Lanxess continues path to recovery, heads for Asia

Leverkusen, Germany - Lanxess AG's rubber activities continued to increase prices through the last year, leading to better profitability at the company. With overall selling prices rising by 10.2 percent in this unit, sales volume declined by five percent. These two factors combined to raise earnings (EBITDA) to 14 percent of sales, from 12.8 percent a year earlier.

Announcing the company's results for the 12 months to december 2006, Matthias Zachert, CFO said, "All three business units in [the Performance Rubber] segment were able to pass on what were in some cases significant rises in raw material costs. The price rises of around 10 percent compensated for negative volume effects and some very minor exchange rate effects. The Performance Rubber segment as a whole lifted sales 5.8 percent from €1700 million to €1800 million.

The company's CEO, Axel Heitmann said, "The steadily rising demand for butyl rubber .. offers Lanxess the opportunity to expand its production capacities for this material by 25 percent, or 50 000 tonnes a year, by 2009." This is the same increase announced six months ago, which saw a 10 percent capacity increase at the company's Antwerp plant in 2006 and a 42 percent increase at the company's Sarnia (Canada) facility due on stream later this year.

ERJ estimates that after the earlier expansions, Lanxess will have capacity for around 265 kt/year of butyl rubber, split 85:15 between butyl and halobutyl. Although the capacity will be nominally on stream this year, technical constraints mean the material will not be fully available until 2009, according to Lanxess.

Heitmann also said Lanxess sees a strong future for chemicals business in Asia. "We expect the Chinese chemical industry to go on growing in double digits this year and next. We also anticipate a major stimulus from India, with growth rates of around 8 percent." he said. As a response to this opportunity, said Heitmann,there is a company-wide initiative called, "Lanxess goes Asia." pat of this will be the completion of a new site for rubber chemicals in Tongling.

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Website of Lanxess AG

Speech by Heitmann On Lanxess website

Speech by Zachert On Lanxess website