Ladies and gentlemen,

I would also like to welcome you to today’s conference call.

Let me tell you straight away how we performed in the third quarter:

We proved once again that we are actively addressing and successfully managing the challenges of the economic crisis. Our key data showed a further improvement compared with the preceding quarter.

With EBITDA pre exceptionals of EUR 143 million for the third quarter, we exceeded our forecast of achieving earnings around the level of the second quarter figure of EUR 112 million. Earnings turned out higher than expected because we rapidly implemented our global package of measures to overcome the crisis and also because the economy began to recover, particularly in China.
This operating result once again provides compelling evidence of the economic strength we have achieved over the past five years.

In view of the expected developments in the fourth quarter, which I will talk about in a moment, we can now give you an earnings forecast for the full year 2009, as previously promised. We expect to achieve EBITDA pre exceptionals of between EUR 400 and EUR 420 million.

Ladies and gentlemen,
Third-quarter sales fell by 24 percent year on year, while EBITDA pre exceptionals was down by 25 percent and net income by 59 percent. Since in our view a year-on-year comparison is less meaningful because of the global crisis, I will talk about our third-quarter performance in relation to the preceding three-month period, as I did in August.

You will find a full commentary on our figures in the interim report for the third quarter of 2009, which was posted on the Internet this morning.

First let’s take a look at our key data for the reporting period: 
 

• Sales improved by eleven percent compared with the second quarter, to EUR 1.37 billion. We achieved growth in all regions and in the Performance Polymers and Performance Chemicals segments. In our rubber business we experienced pull-forward effects due to the price increases we have announced for the fourth quarter. Sales of the Advanced  Intermediates segment came in level with the preceding three- month period.
• Our most important internal steering parameter, EBITDA pre exceptionals, amounted to EUR 143 million, up 28 percent from the second quarter. The increase was attributable to the global economic recovery – driven especially by China – and to the fact  that we implemented our global crisis management measures more quickly than planned.
• The EBITDA margin pre exceptionals was up by 1.4 percentage  points compared with the second quarter of 2009, to 10.4 percent, almost matching the prior-year level of 10.6 percent.
• Net income for the third quarter came in at EUR 23 million, an  increase of 35 percent from the previous quarter. We thus have been in the black since the second quarter, despite the crisis.
• Our financial strength also remains encouraging. Thanks to our  strict working capital management, operating cash flow between January and September 2009 improved by EUR 123 million year-on-year, to EUR 432 million.
• At the end of September, net financial liabilities stood at EUR 779 million, up eight percent from the end of June due to the financing for the acquisition of the businesses and assets of Gwalior Chemical Industries in India and Jiangsu Polyols in China. Compared with the end of 2008, net financial liabilities declined by EUR 85 million. Like the high cash flow, this is a sign of our continued strict capital discipline, which is particularly important in the crisis.

Ladies and gentlemen, I would now like to comment briefly on the regional development of our businesses:

Business development in the Asia/Pacific region, especially China, again proved a growth driver for the LANXESS Group in the third quarter. We achieved sales of EUR 338 million in this region, which was eleven percent more than in the second quarter of 2009 and in fact nearly seven percent more than in the third quarter of last year.

We generated one fourth of our total third-quarter sales in this region.

In our other regions there were also sales increases compared with the second quarter, the pace of the economic recovery being considerably slower than in Asia. 

This brings me to the trend in our segments:

Global sales of the Performance Polymers segment came in 17 percent ahead of the second quarter at EUR 656 million. This segment’s performance in the Asia/Pacific region – particularly in China – was considerably better than in the other regions. In addition, demand for winter tires was well above expectations, and customer orders were up in anticipation of price increases in the fourth quarter. 

EBITDA pre exceptionals in the Performance Polymers segment grew substantially compared with the previous quarter, from EUR 52 million to EUR 76 million.

We believe this gratifying trend proves our high-quality, innovative products are widely appreciated by the market. Our position as the world’s leading supplier of synthetic rubber was underscored by the many activities in connection with the one-hundredth anniversary of this product’s invention, culminating in a scientific symposium in Cologne in September with distinguished participants.

One example of our innovation capability is our rubber additive Nanoprene, which is used in what are known as green tires – in other words tires with reduced rolling resistance. In this connection, we welcome the initiative of the European Commission to introduce a labeling requirement for tires that would indicate their fuel efficiency. This is a further step in the right direction. A final decision by the European Parliament and the E.U. Commission is expected by the end of the year.

Sales in the Advanced Intermediates segment came in at EUR 284 million, virtually matching the second-quarter figure of EUR 285 million. In the agrochemicals business, sales were largely stable although there would normally have been a seasonal decline.  

