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Ladies and gentlemen,

A warm welcome from me as well to this year’s Annual Press Conference of LANXESS. I would now like to talk to you now about the development of our key financial data and the performance of our three operating segments last year.

It’s a situation we’re all experiencing at the moment: there are few companies that haven’t been touched by the economic downturn that began in the fourth quarter of 2008. The chemical industry started to feel the effects of the crisis at a particularly early stage.

But during the good years we experienced in the past, we worked to systematically improve our cost structure, divested poorly positioned businesses and always kept a healthy balance sheet as we charted a course of growth. That means that compared to our starting position back in 2004, we are now well prepared to face the undoubtedly difficult business environment of 2009. Our financial data for 2008 make this clear, as I will now explain in detail.

You can see from our key financial data why we were satisfied with fiscal 2008 as a whole despite the massive slump in the economy in the fourth quarter. Group sales held nearly steady year-on-year at nearly EUR 6.6 billion. Adjusted for portfolio and currency effects, sales in fact rose by 5.9 percent.

EBITDA pre exceptionals, at EUR 721 million, also matched the previous year. The EBITDA margin pre exceptionals, at 11 percent, was not only slightly above 2007, it was also right in line with the peer group average.

EBIT and net income increased sharply. EBIT rose by 49.8 percent, while net income climbed by 52.7 percent. In 2007 both these indicators had been diminished by exceptional charges connected with the divestment of Lustran Polymers.

Net financial debt rose as expected to EUR 864 million by December 31, 2008, compared to EUR 460 million at the end of 2007. The main reason for the increase was our acquisition of the Petroflex group in Brazil, which we completed at the beginning of April 2008. Despite the year-on-year increase in net debt, we continue to do extremely well in terms of the key ratios of net financial liabilities to equity (in other words, gearing) and net financial liabilities to EBITDA. For the year as a whole our gearing came to around 60 percent, while the important ratio of net financial liabilities to EBITDA was about 1.2 – even though we acquired the remaining 30 percent of the  Petroflex shares in the fourth quarter.

Despite the very good figures for 2008, LANXESS too has to contend with the change in the business environment and the future uncertainties. What we need today is the greatest possible financial headroom.  Mindful of our entrepreneurial responsibility, the Board of Management and the Supervisory Board have therefore decided to propose to the Annual Stockholders’ Meeting that the dividend for 2008 be reduced to 50 Euro cents per share.

On the one hand this dividend proposal takes into account the change in the economic situation, which makes maximum financial flexibility es¬sential. At the same time, it means we are adhering to our policy of ensuring that our shareholders benefit from last year’s positive performance.

The transformation of our shareholder structure also continued in 2008. The proportion of traditional investors again increased, as it did in previous years. In our case, such investors generally have a longer-term focus. While in 2005 this investor group accounted for 20 to 25 percent of our shareholders, by 2008 the proportion had increased to some 70 to 80 percent.

At the same time, the proportion of our stock held by hedge funds has fallen substantially to only 5 to 10 percent.

The “Other” category includes private investors and our employees, who have taken part in stock participation programs in growing numbers over the past few years.

Now let’s take a closer look at our operating performance. Our good financial data – and especially the stability of EBITDA – are the result of a strong operating performance. We benefited particularly from our high pricing power. In 2008 we consistently pursued our proven price-before-volume strategy. In other words, we took care of setting exactly the right prices for our products, even if this sometimes meant lower volumes.

By applying this principle we managed to raise prices and offset the negative sales effects of portfolio changes, lower volumes and adverse shifts in exchange rates.

This successful strategy also enabled us last year to compensate for the record energy and raw material prices we have seen over the past 12 months, with a corresponding positive effect on EBITDA pre exceptionals. The price increases of approximately 9 percent were only possible because of the strength of our product portfolio.

A glance at the income statement shows that the rigorous portfolio optimization we have carried out in recent years made a decisive contribution to our strong earnings performance. Here you can see how important it was that we didn’t rest on our laurels while the business environment was favorable, but positioned LANXESS as a streamlined and efficient market player.

The impression conveyed by our balance sheet is just as positive. Despite the acquisition of Petroflex, we still have a solid financial backbone. Here, too, stability is the key factor – stability from which our customers and suppliers are also benefiting as usual.

Petroflex is included in our annual financial statements for the first time. Accordingly, our total assets rose by a substantial 14.9 percent. We still have healthy balance sheet ratios. The growth in inventories was due to the much higher raw material costs, while the trend in trade receivables also reflects our strict cash management.

