LANXESS - Q1 2019 Conference Presentation - Stable performance despite weakening economy
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LANXESS – Q1 2019 Conference Presentation Stable performance despite weakening economy 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, expectations 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
Agenda
1 Resilient in challenging times
2 Q1 – a solid start to 2019
3 Back-up
3
Q1 2019: Resilience proven again
EBITDA pre [€ m] EPS pre [€]
+2% +10%
270 275 1.16 1.28
Q1 2018 Q1 2019 Q1 2018 Q1 2019
EBITDA pre margin Net financial debt [€ m]
+20bp
+21%
14.9% 15.1% 1,675
1,381
Q1 2018 Q1 2019 Q4 2018 Q1 2019
4
More diversified and resilient end market exposure
and…
End market split by sales
Others 15% 20%
Construction, E&E,
15%
Leather
20%
Agro Chemicals 10%
15% 10%
Chemicals
30%
Automotive
45%
20%
2014 2018
5
…substantially reduced dependency on volatile raw
materials
LANXESS global raw materials index* Total raw material expenses (2018)
1,3-Butadiene
200 Isobutylene
Cyclohexane
180
Toluene
160 Raffinate I
Ethylene
140
Ammonia
120 Propylene
Styrene
100
Chlorine
80 Cyclohexanon
Acrylonitrile
60
Benzene
40 4-ADPA
Aniline
20
0
LANXESS no longer dependent on
few raw materials
* Average 2013 = 100%
6
LANXESS with track record of organic growth…
Visible organic EBITDA pre growth in all segments LANXESS EBITDA pre*
[€ m] CAGR CAGR [€ m]
~4% ~8%
CAGR
~8%
Adv. Spec.
Intermed. Add.
2014 LTM 2019 2014 LTM 2019
CAGR CAGR
~2% ~23%
Perf. Eng.
Chem. Mat.
2014 Consensus 2019
2014 LTM 2019 2014 LTM 2019
Organic growth Portfolio effect
7 * LANXESS without ARLANXEO
…and EBITDA-margin in targeted corridor
Trajectory to mid-term target
[EBITDA pre margin]
18%
Ø14-18%*
14.1%
14%
12.9% 13.3%
11.2%
10.1%
10%
8.9%
6%
2013
2013 2014
2014 2015
2015 2016
2016 2017
2017 2018
2018 […] 2021 onwards
Figures until 2017 incl. ARLANXEO
8
* Group EBITDA pre margin through the cycle
Sustainability as core element of our strategy
Corporate Responsibility – Material topics and goals*
LANXESS: Leading, stable, sustainable and profitable
Climate Motivated
Safe and Business- Sustainable Valuing
Resilient protection and employees and
sustainable driven product customer
sourcing energy performing
sites innovation portfolio relations
efficiency teams
Good Corporate Governance
Permanently
Reduction of -25% Energy Keeping
increase the 20% women in
occupational consumption customer
proportion of management
accidents by and emissions loyalty at a
evaluated by 2020
>50% by 2025 until 2025** high level
suppliers
* Selection from all goals shown ** Specific emissions, base year 2015
9
Improving portfolio of businesses
Organic growth Portfolio management
Several projects of manageable size underway Acquisitions executed at reasonable prices
strengthen portfolio and add resilience
Attractive, return-improving project ROCE (~20%)
Divestments prove diligent approach to portfolio
management
10Continuous enhancement of business set-up
Restructuring Synergies
Site closures where restructuring is necessary Realization of Chemtura synergies ahead of plan
Continuous evaluation of businesses Sales synergies not included, providing further
cushion in softening environment
Solid foundation for the LANXESS platform
11Self-help measures in place to achieve goals
Self-help measures On track to reach financial goals for 2021
Debottlenecking and brownfield growth
EBITDA pre
capex (ROCE of ~20%)
Implementation of remaining €30 m
margin
(group, Ø through
14-18%
the cycle)
synergies from Chemtura until 2020
Saltigo improvement
Cash con-
Take Organometallics' margin to industry version* >60%
level (~15%)
Further portfolio alignment EBITDA pre
margin
volatility
L2-3%pts
OW
12 * Cash conversion: (EBITDA pre – capex) / EBITDA preAgenda
1 Resilient in challenging times
2 Q1 – a solid start to 2019
3 Back-up
13Q1 2019: EBITDA pre robust despite economic
headwinds
Highlights Challenges
EBITDA pre (€275 m) 2% above strong Volume decline due to softer end markets (e.g.
