LANXESS Conference Presentation - Q1 / 2016 A good start to the year Investor Relations

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LANXESS Conference Presentation - Q1 / 2016 A good start to the year Investor Relations
LANXESS Conference Presentation
Q1 / 2016
A good start to the year

Investor Relations
LANXESS Conference Presentation - Q1 / 2016 A good start to the year Investor Relations
Safe harbor statement

The information included in this presentation is being provided for informational purposes only and does not
constitute an offer to sell, or a solicitation of an offer to purchase, securities of LANXESS AG. No public market
exists for the securities of LANXESS AG in the United States.

This presentation contains certain forward-looking statements, including assumptions, opinions and views of the
company or cited from third party sources. Various known and unknown risks, uncertainties and other factors
could cause the actual results, financial position, development or performance of LANXESS AG to differ materially
from the estimations expressed or implied herein. LANXESS AG does not guarantee that the assumptions
underlying such forward-looking statements are free from errors nor does it accept any responsibility for the future
accuracy of the opinions expressed in this presentation or the actual occurrence of the forecast developments.
No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, any
information, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any
errors, omissions or misstatements contained herein, and accordingly, no representative of LANXESS AG or any
of its affiliated companies or any of such person's officers, directors or employees accept any liability whatsoever
arising directly or indirectly from the use of this document.

2
LANXESS Conference Presentation - Q1 / 2016 A good start to the year Investor Relations
Agenda

       LANXESS Equity Story

       Executive summary Q1 2016 and outlook 2016

       Financial details Q1 2016

       Backup

3
LANXESS Conference Presentation - Q1 / 2016 A good start to the year Investor Relations
Growing a more resilient New LANXESS

                                        A path to transformation

                             Further business and
                                                                          New LANXESS
                             portfolio improvement
                                                                   !   Profitable & growing
                    First acquisition
                                                                   !   More resilient

            ARLANXEO operational                                   !   Less cyclical

                                                                   !   Cash generating
    Restructuring                                                  !   Integrated supply
                                                                        chains

                         Leadership excellence and performance culture

4
LANXESS Conference Presentation - Q1 / 2016 A good start to the year Investor Relations
LANXESS: Moving strategically into more resilient, less
volatile businesses

                                                  LANXESS AG
                                                                                                                    50%
                                                                                                             owned by
                                                                                                         Saudi Aramco
                                                                                                                   as of
                                                                                                          April 1, 2016*

                     Advanced                                      High                ARLANXEO
                                                Performance
                   Intermediates                               Performance           joint venture for
                                                 Chemicals
                                                                Materials            synthetic rubber

                 The New LANXESS – Effectively diversified and less
                  volatile businesses are the focus for future growth

    * Full   consolidation planned until 2019
                                                                Formerly Segment Performance Polymers
                                                                            (until 31.3.2016)
5
LANXESS Conference Presentation - Q1 / 2016 A good start to the year Investor Relations
LANXESS: A solid foundation to generate shareholder value

                   Sensible organic and external growth in
     Growth &       diversified end markets
     resilience
                   Reducing margin volatility

       Sound       Strong, solid balance sheet
     financials
                   Reduced capex profile

    Shareholder    Shareholder return back in focus
      return       Targeting an appropriate stock market
                    valuation

6
LANXESS Conference Presentation - Q1 / 2016 A good start to the year Investor Relations
Resilient and profitable businesses

                                                  The new LANXESS provides a strong foundation for growth
        Growth &
        resilience
                                      FY 2015                                New LANXESS*              ARLANXEO*   Group

                                                                Advanced      Performance    High
                                                              Intermediates    Chemicals Performance
          Sound                                                                           Materials
        financials
                                      ROCE                                       ~15%                     ~5%      8.4%

                                      EBITDA pre                    €339 m       €326 m     €115 m        €388 m   €885 m
      Shareholder                         margin                      19%          16%        10%           14%      11%
        return

    EBITDA pre and margin for HPM and ARLANXEO are unaudited figures
    * Operational EBITDA pre without reconciliation or hedging expenses
7
LANXESS Conference Presentation - Q1 / 2016 A good start to the year Investor Relations
The New LANXESS: Diversified end markets with good growth
rates

                                                                                                                          CAGR 4.0%
        Growth &                                                                                                                          Chemicals
                                                      CAGR 2.5%
        resilience                                                                                                                         Environmental technology
                                                                     Agro
                                                                                                                                           Efficiency
                                                                      Growing population
                                                                      Limited farmland
                                                                      Need for higher productivity                       CAGR 3.0%
          Sound                                                                                                                           Consumer goods
        financials                                      CAGR 3%
                                                                                                                                           Food and product safety
                                                                                                                                           Growth of middle class
                                                                     Automotive
                                                                      Mobility
                                                                      Vehicle weight reduction                            CAGR 3.5%
                                                                                                                                          Construction
      Shareholder                                                     Growth of middle class
                                                                                                                                           Urbanization
        return
                                                                                                                                           Growth of middle class
                                                                                                                                           Enhanced productivity

    Markets expressed as percentage share of total sales volume; the other ~20% is accounted for by “other” markets, which are growing at ~3%.
    Estimates of 5-year CAGR are based on internal research.
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LANXESS Conference Presentation - Q1 / 2016 A good start to the year Investor Relations
End market exposure changed visibly

                                    More balanced exposure to end markets
     Growth &
                             Tire                       ~15 %
     resilience                        ~20%
                                                                            ~20%
                                                        ~20%
                      Automotive       ~20%                                 ~15%
                                                        ~15%
       Sound           Chemicals       ~15%                                 ~15%
     financials                                         ~10%
                  Consumer Goods       ~10%
                                                                            ~20%
                            Agro       ~10%             ~15%
                     Construction      ~10%             ~10%                ~10%

    Shareholder           Others       ~15%             ~15%                ~20%
      return
                                    Old LANXESS   New LANXESS with New LANXESS
                                                   50% ARLANXEO without ARLANXEO

