1 The success story continues LANXESS Media Day 2017 Matthias Zachert Michael Pontzen Cologne, September 5, 2017
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. LANXESS AG accepts no liability (either direct or indirect) for the information, estimates, target expectations, or opinions set out here and nor should readers rely on these. LANXESS AG accepts no responsibility for any errors, omissions or incorrect statements in this notice. Accordingly, no representative of LANXESS AG or of a group company or one of its bodies accepts any responsibility that could ensue directly or indirectly from the use of this document. 2
Agenda A changing world The LANXESS success story Chapter 1 Repair: what we have achieved to date Chapter 2 Improve: what we are working on Chapter 3 Accelerate: what we intend to achieve by 2021 3
The world is changing... Protectionism Instability Price volatility 4
...and change is accelerating. New competitors Regulatory pressure Digitalization 5
Dramatic changes in the chemical market Consolidation Globalization New challenges and opportunities for medium-sized companies 6
Agenda A changing world The LANXESS success story Chapter 1 Repair: what we have achieved to date Chapter 2 Improve: what we are working on Chapter 3 Accelerate: what we intend to achieve by 2021 7
Shaping the new LANXESS: a story with three chapters 3 ACCELERATE Build on strengths 2 IMPROVE Promote growth 1 REPAIR Realignment 2014 2016 2017 2021 8
Agenda A changing world The LANXESS success story Chapter 1 Repair: what we have achieved to date Chapter 2 Improve: what we are working on Chapter 3 Accelerate: what we intend to achieve by 2021 9
Realignment swiftly implemented REPAIR 3 1 Competitiveness of the business and administrative structure 2 Operational competitiveness Rollout of best practices 150 million in savings Competitiveness of the business portfolio and alliances Founding of ARLANXEO, Chemtura acquisition Lean administration 150 million in savings Performance and team culture 10
New strategic course defined REPAIR Quality instead of quantity: concentrate on high-margin specialty chemicals Focus on profitable mid-sized markets Expand integrated value chains Strong presence in the growth regions North America and Asia Strengthen the integrated sites in Germany 11
EBITA EBITDA Growth CAGR 2011-15 Initial value-adding portfolio measures REPAIR LPT IPG ADD SGO MPP AII HPM ROCE ROCE 2015 LEA 12
Key financial figures substantially improved REPAIR EBITDA EBITDA margin Net financial debt* +35% +4 pp -84% 995 12.9% 1731 735 8.9% 269 2013 2016 2013 2016 2013 2016 All EBITDA data pre exceptionals EBITDA and net debt in million * After deduction of time deposits and securities available for sale 13
Starting situation: targeted strategies to enhance the business units value EBITDA CAGR REPAIR Strong portfolio with further improvement potential Strategic paths Keep financial profile but gain size LPT IPG ADD Catch-up on return and grow SGO MPP AII Turnaround HPM ROCE 2015 LEA All EBITDA data pre exceptionals 14
Restructuring and strategic realignment deliver initial positive results EBITDA CAGR REPAIR The transformation of LANXESS becomes visible EBITDA development IPG LPT ADD SGO MPP HPM AII 50% 30% LEA ROCE 2016 50% 70% 2011 2016 "New" LANXESS ARLANXEO All EBITDA data pre exceptionals 15
Continuous margin improvement with stable capacity utilization REPAIR Capacity utilization 100% 12.9% 13.1% 13.4% 12.9% EBITDA margin 14% Improved margins through higher earnings contributions from the new LANXESS 90% 80% 9.2% 8.9% 10.1% 11.2% 12% 10% 8% Expected volume growth can be managed by expanding capacity 70% 6% 60% 4% 2% 50% 2009 2010 2011 2012 2013 2014 2015 2016 Potential for higher capacity utilization and further margin improvement 0% All EBITDA data pre exceptionals 16
We have accomplished a lot, but still have room for improvement REPAIR Industry balance and market setup need further improvement Leadership positions in many business units achieved but substantial catch-up still to be done Margin and profitability level has visibly improved but still with further potential 17
Agenda A changing world The LANXESS success story Chapter 1 Repair: what we have achieved to date Chapter 2 Improve: what we are working on Chapter 3 Accelerate: what we intend to achieve by 2021 18
Strengthening the foundation our priorities IMPROVE Chemtura integration Organic growth Portfolio management Digitalization A milestone on the growth path Strengthen our production facilities Clear criteria for profitable growth LANXESS moving into the digital age 19
100 million in synergies by 2020 IMPROVE Chemtura integration Organic growth Portfolio management Digitalization Synergies approx. 30 million in administration + + approx. 20 million in sales & marketing approx. 50 million in procurement and production 100 million 20
Synergies in detail procurement and production IMPROVE Procurement synergies Increased procurement volume (approx. EUR 2.5 billion) provides options for negotiating Harmonized supply contracts Optimized production Extending Manufacturing Excellence initiative to the new sites Implementing best practices at former Chemtura sites Backward integration, e.g. for MSA or bromine Transportation and logistics 21
Synergies in detail administration and sales IMPROVE Removal of redundant administrative structures No costs for the Chemtura Board of Directors, headquarters in Philadelphia and stock exchange listing Merging administrative locations Focus on North America Streamline sales Consolidation of the sales organization in all market regions Economies of scale through an enlarged customer base 22
Investments: Profitable organic growth by 2020 EXCELLENCE IMPROVE Chemtura integration Organic growth Portfolio management Digitalization Advanced Intermediates Specialty Additives Performance Chemicals Engineering Materials approx. 150 million 50-100 million 50-100 million 50-100 million 400 million in investments with an average ROCE of ~20% 23
Portfolio optimization based on clear criteria IMPROVE Chemtura integration Organic growth Portfolio management Digitalization Profitability Stability Market and technology leadership Sustainable value contribution 24
Harness digital potential IMPROVE Chemtura integration Organic growth Portfolio management Digitalization Digitalization of the value chain Big data analyses Digital business models Digital competences 25
Agenda A changing world The LANXESS success story Chapter 1 Repair: what we have achieved to date Chapter 2 Improve: what we are working on Chapter 3 Accelerate: what we intend to achieve by 2021 26
Diversify customer industries ACCELERATE Achieve stability through less dependence on single industries 2016 2021 Increase presence in growth industries Continue to reduce dependency on the tire industry Expand further into attractive industries, e.g. electrical/electronics, energy Establish presence in markets with opposing cycles Cars/Tires Agro Chemicals Construction Consumer Other 27
Expand regional diversification ACCELERATE Achieve stability through less dependence on single regions 2016 2021 Stronger presence in the growth markets, e.g. North America and Asia Regional diversification at Group level at business unit level Asia EMEA North America Latin America 28
Portfolio upgrade to strengthen market positions ACCELERATE Leading in all our markets Market leader Leading position Relevant player 2016 2021 29
Our targets: higher profitability and stability 2013 2016 2021 ACCELERATE EBITDA margin 8.9% 12.9% 14-18% Margin volatility HIGH MEDIUM LOW Sustainable volume growth above GDP 30
Strong outlook: LANXESS in 2021 ACCELERATE Business Diversified regionally and in customer industries and thus less susceptible to cyclical trends Market and technology leadership Ready for further growth Financials Financial stability Investment grade rating Culture Enthusiasm in everything we do Team culture: the basis for long-term success 31
Fit for the future Strategic realignment successfully completed Well-positioned in times of change Clear growth targets defined 32
To be continued
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