previous year automotive industry) and termination of low
margin contracts and site closures (ADD)
EBITDA pre margin increase to 15.1%
Further increase of freight and energy prices
€111 m* of €200 m share buy-back program
already executed
Three out of four segments with improved
performance
14 * Status 31 March 2019Q1 2019: Again evidence of resilience
1
[€ m] Q1 2018 Q1 2019 yoy in %
Stable sales: positive pricing and
Sales 1,816 1,822 0% FX effect offset by lower volumes
EBITDA pre and margin reflect
EBITDA pre 270 275 2%
successful pricing and favorable
margin 14.9% 15.1% FX, partly offset by lower volumes
and higher energy and freight costs
EPS 0.89 0.93 4%
Share buy-back supports EPS
EPS pre 2 1.16 1.28 10% increase
Higher capex resulting from
Capex 60 72 20% investments in debottleneckings
Net debt impacted by ongoing
4
share buy-back (~€111 m) and
[€ m] 2
31.12.2018 31.03.2019 Δ% IFRS 16 effect (~€130 m)
Seasonally higher working capital
Net financial debt 3 1,381 1,675 21%
Net working capital 1,455 1,636 12%
1 2018 applies to continuing operations 4 Status 31 March 2019
15 2 Net of exceptionals and amortization of intangible assets as well as attributable tax effects
3 After deduction of time deposits and securities available for saleQ1 2019: Positive price and FX mitigated by lower
volumes
Q1 yoy sales variances Price Volume FX Portfolio Total Stable sales:
Price increase and positive FX
Advanced Intermediates 0% +1% +2% 0% +4% effect offset by lower volumes in
BUs with auto exposure
Specialty Additives +1% -9% +5% +1% -3%
Performance Chemicals 0% 0% +4% 0% +3%
Engineering Materials +1% -6% +3% 0% -3%
LANXESS +1% -4% +3% 0% 0%
Q1 yoy LANXESS EBITDA pre bridge [€ m] EBITDA pre increases as lower
volumes are offset by positive FX
and pricing effects
270 275 “Other“ include IFRS 16 and FX
effects
Q1 2018 Volume Price Input costs Other Q1 2019
16Q1 2019: Advanced Intermediates very strong;
Specialty Additives again with improved margins
Advanced Intermediates Specialty Additives
Price Volume FX Portfolio Price Volume FX Portfolio
+0% +1% +2% 0% +1% -9% +5% +1%
Total +4% Total -3%
Solid volume growth with improved product mix in BU Sales decline driven by lower volumes
AII and in BU SGO despite still weak agro market Volume drop due to termination of margin-dilutive
Considerably improved EBITDA pre and margin versus tolling agreements, closure of sites and lower auto
already high previous-year level due to recovering BU demand (especially BU RCH)
SGO and strong performance in BU AII Portfolio reflects Solvay’s U.S. phosphorus additives
Rising EBITDA pre and margin driven by pricing, FX
and synergies
[€ m] Q1'18 Q1'19 [€ m] Q1'18 Q1'19
Sales 565 586 Sales 500 485
EBITDA pre 102 114 EBITDA pre 81 83
Margin 18.1% 19.5% Margin 16.2% 17.1%
17Q1 2019: Performance Chemicals stabilizing,
Engineering Materials softer due to lower auto demand
Performance Chemicals Engineering Materials
Price Volume FX Portfolio Price Volume FX Portfolio
0% 0% +4% 0% +1% -6% +3% 0%
Total +3% Total -3%
Higher sales driven by positive currency effects Sales decline resulting from lower volumes, mitigated
Price increases in BU MPP and BU LPT offset by slightly by USD tailwind and pricing
lower prices in BU IPG and BU LEA Lower volumes mainly in BU HPM due to weaker auto
demand
Improved volumes in all BUs Text