Our operating cash flow improved by 7.7 percent in 2008 to EUR 506 million, showing that LANXESS remained in a very strong position despite major economic challenges. And that figure is after a cash outflow of roughly EUR 80 million for restructuring.

The cash flow was also improved by our strict management of working capital. Our investing cash flow mainly included payments for the acquisition of Petroflex.

Ladies and gentlemen, financing is a particularly important topic in the current banking crisis. We at LANXESS have always placed great importance on a sound, long-term financing strategy. Today, LANXESS has an outstanding credit portfolio and debt maturity structure – and of course, we will continue to develop our financing strategy along sound lines.

Last year we secured long-term financing for the Petroflex acquisition on favorable terms despite the difficult environment. During fiscal 2008 we financed the acquisition via a three-year term loan, which in light of the financial crisis is testimony to the financial soundness of LANXESS.

In addition we negotiated a ten-year loan that further diversifies our debt maturity structure and gives us flexibility in a changing market environment. Thus LANXESS today has at its disposal a liquidity and credit volume of some EUR 1.7 billion, all of which remained undrawn as of the balance sheet date.

At LANXESS we have a special focus on the management of current assets, which amounted to approximately EUR 1.3 billion in 2008 – corresponding to 19.6 percent of Group sales.

The development of our inventories reflects partly the acquisition of Petroflex and partly our raw material costs, which were higher over the year as a whole than in 2007. We anticipate that the downward trend in raw material prices that began in the fourth quarter will continue in the first quarter of this year.

We considerably reduced our receivables once again in 2008. The year-end figure was down by EUR 300 million even compared to the third quarter – indicating an impressive performance by our operational management team considering the state of the economy.

Ladies and gentlemen, now let’s take a look at our three segments.

The Performance Polymers segment made a key contribution to the Group’s strong earnings, with significant growth in EBITDA pre exceptionals. Earnings of the Advanced Intermediates segment also moved higher. Only the Performance Chemicals segment posted a drop in earnings, and I’ll explain the reasons for that in a minute.

Performance Polymers, our largest segment in terms of sales, performed very strongly in 2008. A positive effect came from the first-time inclusion of the sales and earnings of Petroflex. As a result, sales of the segment rose by a substantial 22.4 percent, while EBITDA pre exceptionals was up by 9.8 percent.

Here I would like to especially mention the Performance Butadiene Rubbers business unit, which benefited particularly in the first nine months of 2008 from good business in Asia and the integration of Petroflex. For the Semi-Crystalline Products business unit in particular, the year has to be seen in two parts – a strong first nine months and a very weak fourth quarter.

The year-on-year increase in the segment’s capital expenditure requirements resulted mainly from the transfer of our nitrile butadiene rubber production to La Wantzenau in France, the integration of Petroflex and charges related to Hurricane Ike in September.

We are also satisfied with the trend in our Advanced Intermediates segment. Sales here rose by 8.8 percent, with EBITDA pre exceptionals advancing by 6.9 percent.

Our Basic Chemicals business unit received a particular boost from the continuing strong demand for crop protection products and from high volumes in Asia. Fluctuations in raw material costs, however, had a negative effect.

Stable demand for agrochemical precursors and pharmaceutical intermediates led to a good operating performance by our subsidiary Saltigo. Capital expenditure requirements for the segment rose from EUR 52 to 76 million, due mainly to customer-financed projects at Saltigo.

Finally, Performance Chemicals felt the impact of the economic crisis more distinctly than the other segments. Sales to automotive suppliers and to the leather and construction industries fell dramatically in some cases in the fourth quarter of 2008. This weighed on the full-year figures for Performance Chemicals, as volumes were down in nearly all business units.

As a result, sales came in at EUR 1.9 billion, against just under EUR 2 billion in the previous year. The main reason for the comparatively small decrease was our success in raising selling prices even in this segment. EBITDA pre exceptionals receded from EUR 285 to EUR 241 million.

Despite this trend, we continued to invest in the future potential of this segment in 2008. Capital expenditures in the Performance Chemicals segment increased to EUR 82 million, mainly on account of our investment at the site in Jhagadia, India.

Ladies and gentlemen,

As you can see from the overview of the segments, we are preparing ourselves for lasting difficult business conditions. I am, however, convinced that LANXESS is best equipped to master the upcoming challenges due to its successful transformation since the listing in 2005, due to measures now initiated and in view of its strong financial position.

Thank you very much for your attention.