9
LANXESS Conference Presentation - Q1 / 2016 A good start to the year Investor Relations
Advanced Intermediates: AII and Saltigo as provider of high-
quality and custom intermediates
                                               Advanced Intermediates
      Growth &      Unique              Custom synthesis
      resilience     manufacturing
                                         Focus on agro chemicals,
                     processes            pharma and fine chemicals
                    Strong market       Driven by need of    SGO
                     positions            efficiency in
                                          agriculture
        Sound       Integrated asset
                                                                                       Broad range of
      financials     structures                                                         high quality
                                                                      ~ €1.8 bn   AII
                    Serving niche                                      Sales           intermediates
                     markets                                                           Driven by diverse
                                                                                        end markets (e.g.
                                                                                        agro, consumer,
     Shareholder                                                                        construction,
                                                                                        automotive)
       return

10
Performance Chemicals: Attractive, solutions-oriented
businesses
                                                    Performance Chemicals
      Growth &      Strong market          Water treatment, beverages                  Beverages
      resilience     positions in           Demand for drinking water                   Construction
                     niches                                                              Urbanization
                                            Increasing awareness of water
                    Low importance of       shortage
                     raw materials                                           LPT     MPP

                    Strong application     Apparel, automotive                                      Construction,
                     expertise in partly                                                               paints & coatings
        Sound                               Growing middle
                     regulated markets                         LEA                             IPG    Urbanization
      financials                             class
                                                                              ~ €2 bn
                    Less capital           Steel production                                         Growing demand
                                                                               Sales
                     intense                                                                           for environmentally
                    Close relations                                                                   friendly production
                     with customers

     Shareholder                                                               ADD
       return                               Automotive, plastics, tire
                                            Mobility and urbanization
                                            Growing demand for green solutions

11
High Performance Materials: High-end engineering know-know
for all stages of advanced component development
                                            High Performance Materials
      Growth &      One of the leading     End markets:
      resilience     providers of
                                             Automotive industry
                     engineering plastics
                                             Electric & electronics
                    Upstream integration    Construction
                     in strategic raw
        Sound        materials
      financials    Global production
                     and R&D network

                                                                       Growth drivers:
     Shareholder                                                        Vehicle weight reduction
       return                                                           Growing demand for cars
                                                                        Growth of electrical & electronics industry

12
New LANXESS:
Sound and resilient business platforms
                                                   Low margin volatility in New LANXESS’ operative segments*
         Growth &                       EBITDA [€ m] / Margin [%]
                                                                                 4%
         resilience                   1.000                                     CAGR

                                        750

           Sound
         financials
                                        500

                                        250
       Shareholder
                                                                                                               Sustainable margin
         return                                     15.5%       14.6%   14.0%          12.0%   13.4%   15.6%   corridor of 12-15%
                                           0
                                                     2010       2011    2012           2013    2014    2015

     All reference to EBITDA is EBITDA pre exceptionals
     * Excluding Reconciliation segment
13
Swift action on growth strategy has already been taken in our
Performance Chemicals segment
                                                Chemours’ Clean & Disinfect business
                                                                                                                          Significant expansion
         Growth &                                                                    BU MPP                              of high margin biocide
         resilience                        EV/EBITDA                                                                     business with attractive
                                            including                                                                      growth rates (3-6%)
                                                                                     Beverages
                                           synergies
                                               ~7.0x                        Wood                                          Access to attractive
                                                                          Protection                                        niche market in
           Sound
         financials                                                                               Clean &
                                                                                                                         veterinary disinfection
                                             EPS                          Paints &                Disinfect              with potential for top-
                                                                          Coatings                                           line synergies
                                          accretive in
                                               year 1                              Disinfection
       Shareholder                                                                                                        Chemours’ (formerly
                                                                                                          Illustrative
                                                                                                                         DuPont) business is the
         return
                                            Sales               EBITDA        Employees           Production                 only backward
                                          ~€100 m*              ~€20 m*         ~170                3 sites                 integrated player

     * Financials FY 2015 pro forma pre exceptionals; FX: 1.10 USD/EUR

14
Clear and strategic financial criteria for sensible growth

                                                     Organic investments                                                    External growth
         Growth &
         resilience                                                                             Strategic fit

                                        Focus on brownfields and
           Sound                                                                                                          Limited execution risk
                                             debottlenecking
         financials

                                                                                                                         Attractive valuation after
                                                  ROCE* accretive
                                                                                                                                  synergies
       Shareholder
         return
                                        EPS accretive immediately                                                        EPS accretive in year 1-3

     * Refers to ROCE of “New LANXESS” through the cycle
     EPS and ROCE accretion for organic investments: Once the new investment has reached its normal operating activity
15
LANXESS now has strong and sound balance sheet

                                     ~€1.2 bn cash from successful closing of ARLANXEO JV visibly strengthens
                                                                   balance sheet
         Growth &
         resilience                    € bn
                                                                     2.9

                                        Pensions and op.
           Sound                        lease obligations
         financials                                                                        1.5                     Free of
                                                                                                                     net
                                        Net financial debt
                                                                              EBITDA                EBITDA
                                                                                                                  financial
                                                                                                                     debt
                                                                     Q1 2016 LTM
       Shareholder                                Total debt /
                                                                                       April 1, 2016, pro forma

         returns                                     EBITDA                3.2x                  ~2x

                                                                                             50% of ARLANXEO

     All references to EBITDA are to EBITDA pre-exceptional items.