EBITDA pre exceptionals of the Advanced Intermediates segment advanced by five percent compared with the second quarter, to EUR 40 million.

The acquisitions of the businesses and assets of Gwalior Chemical Industries in India and Jiangsu Polyols Chemical in China were successfully completed on September 1, 2009.

This brings us finally to the Performance Chemicals segment. Sales here rose by ten percent compared with the preceding three months, to EUR 425 million. EBITDA pre exceptionals climbed by 52 percent to EUR 67 million. Higher volumes in the Inorganic Pigments, Leather and RheinChemie business units contributed decisively to the sharp increase in operating income.

Ladies and gentlemen,
The regional disparities in economic trends present LANXESS, like other companies, with major challenges. The post-crisis period has already begun in the growth markets of Asia, including particularly China and India. But the situation here in Germany, for example, is very different. Here the economy is recovering only slowly, step by step. It will be some time before we reach the pre-crisis level again.

In view of this difficult situation, employees at the Leverkusen, Dormagen and Krefeld-Uerdingen sites, whose tasks will disappear in the long term as a result of the crisis, are being offered the option of taking on new challenges. These may involve either internal or external opportunities.

In collaboration with the employee representatives, we have therefore launched a training, deployment and job management center – known by the acronym QUEST – for employees in Germany.

Ladies and gentlemen,
In addition to the successful personnel measures we already adopted as part of our “Challenge” program to offset the effects of the crisis, we have also implemented our flexible asset management program throughout the LANXESS Group. This program enables us to avoid overproduction and reduce costs for raw materials, energies, infrastructure and logistics and also avoids producing stock.

We have developed a digital operating approach for our big production plants that allows us to run computer simulations of all operating conditions worldwide and then optimize them in line with real demand. This flexible asset management across locations allows us to considerably lower the critical degree of minimum capacity utilization. 

This enables us to generate an operating profit and adhere to our proven price-before-volume strategy even with considerably reduced capacities. The average capacity utilization at our facilities in the third quarter was about 75 percent.

All of these measures are designed to achieve total cost savings of EUR 360 million by 2012. We are succeeding in implementing them more quickly than originally expected. We will thus achieve the roughly EUR 30 million in cost reductions originally targeted for 2010 by the end of this year.

Ladies and gentlemen,
In view of the economic crisis and the challenging competitive environment we continue to face as a result – combined with permanent changes in some regional markets – LANXESS will press ahead with the optimization of its global production structures.

For example, we are transferring the production of colorants from the site of the Functional Chemicals business unit at Lerma in Mexico to the Leverkusen site, thereby making the business unit’s German facilities more competitive.

The plans we already announced to relocate the global headquarters of the Butyl Rubber business unit will be realized next year. The administration of this business unit will be transferred from Fribourg, Switzerland, to Singapore. This acknowledges the increasing importance of the Asian growth market.

To better exploit market opportunities in China, we will further expand our local production network in that country. This month already, we will inaugurate a new production facility of the Leather business unit at the existing site in Wuxi in the presence of North Rhine-Westphalia state premier Jürgen Rüttgers. That site is home to the largest and most modern research and development center for leather chemicals in the Asia/Pacific region.

It is also planned to expand and optimize the production facilities of the Inorganic Pigments business unit in Jinshan, near Shanghai.

Ladies and gentlemen,
Despite the difficult economic situation, LANXESS is stepping up its R&D activities. A major area of focus in the coming year will be on the important issue of water. We Europeans take clean drinking water for granted. But in many parts of the world, clean water is a scarce resource. It is already possible to purify contaminated water with ion exchange resins from LANXESS – not only for drinking water purposes, but also to meet industrial requirements for pure or ultra-pure water.

Let me close with our forecast for the full year 2009:

Performance is again varying from one region to another in the current fourth quarter. Asia, and particularly China, will again serve as the growth engine. The markets in America and Europe are gradually recovering, but much more slowly than in China.

In other words, the development of the global economy continues to present a challenge despite the recent positive trends.

Development in the fourth quarter of 2009 is likely to be subject to the usual seasonal effects. It could also be held back by advance purchases made by customers in light of price increases we have announced. Earnings will therefore be lower than in the preceding three months.

The continuing rise in raw material costs could be a further key factor affecting net income. We intend to quickly pass on higher raw material prices to the market.

Against this background, we expect to post EBITDA pre exceptionals of between EUR 400 and 420 million for 2009 as a whole. This forecast offers proof of how well we are coping with the difficult conditions.

Ladies and gentlemen, thank you for your interest.