Interim Report H1 2008

Business Trends by Region

Business Trends by Region

LANXESS Group sales in the EMEA region (Europe [excluding Germany], Middle East, Africa) increased 4.2% to €591 million in the second quarter of 2008. Adjusted for portfolio changes and currency effects, sales were up 18.0% year on year. The Performance Polymers and Advanced Intermediates segments, both of which posted double-digit growth rates, were the chief drivers of this growth, while business in Performance Chemicals expanded by a substantial single-digit percentage. Business in Western Europe, notably Belgium, France and Italy, was particularly robust, followed at some distance by the Middle East, Africa and Eastern Europe. There, however, business developed especially well in Slovakia, Hungary, the Czech Republic and Poland thanks to the momentum of these countries’ economies.

Half-year sales in the region receded 1.2%, from €1,157 million to €1,143 million, but were up 12.2% on an adjusted basis. Growth drivers for the half were identical to those for the quarter.

With a share of more than 30% in total sales for both the quarter and the half, EMEA (excluding Germany) remains the largest of the LANXESS Group’s regions in terms of sales.

Sales in Germany fell 9.3% in both the second quarter and the first half, to €381 million and €754 million, respectively. Adjusted for portfolio changes, sales were level with the previous year, gaining just 0.6%. Sales in Performance Chemicals proved the largest contributor to this growth, offsetting a slight dip in sales in the Advanced Intermediates segment caused by a seasonal slowing in sales of the Saltigo business unit.

On an operational basis, i.e. adjusted for portfolio effects, sales in the region grew by a low single-digit percentage. Germany’s share of total sales dropped in both the quarter and the half.

Second-quarter sales in the Americas region increased by €40 million, or 9.3%, from €430 million to €470 million. After integrating Petroflex into the Group’s portfolio effective April 1, 2008, LANXESS significantly increased its sales in Latin America, especially Brazil. On a portfolio- and currency-adjusted basis, the Group posted a 12.3% sales increase in the Americas region. Performance Polymers was the growth engine here, with a sizable double-digit increase. Growth rates also exceeded 10% in both North America and Latin America.

Sales for the half, at €799 million, were down 4.9% from the same period of the previous year. Adjusted for portfolio changes and currency effects, the Group achieved operational sales growth of 9.3% for the half, essentially on account of the same dynamics described above for the second quarter.

The proportion of total sales attributable to the Americas region for the half year, at 24.2% versus 24.4% for the prior-year period, was effectively constant, while the region’s share of sales for the quarter edged 1.7 percentage points higher to 26.6%.

Second-quarter Group sales in the Asia-Pacific region advanced 4.2%, from €310 million to €323 million. After adjusting for shifts in currency parities as well as divested and newly integrated businesses, LANXESS increased its sales in the region by a very substantial 43%. Performance Polymers once again proved to be the principal driver of this growth, outperforming the other segments by a wide margin. LANXESS achieved strong double-digit growth rates in China, India and Japan.

For the half, Group sales in the region declined by 1.0%, from €610 million to €604 million. On an operational basis, they surged 37%, again driven by the Performance Polymers segment.

The region’s share of total sales continued to grow as in prior reporting periods, advancing 0.3 percentage points for the quarter and 0.6 percentage points for the half to 18.3% for both periods.