but LEA due to strikes
EBITDA pre burdened by volumes despite favorable
EBITDA pre and margin reflect good performance of BUs
pricing and FX Text
MPP and LPT and positive FX
Margin remains on good level despite end market
weakness
[€ m] Q1'18 Q1'19 [€ m] Q1'18 Q1'19
Sales 336 347 Sales 392 382
EBITDA pre 52 54 EBITDA pre 73 65
Margin 15.5% 15.6% Margin 18.6% 17.0%
18Q1 2019: Solid performance on high comparable base
1
[€ m] Q1 2018 Q1 2019 yoy in % Increase in selling expenses driven
by higher freight costs
Sales 1,816 (100%) 1,822 (100%) 0%
Reduced G&A costs due to lower
Cost of sales -1,342 (-74%) -1,351 (-74%) -1% provisions for var. compensation
Selling -199 (-11%) -216 (-12%) -9% and lower costs of the former
G&A -77 (-4%) -66 (-4%) 14% Chemtura businesses
Improved net income driven by
R&D -30 (-2%) -28 (-2%) 7%
better financial result and tax rate
EBIT 154 (8%) 139 (8%) -10%
Increased EPS pre also reflects
Net Income 81 (4%) 84 (5%) 4% share buy-back
2
EPS pre 1.16 1.28 10% Higher exceptionals due to M&A
projects, adjustment of production
EBITDA 255 (14%) 253 (14%) -1%
network and digitalization
thereof exceptionals -15 (-1%) -22 (-1%) 47%
EBITDA pre exceptionals 270 (14.9%) 275 (15.1%) 2%
Figures reflect higher resilience
1) 2018 applies to continuing operations
19 2) Net of exceptionals and amortization of intangible assets as well as attributable tax effectsProven stability of portfolio – EBITDA pre decline in
Engineering Materials offset by other segments
[€ m] Q1 2019 Sales [€ m] Q1 2019 EBITDA pre
+2%
+0%
AII SGO 270 275
1,816* 1,822*
102 114
+12%
Advanced
565 +4% 586
ADD RCH
Intermediates
81 +2% 83
Specialty 500 -3% 485
Additives IPG LEA MPP LPT
52 +4% 54
Performance 336 +3% 347
Chemicals
Engineering 392 -3% 382
HPM URE 73 -11% 65
Materials
Q1 2018 Q1 2019 -38 -41
Q1 2018 Q1 2019
Advanced Intermediates Specialty Additives Performance Chemicals Engineering Materials Reconciliation
* Total group sales including reconciliation
20Q1 2019: FX driven sales growth in Americas and Asia
offset by decline in EMEA and Germany
Q1 2019 sales by region [%] Regional development of sales [€ m]
Operational
1,816 1,822 development*
North
America LatAm
Asia/Pacific 391 +2% 399 -3%
5
22 Asia/
LatAm 89 +3% 91 -4%
Pacific
22
North America 373 +6% 396
-3%
603 -2% 591 -3%
19 EMEA
32 (excl. Germany)
EMEA Germany Germany 360 -4% 345 -5%
(excl. Germany)
Q1 '18 Q1 '19
* Currency and portfolio adjusted
21Cash flow Q1 2019: Stable operating cash flow
1
[€ m] Q1 2018 Q1 2019 Higher depreciation due to IFRS
16 effect
Profit before tax 120 118
Changes in other assets and
Depreciation & amortization 101 114 liabilities driven by lower
provisions for variable
Financial (gain) losses 17 15
compensation and utilization of
Income taxes paid -31 -39 provisions, e.g. restructuring
Changes in other assets and liabilities 27 -14 Changes in working capital
reflects normal seasonal pattern
Operating cash flow before changes in WC 234 194
Investing cash flow comprises
Changes in working capital -206 -162 investment of liquidity after
ARLANXEO divestment
Operating cash flow 28 32
Capex increase driven by
Investing cash flow -113 -239 debottlenecking investment
program
Thereof capex -60 -72
Share buy-back reflected in
Financing cash flow 11 -157 financing CF
1 2018 applies to continuing operations
22Balance Sheet: Solid!