16
Strengthening the balance sheet and increasing EPS through
pension funding
                                                              Efficient use of proceeds improves pension funding status
          Growth &                                                                                               An additional step to reduce
          resilience                                        €2.4 bn                                  €2.4 bn
                                                                                                                  total indebtedness
                                                                                                                 Reduces volatility of
                                                                                                                  pension provisions
                                                                              +8%
                                                                             points
                                                                                                                 Increases funding status
            Sound                                                                            51%                  materially, by ~€200 m or
          financials                                43%                                                           8% points
                                                                                                                 Improves financial result
                                                                                                                  with resulting EPS
                                                                                                                  accretion of ~7 cents*
       Shareholder
                                                                                                                 Strengthens certainty of
         return                                        31.03.16                       pro forma after funding
                                                                                                                  pensions for employees
                                                                   Funded status          Pension obligation

     * Annualized impact of IFRS interest rate (31.12.2015) vs. a zero-interest deposit

17
In parallel, LANXESS maintains a clear focus on cash

                           Capex cycle comes to an end                   Cash-outs for restructuring curtailed
                   Capex                                              [€ m]
      Growth &     [€ m]
      resilience
                       696
                                                                                     ~130

        Sound                        434        ~450
      financials
                                                                                                   ~50

                                                                                                                    ~20
     Shareholder
       return
                      2012          2015       2016e          2017e           2014   2015        2016e          2017e

                           Maintenance     Growth      Realignment                      Cash outs for realignment

18
Shareholder returns driven by several factors

                               Clear dividend policy:
      Growth &      Aiming for a rising or at least stable dividend
      resilience

                         Planned share buy-back of ~€200 m
        Sound
      financials
                   Reduced risk profile from both the business and
                               financial perspectives

     Shareholder
       return        An experienced and capital market minded
                                management team

19
Agenda

        LANXESS Equity Story

        Executive summary Q1 2016 and outlook 2016

        Financial details Q1 2016

        Backup

20
Q1 2016 financial headlines

                               Good Q1 2016 performance
     [€ m]
             EBITDA pre and margin                   Net income

                        +14%                          +>100%
                               262                             53

                229

                                                    22
                11.2%          13.6%

              Q1 2015      Q1 2016               Q1 2015   Q1 2016

              High Performance Materials and Performance Chemicals
                           showed strong improvement

21
Q1 2016: A strong quarter resulting from volume growth and
cost relief
                                                               Sales and EBITDA pre Q1 2016
          Sales variances yoy                       €1,920m (€2,038 m)                    Lower selling prices mainly due to lower raw
                                                                                           material prices
                                                                                          All segments contributed with higher volumes
                   -8%               +2%            +1%             -6%
                                                                                          Some customers pre-buying due to rising raw
                    Price            Volume           FX             Total
                                                                                           material prices

          EBITDA pre                                       €262 m (€229 m)                EBITDA pre increased due to volume growth,
                                                                                           absence of one-time costs* and support from FX
                                                                                          Mitigating effect from market price pressure in
               229                                                            262          rubber and absence of prior-year raw material
                                                                                           tailwind for Advanced Intermediates
              Q1 2015       Volume       Price   Input costs     Other       Q1 2016

                                                                           Strong start to the year

     * ~€25   m total ramp-up cost in Q1 2015 for EPDM and Nd-PBR plants

22
Q1 2016 financial overview: Good set of results

      [€ m]                                          Q1 2015                     Q1 2016          yoy in %    Sales decreased due to
      Sales                                               2,038                       1,920         -5.8%      lower selling prices partly
                                                                                                               offset by higher volumes
      EBITDA pre except.                                     229                         262        14.4%
                                                                                                              EBITDA increased by ~14%
                            margin                       11.2%                       13.6%
                                                                                                               due to higher volumes and
      EPS                                                   0.24                        0.58       >100%       the absence of one-time
      EPS pre1                                              0.66                        0.67         1.5%      costs2

      Capex                                                    56                          49      -12.5%
                                                                                                              Net financial debt stable,
                                                                                                               while working capital
      [€ m]                                      31.12.2015                  31.03.2016               ∆%       increased in a normal pattern
       Net financial debt                                 1,211                       1,216          0.4%     Number of employees
       Net working capital                                1,526                       1,719         12.6%      increased due to status
                                                                                                               change of external
       ROCE                                                8.4%                        8.9%
                                                                                                               contractors to internal
       Employees                                        16,225                      16,606           2.3%      employees3
     1 Netof exceptionals, using the local tax rate applicable where the expenses were incurred
     2 Q12015 was burdened by ~€25 m ramp-up costs for new rubber plants in Asia
     3 Required by legal changes in China and South Africa
23
Q1 2016: All businesses began the year with higher volumes

        Advanced Intermediates              Performance Chemicals             High Performance Materials                 ARLANXEO

      Price   Volume Currency   Total     Price   Volume Currency   Total    Price   Volume Currency   Total    Price   Volume Currency   Total
      -8%     +5%      0%       -3%      -2%      +1%      0%       0%       -8%     +1%      0%       -7%     -14%     +1%      +1%      -11%

      Lower prices driven by            Volume increase driven by          Lower selling prices driven       Lower selling prices driven
       lower raw material costs           BUs MPP, LPT and IPG                by lower raw material costs        by lower raw materials;
      Both BUs made strong              EBITDA advanced through            Good volume growth in              pricing pressure remains
       volume contribution                improved utilization                compounds, consequently           Nice volume growth in butyl
      EBITDA pre and margin             Emerging market                     lower volumes in                   and Nd-PBR, while volumes
       strong; but last year’s raw        currencies supported                intermediates (caprolactam)        in other rubbers declined
       material tailwinds did not         EBITDA                                                                EBITDA pre rose due to
       reoccur                                                                                                   absence of one-time costs

     [€ m]           Q1’15 Q1’16        [€ m]            Q1’15 Q1’16        [€ m]           Q1’15 Q1’16        [€ m]            Q1’15 Q1’16
     Sales              478       463   Sales               533      533    Sales              292      273    Sales               723      640
     EBITDA pre          92        89   EBITDA pre           87       98    EBITDA pre          25       38    EBITDA pre           97      113
     Margin            19%       19%    Margin             16%      18%     Margin             9%      14%     Margin             13%      18%

24
Macroeconomic outlook largely unchanged – FY guidance
lifted as a result of the strong start to 2016
                                   New LANXESS                                           ARLANXEO

                                                                  High
            Advanced                 Performance
                                                              Performance
          Intermediates               Chemicals
                                                               Materials

