless noted in the text, does not incorporate significant acquisitions and divestitures. Source: Moody's Financial Metrics 7

8 Appendix Exhibit 8 Lanxess AG peer comparison Lanxess AG Eastman Chemical Co 3 Stable 2 Stable $ million Revenue 10,637 8,773 8,519 9,527 EBITDA ,085 2,087 3,521 2,884 4,164 8,384 7,740 Total Debt Cash & Cash Equiv. Arkema Covestro AG 2 Stable 9,648 9,008 7,908 2,314 2, ,183 2,523 3,147 2 Stable 8,530 8,337 15,626 13,414 13,171 1,149 1,256 1,565 1,708 2,247 3,089 6,777 4,328 3, , , EBITDA Margin 8.5% 10% 13% 22% 24% 24% 12% 13% 15% 10% 13% 17% ROA - EBIT / Avg. Assets 3.2% 4.4% 5.2% 11% 10% 9.2% 5.9% 7.0% 7.0% 5% 8% 11.9% EBITDA / Int. Exp. 5.2x 7.0x 8.2x 9.2x 7.5x 6.9x 10.5x 10.5x 11.4x 7.6x 10.3x 20.4x Debt / EBITDA 4.3x 3.2x 4.0x 4.0x 3.3x 3.4x 2.9x 2.8x 2.6x 4.8x 2.6x 1.6x Net Debt / EBITDA 3.5x 2.6x 1.5x 3.9x 3.2x 3.3x 1.3x 2.1x 2.0x 2.2x 1.4x RCF / Debt 15% 21% 17% 19% 22% 25% 18% 21% 22% 16% 24% 48% RCF / Net Debt 18% 26% 47% 20% 23% 25% 40% 28% 28% 18% 29% 56% All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations. Source: Moody's Financial Metrics Exhibit 9 Lanxess AG historical Moody's adjusted debt breakdown million 2012 As Reported Debt 2,334 2,317 1,854 1,677 2,789 Pensions ,129 Operating Leases Hybrid Securities Moody's Adjusted Debt 280 (250) 3,409 3,277 2,910 2,655 3,948 Source: Moody's Financial Metrics Exhibit 10 Lanxess AG historical Moody's adjusted EBITDA breakdown million 2012 As Reported EBITDA 1, Pensions Operating Leases Interest Expense Discounting (13) (11) (14) (15) (12) (44) (1) Unusual Adjustments Non-Standard Adjustments (1) Moody's Adjusted EBITDA 1,203 (2) Source: Moody's Financial Metrics 8

9 Exhibit 11 Lanxess AG historical and projected Moody's adjusted financial data million 2012 FC PC* 2017F* 2018F* Revenues 9,094 8,300 8,006 7,902 7,699 6,664 8,050 8,850 EBITDA 1, ,232 EBIT Interest Expense Net Income 488 (12) INCOME STATEMENT BALANCE SHEET Cash&Cash Equivalents Total Debt ,520 2, ,409 3,277 2,910 2,655 3,948 3,711 3,609 3, (201) (46) (46) (136) (58) CASH FLOW Funds from Operations Change in Working Capital items Cash Flow from Operations Capital Expenditures (CAPEX) (707) (654) (649) (485) (488) (417) (555) (504) Dividends (72) (83) (46) (46) (55) (55) (67) (83) Free Cash Flow (FCF) (33) (183) Retained Cash Flow (RCF) RCF / Debt 26% 13% 15% 21% 17% 16% 19% 29% RCF / Net Debt 33% 15% 18% 26% 47% 48% 22% 33% -1.0% -5.6% 0.5% 5.1% 3.3% 3.4% 0.2% 11% % Change of Sales (YoY) 3.6% -8.7% -3.5% -1% -3% -16% 21% 10% EBIT Margin % 8.7% 2.2% 2.9% 4.2% 6.0% 6.2% 6.3% 8.2% EBITDA Margin % 13.2% 8.3% 8.5% 10.5% 12.7% 13.3% 12.0% 13.9% EBIT / Interest Expense 4.9x 1.1x 1.8x 2.8x 3.9x 3.6x 3.3x 5.8x EBITDA / Interest Expense 7.5x 5.2x 7.0x 8.2x 7.9x 6.2x 9.8x Debt / EBITDA 2.8x 4.8x 4.3x 3.2x 4.0x 3.7x 2.6x Net Debt / EBITDA 2.2x 4.0x 3.5x 2.6x 1.5x 1.4x 3.3x 2.3x FCF / Debt PROFITABILITY INTEREST COVERAGE LEVERAGE *Moody's estimate based on proportional consolidation of Arlanxeo All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations and represent Moody's forward view, not the view of the issuer; and unless noted in the text, does not incorporate significant acquisitions and divestitures. Source: Moody's Investors Service Ratings Exhibit 12 Category LANXESS AG Outlook Issuer Rating Senior Unsecured -Dom Curr Pref. Stock -Dom Curr Moody's Rating Stable Source: Moody's Investors Service 9

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