Köln - Specialty chemicals group LANXESS AG is satisfied with its business development this year and sees itself in a strong position for the coming years. “I’m very confident for the foreseeable future despite the increasingly difficult market environment,“ commented LANXESS Board of Management Chairman Axel C. Heitmann at the Group’s third International Media Day in Cologne. He said the third quarter of 2008 is going well. The Group again confirms its earnings forecast and the targets set for fiscal 2008. For the full year LANXESS continues to expect further operational sales growth and EBITDA pre exceptionals of more than EUR 700 million.

At the Media Day, Heitmann presented LANXESS’s strategy for countering the effects of the global economic turbulence. The three pillars of this strategy are to supplement organic growth by investing in existing business units; make selective acquisitions to progressively broaden and strengthen the Group’s portfolio; and research and develop innovative products.

The Group is placing special focus on speeding the pace of its expansion in the BRIC countries. Along with the successful growth projects in Brazil, India and China, LANXESS is therefore now preparing to enter the Russian market. In the New Year the Group will launch its own company in Russia. The first step will be to open a branch in Moscow to build a platform for further involvement in the CIS countries. The Russian chemicals market is growing at a rate in excess of 5 percent a year. “We plan to derive significant benefit from this expansion,” said Heitmann. “We have identified substantial development potential for LANXESS and will systematically enlarge our market shares. We consider annual sales growth of up to 20 percent a realistic prospect.“

LANXESS anticipates a particularly positive medium-term trend in key customer markets such as the automotive industry (+9% annually), the electrical and electronics sector (+5%) and the construction industry (+8%). Currently in especially high demand in Russia are LANXESS’s high-tech rubbers, rubber chemicals and ion exchange resins. The new company, based in Moscow, begins operating on January 1, 2009.

Capacity expansion in Antwerp

LANXESS is also strengthening its site in Antwerp. Some EUR 35 million is to be invested to increase the capacity of the caprolactam production facility of the Semi-Crystalline Products business unit by 10 percent by 2010. Thus the company is further expanding its polyamide business. At present the plant supplies approximately 200,000 tons/year of this key starting material for high-tech plastics. Says Heitmann: “This investment will further reinforce our leading position in the global plastics business. It also represents a clear commitment to our Antwerp site.”

Investments totaling EUR 1 billion by 2009

The Group will have invested a total of EUR 1 billion worldwide by 2009, with over half of this amount spent at the main German sites. “These capital expenditures are helping to ensure our global competitiveness,” said Heitmann. LANXESS has already earmarked some EUR 250 million for further investment projects in Germany in the coming years. The fact that the company is profitably aligned in Germany, too, again underscores the country’s strategic significance for the global competitiveness of the entire Group.

Over 100 projects in the research pipeline

The third pillar of the growth strategy is to focus on innovations in terms of both new products and process technology. LANXESS currently has over 100 projects in its research pipeline that are expected to have a sales potential of around EUR 700 million by 2011. In addition to strengthening traditional business areas, LANXESS is also pressing ahead with the development of new, innovative products such for high-performance tires that have better wear resistance while at the same time reducing fuel consumption and cutting emissions by all types of vehicle. The increasing global trend toward mobility – driven by the Asian countries – will significantly boost demand for these products in the next few years and thus open up considerable growth potential for LANXESS.

Strong backbone based on long-term financing

The operational success of the LANXESS Group is based on sound financing. During the Media Day, CFO Matthias Zachert emphasized that LANXESS was not directly affected by the current crisis on the financial markets. “We have renegotiated our credit facilities over the past few years on favorable terms, most recently in fall 2007, thereby safeguarding the Group’s long-term liquidity through 2014,” he said.