      Segment to perform        Segment to perform      Engineering plastics      Macroeconomic
       above prior year           above prior year         with strong projected      weakness in emerging
      Highly diversified mix    Two flagship             development                markets
       of customer industries     businesses (IPG and     Growth to be driven by    Margin pressures
      Agro customer industry     ADD) to benefit from     various end                expected to increase in
       to remain soft             new capacities and       applications               the second half of the
                                  newly established       Europe and North           year, largely resulting
                                  business platforms       America expected to        from new rubber
                                                           be robust                  capacity in the market

            FY 2016 EBITDA pre expected between €900 – 950 m due to a good first quarter

25
Agenda

        LANXESS Equity Story

        Executive summary Q1 2016 and outlook 2016

        Financial details Q1 2016

        Backup

26
Q1 2016: Good results in a challenging market environment

      Q1 yoy sales variances                            Price           Volume        Currency          Total    Lower selling prices mainly due
                      Adv. Intermediates                 -8%              +5%               0%          -3%       to lower raw material prices
                                                                                                                 Higher volumes in all segments
                            Perf. Chemicals              -2%              +1%               0%          0%
                                                                                                                 Overall some customers pre-
                     High Perf. Materials                -8%              +1%               0%           -7%      buying due to currently rising
                                ARLANXEO                -14%              +1%           +1%             -11%      raw material prices

                               LANXESS                  -8%              +2%           +1%              -6%

     Q1 yoy EBITDA pre bridge [€ m]                                                                              EBITDA increased due to
                                                                                                                  higher volumes, absence of
                                                                                                                  one-time costs* and FX support
                                                                                                                 Mitigating effect from market
                      229
                      746                                                                         262             price pressures in rubber and
                                                                                                                  absence of last year’s raw
                   Q1 2015         Volume             Price       Input costs       Other        Q1 2016          material tailwinds in Advanced
                                                                                                                  Intermediates
     * ~€25   m total ramp-up costs in Q1 2015 for EPDM and Nd-PBR plants in Asia

27
Q1 2016: All regions affected by lower selling prices – Latin
America sole region with visibly lower volumes
           Q1 2016 sales by region                                    Regional development of sales
                    [%]                                                         [€ million]
                                                                                                       Operational
                                                                      2,038                           development*
        Asia/Pacific         Germany                                                        1,920
            23                  18
                                                  Asia/Pacific         495       -9%                     -10%
                                                                                             448
                                                        LatAm          213       -15%
                                                                                            180          -15%
                                                North America          342        0%                     -2%
                                                                                             341
     LatAm
       10
                                EMEA                    EMEA
                                                   (excl. Germany)     623       -3%         603          -3%
                              (excl. Germany)
                    North          31
                   America
                                                    Germany            365       -5%         348          -5%
                     18
                                                                     Q1 2015              Q1 2016

     * Currency adjusted

28
Q1 2016 showing improved margins year-on-year

      [€ m]                                               Q1 2015                         Q1 2016           yoy in %
      Sales                                            2,038 (100%)                   1,920 (100%)            -6%       Cost of sales decreased
     Cost of sales                                    -1,595        (78%)            -1,459        (76%)       9%        disproportionately to sales
                                                                                                                         mainly due to the absence of
      Selling                                            -183         (9%)              -194       (10%)      -6%
                                                                                                                         one-time costs (~€25 m ramp-
     G&A                                                   -64        (3%)                -72        (4%)    -13%        up costs in Q1’15)
     R&D                                                   -32        (2%)                -30        (2%)      6%       Selling expenses increased due
     EBIT                                                   63        (3%)               131         (7%)   >100%        to higher freight and stock
                                                                                                                         keeping costs
     Net Income                                             22        (1%)                 53        (3%)   >100%
                                                                                                                        Among others variable
     EPS                                                 0.24                           0.58                >100%
                                                                                                                         compensation weighed on
     EPS pre1                                            0.66                           0.67                   2%        overhead costs
     EBITDA                                               178         (9%)               251       (13%)      41%       Lower exceptional items lifted
      thereof exceptionals                                -51         (3%)               -11        (1%)     -78%        EBIT and net income
     EBITDA pre exceptionals                              229 (11.2%)                 262 (13.6%)      14%
                                                                                  A good first quarter

     1 Net   of exceptional items, using the local tax rate applicable where the expenses were incurred

29
Q1 2016: EBITDA increase driven by nearly all segments

      [€ m]                                                 Sales                                                       [€ m]       EBITDA pre
                                                                       HPE
                               -6%                                                                                                         +14%
                                                                                                       TSR                                         262
                2,038
                                            1,920                                                                                229
                                                                       HPM
                                                                                                                                           +16%    113
                  723                                                                                                            97
                               -11%          640
                                                                                                                                 25        +52%    38
                                                                               LPT       MPP
                  292           -7%          273                         LEA                                                     87                98
                                                                                                      IPG                                  +13%

                  533           +0%          533                                                                                 92        -3%     89
                                                                       ADD

                  478           -3%          463                       SGO                                                       -72               -76

              Q1 2015                     Q1 2016                                                      AII                      Q1 2015           Q1 2016

                            Advanced Intermediates     Performance Chemicals   High Performance Materials    ARLANXEO     Reconciliation

     Total group sales and EBITDA pre figures include reconciliation

30
Advanced Intermediates: Strong volume contributions and
proven resilience
     [€ m]                           Q1 2015          Q1 2016           ∆
     Sales                                   478           463         -3.1%   1,847         1,826       -1.1%
     EBIT                                       70          64         -8.6%       202         258      27.7%
     Depr. / Amort.                             23          25         8.7%         93           80     -14.0%
     EBITDA pre exceptionals                    92          89         -3.3%       308         339      10.1%
       Margin                            19.2%         19.2%                   16.7%        18.6%
     Capex                                      10           9     -10.0%           90           87      -3.3%

                      Q1 sales bridge yoy [€ m]                                              Q1 yoy EBITDA pre effects
                                                                                     Volume growth in both business units driven by good
                      -8%    +5%             +0%      0%
                                                                               +      demand across various end markets
                                                                                     Higher volumes lead to higher capacity utilization rates
             478                                                 463                 Lower selling prices due to lower raw material prices,
                                                                               -      tailwinds from lower raw material costs in Q1’15 did not
                                                                                      reoccur
                              (approximate numbers)

                   Price    Volume Currency Portfolio Q1 2016                        D&A increases due to write-backs at the end of 2015,
        Q1 2015
                                                                                      resulting in higher asset base

31
Performance Chemicals: A diversified business benefits from
improved utilization
     [€ m]                           Q1 2015          Q1 2016           ∆
     Sales                                   533           533         0.0%    1,989         2,085        4.8%
     EBIT                                       64          76     18.8%           156          225      44.2%
     Depr. / Amort.                             21          22         4.8%         82           88       7.3%
     EBITDA pre exceptionals                    87          98     12.6%           269          326      21.2%
       Margin                            16.3%         18.4%                   13.5%         15.6%
     Capex                                      17          16         -5.9%        71          139      95.8%

                      Q1 sales bridge yoy [€ m]                                              Q1 yoy EBITDA pre effects
                                                                                     Selling prices almost unchanged amid volatile raw
                      -2%    +1%             +0%      0%
                                                                               +
                                                                                      material prices
                                                                                     Improved profitability in BU LEA due to better utilization
             533                                                 533                 Support from currency effects, especially in emerging
                                                                                      markets

        Q1 2015    Price
                              (approximate numbers)

                            Volume Currency Portfolio Q1 2016
                                                                               -     Higher volumes leading to higher utilization
                                                                                     Slightly lower volumes in BU ADD due to a distributor
                                                                                      change

32
High Performance Materials: Major performance improvement
resulting from continuing shift to high-value-added business
      [€ m]                                   Q1 2015          Q1 2016           ∆
       Sales                                          292           273         -6.5%   4,128        3,944      -4.5%
       EBIT                                              14          27     92.9%           120       280*     >100%
       Depr. / Amort.                                    10          11     10.0%           231        227      -1.7%
       EBITDA pre exceptionals                           25          38     52.0%           392        502      28.1%
          Margin                                    8.6%        13.9%                   9.5%         12.7%
       Capex                                               4          5     25.0%           428        184     -57.0%
                                       H
                            Q1 sales bridge yoy [€ m]                                                Q1 yoy EBITDA pre effects
                                                                                              Good volume development: Product stream shifted
                            -8%       +1%             +0%      0%                              towards polyamides and compounds with resulting
                                                                                               reduced caprolactam exposure

               292                                                        273           +     Balanced capacity model starts to pay off
                                                                                              EBITDA improvement driven by downstream
                                                                                               development into compounding business with strong
                                       (approximate numbers)
                                                                                               backward integration
            Q1 2015       Price      Volume Currency Portfolio Q1 2016

     Preliminary unaudited figures

33
ARLANXEO: A well-managed quarter in a persistently
challenging market environment
      [€ m]                                   Q1 2015          Q1 2016           ∆
       Sales                                          723           640     -11.5%      4,128         3,944       -4.5%
       EBIT                                                4         57     >100%           120        280*     >100%
       Depr. / Amort.                                    57          56         -1.8%       231         227       -1.7%
       EBITDA pre exceptionals                           97         113     16.5%           392         502      28.1%
          Margin                                  13.4%         17.7%                   9.5%         12.7%
       Capex                                             20          16     -20.0%          428         184     -57.0%
                                       H
                            Q1 sales bridge yoy [€ m]                                                Q1 yoy EBITDA pre effects
                                                                                              Good volume development in butyl and Nd-PBR, while
                           -14%       +1%             +1%      0%
                                                                                        +      volumes in other rubbers declined
                                                                                              Absence of one-time costs (Q1 ‘15 ~€25 m; Asia plants)
               723                                                        640                 Support from emerging market currencies and US dollar

                                       (approximate numbers)
                                                                                        -     Lower selling prices driven by lower raw material prices
                                                                                               and margin pressures
            Q1 2015       Price      Volume Currency Portfolio Q1 2016                        Supplier force majeure unresolved; expected to weigh
                                                                                               down ARLANXEO in Q2 and Q3

     Preliminary unaudited figures

34
Q1 2016: Increase in working capital weighs on cash flow

      [€ m]                                                         Q1 2015   Q1 2016
      Profit before tax                                                34        94      Swing in changes in other assets
      Depreciation & amortization                                     115       120       and liabilities mainly driven by FX
      Gain from sale of assets                                          0         0       effects from intercompany
      Result from investments (using equity method)                     0         0
                                                                                          financing and recognition of bonus
                                                                                          schemes
      Financial (gains) losses                                         15        17
                                                                                         Changes in working capital driven
      Cash tax payments/refunds                                         -5       -42      by higher receivables (higher
      Changes in other assets and liabilities                           -6       77       sales in March ‘16 vs Dec ‘15)
      Operating cash flow before changes in WC                        153       266       and lower payables
      Changes in working capital                                      -120      -218     Investing cash flow includes cash-
      Operating cash flow                                              33        48
                                                                                          in from disposal of near cash
                                                                                          assets
      Investing cash flow                                              -61       56
                                                                                         Financing cash flow reflects early
           thereof capex                                               -56       -49      repayment of financial liabilities*
      Financing cash flow                                              -52      -137

     * Early repayment of outstanding EIB tranche in January 2016

35
Balance sheet remains solid

      [€ m]                                                                 Dec 2015                  Mar 2016                  Equity ratio remains strong
      Total assets                                                               7,219                  7,140                   Net financial debt stable
      Equity                                                                     2,323                  2,294                    despite increase in working
      Equity ratio                                                                32%                     32%                    capital; ~€1.2 bn of cash
      Net financial debt                                                         1,211                  1,216                    received on April 1, 20164
      Near cash, cash & cash equivalents                                            466                    333                  Pension provisions
      Pension provisions                                                         1,215                  1,375                    increased due to interest
                                                                                                                                 rate adjustments in
      ROCE1                                                                      8.4%                    8.9%                    Germany (from 3.0% to
      Net working capital                                                        1,526                  1,719                    2.5%)
      Net working capital/sales1                                                  19%                     22%                   Net working capital
      DIO (in days)2                                                                  84                     83                  increased, following normal
      DSO (in days)3                                                                  48                     51                  yearly pattern; lower
                                                                                                                                 payables burden additionally
     1 Based on last twelve months for EBIT pre or sales              4   On April 1, 2016, LANXESS placed 50% of its rubber business in a joint venture with Saudi
     2 Days of inventory outstanding calculated from quarterly COGS       Aramco, receiving in return ~€1.2 bn in cash
     3 Days of sales outstanding calculated from quarterly sales
36
Balance sheet solid

     [€ m]                               Dec’15        Mar’16                                        Dec’15    Mar’16
     Non-current assets                    4,180          4,106      Stockholders’ equity            2,323       2,294
      Intangible assets                      300            289      Non-current liabilities         2,936       3,067
      Property, plant & equipment          3,447          3,330       Pension & post empl. provis.   1,215       1,375
      Equity investments                       0              0       Other provisions                 271         257
      Other investments                       12             11       Other financial liabilities    1,258       1,258
      Other financial assets                  21             20       Tax liabilities                   19          19
      Deferred taxes                         361            411       Other liabilities                127         106
      Other non-current assets                39             45       Deferred taxes                    46          52

     Current assets                        3,039          3,034      Current liabilities             1,960       1,779
      Inventories                          1,349          1,339       Other provisions                 411         484
      Trade accounts receivable              956          1,082       Other financial liabilities      443         327
      Other financial & current assets       268            280       Trade accounts payable           779         702
      Near cash assets                       100              0       Tax liabilities                   85          89
      Cash and cash equivalents              366            333       Other liabilities                242         177

     Total assets                          7,219          7,140      Total equity & liabilities      7,219       7,140

      Increase in pension provisions driven by interest rate changes (mainly in Germany from 3.0% to 2.5%).
      Receivables increased due to higher business activity in March 2016 against December 2015.

37
Agenda

        LANXESS Equity Story

        Executive summary Q1 2016 and outlook 2016

        Financial details Q1 2016

        Backup

38
Backup
Housekeeping items

                                    Additional financial expectations
          Capex 2016:                               ~€450 m
          Operational D&A 2016:                     ~€450-460 m
          Reconciliation 2016:                      underlying expenses of ~-€150 m
                                                     EBITDA; additionally hedging expenses
                                                     of ~€90 m in 2016*
          Annual tax rate:                          - 2016: around 2015 level
                                                     - mid-term: 30-35% (for New LANXESS)

     *   Based on an exchange rate of 1.10 USD/EUR

40
2015: LANXESS now on solid foundation:
 Transformation ahead of plan, management teams in place

                                                                                                  Portfolio
       Business & administration                       Operations
     1                                      2                                       3         competitiveness
       structure competitiveness                     competitiveness
                                                                                                and alliances

       Restructuring of R&D and                 Site-by-site analysis of               Strategic alliances to address
        SG&A                                      production and supply chain             lack of backward integration
       ~1,000 headcount reduction                to identify and leverage               Saudi Aramco and LANXESS
       Savings realized earlier than             synergies                               enter a strategic joint venture
        originally anticipated                   Capacity adjustments                    for synthetic rubber
                                                  announced for EPDM, NBR,               Start of JV April 1st
                                                  ESBR and PBR rubbers

                                                  ~€150 m additional                    JV for synthetic rubber
         ~€150 m savings by
                                                efficiency gains by end                  business resulting in
            end of 2015
                                                          2019                            cash in of ~€1.2 bn
                                                                                                                          

41
~€150 m savings from Phase II – through process efficiencies
and asset network reconfiguration
                                         Savings from Phase II                                                              One-time items of Phase II
                                                                             ~€150 m
                                                            ~€20 m*        by end of 2019                                                                 ~€140 m
                                                                                                                                                         by end of 2019
                                             ~€20 m
                            ~€10 m                            EPDM /
           ~€100 m                                            Nd-PBR                                                       ~€100 m
                                        Capacity               global
                             Capacity adjustments             network                            ~€10 m                                       ~€55 m
             Rubber        adjustments
             ~€40 m
                                         Latin                                                   already                                      already
                              France    America
                                                                                                 realized                                     booked
                                                                                                 in 2015                                     (Q1’15)**
              New
            LANXESS
             ~€60 m

           Process                                                            Total                                         OTCs as                       Capex for
          efficiencies        Asset network reconfiguration                  savings                                       exceptional                    efficiency
                                                                                                                            charges**                     measures

     * €20 m savings from the EPDM and Nd-PBR reconfiguration already communicated in March 2015
     ** OTCs include ~€55 m already communicated and booked (Marl / Nd-PBR reconfiguration) / *** Cost base 2014 without depreciation and amortization
42
Phase I savings realized faster than anticipated

                           Faster execution of realignment program Phase I

        updated
                                      2014       2015      2016       Total

                Headcount reduction   ~425       ~475      ~100      ~1,000

        [€ m]             Cash out     ~20       ~110       ~20       ~150

        [€ m]    P&L expense (OTC)    ~110       ~40        ~0        ~150

        [€ m]        Cost reduction    ~20       ~100       ~30       ~150

                                                                   Already realized
                                                                    by end of 2015

43
Financial details on Phase II

                                 Detailed table to summarize financial impact of restructuring Phase II

                                                              2015             2016             2017             2018             2019               Total

                 [€ m]     P&L expense (OTC)                   ~60              ~30              ~10                                                 ~100

                 [€ m]          Cash-out (OTC)                 ~5               ~50              ~20              ~15                                ~90

                 [€ m]             Capital Invest                                             by 2019                                                ~140

                 [€ m]           Cost reduction               ~10               ~20              ~40              ~40              ~40               ~150

     Includes €20 m savings from the EPDM and Nd-PBR reconfiguration already communicated in March 2015 / OTCs include ~€55 m already communicated
     and booked in 2015 (Marl / Nd-PBR reconfiguration) / OTC = one-time-costs booked as exceptionals
44
The JV with Saudi Aramco generally offers several ways of
 value creation
           Near-term strategic initiatives                   Mid-term initiatives

            Horizontal consolidation

                                              Integration of value chains:
                                               Building C4 extraction units
     R&D and technology-related investments    Terminals for physical butadiene
                                               Tolling agreements
                                                   Supply of naphtha to existing suppliers
                                               Swap agreements
           Investments in Saudi Arabia             Logistics and supply chains already in place
                                                   No transportation costs due to direct procurement

             After closing: 1 to 5 years                 Time horizon 5 to 10 years

45
New strategic focus: Building a more balanced and resilient
company
      Advanced Intermediates     Performance Chemicals      High Performance Materials          ARLANXEO

      Leading market            Strong positioning in a    A leading producer of       Leading market
       positions and process      broad range of niche        engineering plastics         positions with strong
       technologies               markets                    Balanced value chain         and diversified
      Efficient and strong      Low importance of raw       with limited exposure        portfolio
       production platform        materials                   to volatile markets         Broadest synthetic
      Highly diversified end    Acting as solution                                       rubber platform with
       markets                    provider                                                 competitive advantage
                                                                                           for future development

                                 Adding functionality,       High-tech plastics for      Highly competitive JV
      Delivering chemical
                                color or processability       a wide range of end          and global #1 for
         intermediates
                                      to products                   markets                synthetic rubber

46
A lean business organization

                                           Advanced Industrial Intermediates                                      Advanced Industrial Intermediates
                    Advanced               Saltigo                                              Advanced          Saltigo
                  Intermediates                                                               Intermediates

                                            Rhein Chemie Additives                                                Rhein Chemie Additives
                                            Inorganic Pigments                                                    Inorganic Pigments
                   Performance              Leather
                                                                                               Performance        Leather
                    Chemicals               Material Protection Products
                                                                                                Chemicals         Material Protection Products
                                            Liquid Purification Technologies                                      Liquid Purification Technologies

                                           Tire & Specialty Rubbers                                High           High Performance Materials
                                           High Performance Elastomers                         Performance
                   Performance             High Performance Materials                           Materials*
                    Polymers
                                                                                                                  Tire & Specialty Rubbers
                                                                                                                  High Performance Elastomers
                                                                                               ARLANXEO*

     *Future reporting structure – ARLANXEO to be                       Sales: > €500 m   Sales: €200 m – 500 m    Sales: < €200 m
     fully consolidated for the first three years
47
New LANXESS: resilient, cash generating and well positioned in
growing markets

         Strong                  Advanced                         Performance                     High Performance
       businesses             Intermediates                         Chemicals                         Materials

                                                                                               Target margin >10%,
        Resilience       Proven level of 15-18%            Sustainable at 13-16%              resilience moving forward
     (EBITDA margin)     Margin volatility of ~2-3% pts    Margin volatility of ~2-3% pts     with transformation of
                                                                                                business

                         Attractive cash generation                                           Cash generation will improve
                                                            Considerable cash generation
                          through technology                                                    with a more balanced value
     Cash generation      leadership and efficient
                                                             based on good mix of solution
                                                                                                chain and shift to higher-
                                                             focused businesses
                          business set-up                                                       margin businesses

         Growth          Growth slightly above GDP         Growth with GDP                   Growth above GDP

                  Valuable businesses with resilience, cash generation and growth opportunities

48
Corporate Responsibility well integrated - achieving goals
sustainably
                      Climate / Environmental goals                                      Procurement initiatives
         Reduction of specific CO2 emission by 25%* until 2025      ‘Supplier Code of Conduct’ for supplier selection and
         Reduction of specific energy consumptions by 25%* until     rating
          2025                                                       ‘Together for Sustainability’ initiative for higher
         Reduction of volatile organic compounds (NMVOC)              transparency in the supply chain (implementation of a
          emissions by 25%* until 2025                                 global auditing program)

                                     Safety goals                                    Social initiatives and goals

         Xact: Global safety program to improve occupational,       Global board initiative ‘Diversity & Inclusion’: raising the
          process and plant safety (since 2011)                       proportion of women in management to 20% by 2020
         Global management system for optimization of               Leverage water know-how: support of AMREF
          transportation of (dangerous) goods                        Education initiatives with local and global commitment

                                                                         Rating Category: C+

     * Base year: 2015; for CO2: Scope 1 and Scope 2 emissions

49
ARLANXEO effects on LANXESS’ income statement from
Q2 2016 onwards
                     LANXESS to fully consolidate ARLANXEO for the first three years
     Sales
                                                      No changes:
     Cost of sales
                                                       ARLANXEO fully consolidated within LANXESS
     Selling                                            group for the first three years
     G&A                                               ARLANXEO comprises the BUs TSR and HPE
     R&D                                               No consolidation effects on margins
     EBIT / EBT / tax expenses
      ./. Non-controlling interests                   Changes in net income and EPS:
     Net Income                                        50% of ARLANXEO’s net income is attributable to
                                                        non-controlling interest of Saudi Aramco
     EPS
     EBITDA                                           No changes:
      thereof exceptionals                             No effects in EBITDA and EBITDA pre as
                                                        ARLANXEO is fully consolidated
     EBITDA pre exceptionals
                       Group net income and EPS reflect participation of Saudi Aramco

50
ARLANXEO effects on LANXESS’ statement of cash flows from
Q2 2016 onwards
                           LANXESS to fully consolidate ARLANXEO for the first three years
     Profit before tax
     Depreciation & amortization
     Gain from sale of assets
     Result from investments (using equity method)                 No changes:
     Financial (gains) losses
                                                                    Cash flow statement includes the full consolidated
     Cash tax payments/refunds
                                                                     results of ARLANXEO; comprising the 50% owed by
     Changes in other assets and liabilities                         Saudi Aramco
     Operating cash flow before changes in WC
                                                                    Capex figure includes 100% of ARLANXEO
     Changes in working capital
     Operating cash flow
     Investing cash flow
       thereof capex
                                                                   Potential changes:
     Financing cash flow                                            Dividends and similar payouts to Saudi Aramco will
       thereof payouts/dividend to non-controlling interest          be shown in financing cash flow
                                Financing cash flow potentially affected by alliance with Saudi Aramco

51
ARLANXEO effects on LANXESS’ group balance sheet
including full consolidation

     Non-current assets                                             Stockholders’ equity
      Intangible assets                                              Equity attributable to
      Property, plant & equipment                                    non-controlling interests
      Equity investments                                            Non-current liabilities
      Other investments                                              Pension & post empl. provis.       50% non-
      Other financial assets                                         Other provisions                  controlling
      Deferred taxes                                                 Other financial liabilities
      Other non-current assets                                       Tax liabilities                interest of Saudi
                                                                     Other liabilities                 Aramco in
                                                                     Deferred taxes                    ARLANXEO
     Current assets                                                 Current liabilities
      Inventories                                                    Other provisions
      Trade accounts receivable                         Cash         Other financial liabilities
      Other financial & current assets                               Trade accounts payable
      Near-cash assets                                received       Tax liabilities
      Cash and cash equivalents                     from Saudi       Other liabilities
                                                      Aramco
     Total assets                                                   Total equity & liabilities

                                    Only minor changes in balance sheet due to full consolidation

52
A well managed and conservative maturity profile

         Long term financing secured                                                         Liquidity and maturity profile as per March 2016
                                                                               [€ m]
       Diversified financing sources                                                                                                                                 Private Placements
                                                                                750
       - Bonds & Private placements                                                                                                                                     2022 – 3.50%
       - Syndicated credit facility                                             500                                                                                     2027 – 3.95%
                                                                                          Bond 2016
       - Bank facility                                                                      5.5%                           Bond 2018                                     Bond 2022
                                                                                250
                                                                                                                            4.125%                                        2.625%
       All group financing executed                                               0
        without financial covenants                                            -250
                                                                                                                                                         Syndicated
       No refinancing need in 2016                                            -500                                                                      Revolving
                                                                                                                                                           Credit
        due to cash position and                                               -750                                                                        Facility
        expected JV proceeds                                                                                                                              €1.25 bn
                                                                             -1000

                                                                             -1250
                                                                                                                                                        €150 m EIB1
                                                                             -1500
                                                                                             2016               2017         2018           2019           2020            2021+

                                                                                 Financial liabilities    Cash & cash equivalents   Near cash assets   Undrawn long-term facilities

     EIB = European Investment Bank
     1 Final maturity of EIB facility in case of utilization earliest in 2020; EIB facility currently undrawn

53
High volatility in raw material prices

                                   Global raw materials index*                                                  Sharp decline in raw
              [%]
       150                                                                                                       material prices in Q4 2014/
       140
                                                                                                                 Q1 2015 driven by a steep
                                                                                                                 drop in the price of oil
       130
                                                                                                                Raw material prices
       120
                                                                                                                 remained volatile, trending
       110                                                                                                       downwards through year
       100                                                                                                       end 2015
         90                                                                                                     Q2 2016 expected to be
         80                                                                                                      marked by progressively
                                                                                                                 higher raw material costs on
         70
                                                                                                                 average
         60

         50
                                          Q1     Q2     Q3     Q4     Q1     Q2     Q3     Q4     Q1     Q2
             2010   2011   2012   2013
                                         2014   2014   2014   2014   2015   2015   2015   2015   2016   2016

     * Source: LANXESS, average 2013 = 100%

54
Overview of exceptional items in Q1

     [€ m]                        Q1 2015                          Q1 2016

                              Excep.        thereof D&A   Excep.         thereof D&A

     Performance Polymers       46             9              0              0

     Advanced Intermediates     -1             0              0              0

     Performance Chemicals       2             0              0              0

     Reconciliation             13             0             11              0

     Total                      60             9             11              0

55
Abbreviations

                       ARLANXEO                           Performance Chemicals

      TSR   Tire & Specialty Rubbers             ADD   Rhein Chemie Additives
      HPE   High Performance Elastomers          IPG   Inorganic Pigments
                                                  LEA   Leather
                                                  MPP   Material Protection Products
                                                  LPT   Liquid Purification Technologies

              Advanced Intermediates                     High Performance Materials

      AII   Advanced Industrial Intermediates    HPM   High Performance Materials
      SGO   Saltigo

56
Upcoming events 2016

                                               Proactive capital market communication
      Annual General Meeting                                   May 20            Cologne
      Deutsche Bank   7th   Annual dbAccess Asia Conference    May 24/25         Singapore
      dbAccess German, Swiss & Austrian Conference             June 8/9          Berlin
      Exane BNPP 18th Europe CEO Conference                    June 15           Paris
      Q2 results 2016                                          August 10
      Capital Markets Event “Meeting the Management”           September 8       Cologne
      Goldman Sachs 5th German Corporate Conference            September 19-21   Munich
      Q3 results 2016                                          November 10
      Morgan Stanley Global Chemical Conference                November 14       Boston
      Deutsche Börse Eigenkapital Forum                        November 21       Frankfurt

57
Contact details Investor Relations

     Oliver Stratmann                          Ulrike Rockel

     Head of Treasury & Investor Relations     Head of Investor Relations

     Tel.     : +49-221 8885 9611              Tel.   : +49-221 8885 5458
     Fax.     : +49-221 8885 5400              Mobile : +49-175 30 50458
     Mobile   : +49-175 30 49611               Email : Ulrike.Rockel@lanxess.com
     Email    : Oliver.Stratmann@lanxess.com

     Janna Günther                             Katharina Forster
     Assistant to Oliver Stratmann             Institutional Investors / Analysts / AGM
                                               Tel.     : +49-221 8885 1035
     Tel. : +49-221 8885 9834                  Mobile : +49-151 74612789
     Fax. : +49-221 8885 4944                  Email : Katharina.Forster@lanxess.com
     Mobile : +49-151 74612615
     Email : Janna.Guenther@lanxess.com

                                               Dirk Winkels
     LANXESS IR website                        Institutional Investors / Analysts
                                               Tel.     : +49-221 8885 8007
                                               Mobile : +49-175 30 58007
                                               Email : Dirk.Winkels@lanxess.com

58
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