1
[€ m] * 31.12.2018 31.03.2019 Stable total assets and equity
ratio
Total assets 8,687 8,837
Net debt impacted by ongoing
Equity (incl. non-controlling interest) 2,773 2,813 share buy-back (€111 m)3and
IFRS 16 effect (~€130 m)
Equity ratio 32% 32%
Cash proceeds from sale of 50%
share in ARLANXEO partly
Net financial debt 1,381 1,675
included in treasury financial
(including cash and near cash assets)
assets
Near cash, cash & cash equivalents 797 434 Higher pension provisions due to
Pension provisions 1,083 1,110 declining underlying interest rate
in Germany
Net working capital 1,455 1,636 Seasonal increase in net working
capital
1
DSI (in days) 69 69
2
DSO (in days) 46 48
1 Days of sales in inventory calculated from quarterly sales
23 2 Days of sales outstanding calculated from quarterly sales
3 Status 31 March 2019Stable and solid balance sheet
[€
[€ m]
m] Dec 2018 Mar 2019 Dec 2018 Mar 2019
Non-current assets 4,786 4,977 Stockholders' equity 2,773 2,813
Intangible assets 1,764 1,786 attrib. to non-contr. interests -7 -8
Property, plant & equipment 2,577 2,717 Non-current liabilities 4,395 4,546
Equity investments 0 0 Pension & post empl. provis. 1,083 1,110
Other investments 2 2 Other provisions 337 351
Other financial assets 25 25 Other financial liabilities 2,686 2,783
Tax receivables 14 14 Tax liabilities 117 129
Other non-current assets 404 433 Other liabilities 83 79
Current assets 3,901 3,860 Deferred taxes 89 94
Inventories 1,347 1,386 Current liabilities 1,519 1,478
Trade account receivables 903 975 Other provisions 465 479
Other current financial assets 598 789 Other financial liabilities 59 78
Other current assets 256 276 Trade accounts payable 795 725
Near cash assets 0 0 Tax liabilities 44 48
Cash and cash equivalents 797 434 Other liabilities 156 148
Total assets 8,687 8,837 Total equity & liabilities 8,687 8,837
IFRS 16 effect of ~€130 m impacts PP&E and other financial liabilities
24FY 2019 EBITDA pre guidance between
€1,000 m and €1,050 m
General trading environment softer, but not deteriorating
Current view Auto: Expected to remain weak, especially in Asia
on economy Agro: Recovery not yet visible
China: No impulse from governmental stimuli yet
FY 2019 EBITDA pre expected
LANXESS
between €1,000 m and €1,050 m
FY 2019
25Agenda
1 Resilient in challenging times
2 Q1 – a solid start to 2019
3 Back-up
26Housekeeping items
LANXESS financial expectations
Capex 2019: ~€500 m
Operational D&A 2019: ~€450 m
Reconciliation 2019: ~€150 m - €160 m including remnant costs
Tax rate: Around 30%
Exceptionals 2019: €30 m - €60 m based on current initiatives
FX sensitivity: one cent change of USD/EUR resulting in
~€7 m EBITDA pre impact before hedging
IFRS 16 effects 2019:
Reclassification of ~€35 m from operating result to depreciation and interest expense (low single-digit € millions)
leading to EBITDA pre improvement
Rise in fair value of leasing liabilities by ~€130 m burdening net debt
27FY 2018: Improved results in three segments drive
performance in tougher environment
EBITDA pre
Strong performance despite
Advanced Agro weakness
335 359 +7%
Intermediates Organometallics not being fixed yet
2017 2018
Substantial increase despite
Specialty 343 Synergies not yet fully realized
+28%
Additives 267
Weakness in BU RCH
2017 2018
Very tough chrome ore value chain
Performance Difficult market in relevant construction applications
252 -26%
Chemicals 187
2017 2018
Significant development despite
Engineering 267 Softening demand in auto industry
219 +22%
Materials Raw material price headwind in BU URE (TDI / MDI)
2017 2018
28EBITDA pre and margin continuously improve
[€ m] EBITDA pre and margin development first quarter* Q1 EBITDA pre and margin
continue to grow
Improvement - even in more
20.0% 300 challenging environment -
reflects increasing resilience of
250
15.0%
LANXESS‘ business setup
200 Q1 2017 margin development
held back by lagging raw
10.0% 150 material price pass-through
100 Significant increase in Q1 2018
5.0% due to acquisition of Chemtura
50 and synergies
0.0% 0
Q1 13 Q1 14 Q1 15 Q1 16 Q1 17 Q1 18 Q1 19
EBITDA pre EBITDA pre Margin
* LANXESS without ARLANXEO, figures 2013 – 2016 indicative / unaudited
29LANXESS EBITDA pre increases versus strong prior
year despite challenging environment
EBITDA pre Q1 2018 vs. Q1 2019 [€ m]
2%
Peer A
2%
Peer B -2%
Peer C -3%
Peer D -3%
Peer F -11%
Peer E -12%
Peer G -31%
-31%
Peer H -58%
30New Board member responsible for additives business
Anno Borkowsky
Responsibility for all businesses in the Specialty Additives segment
New position underpins importance of additives business at LANXESS
Start on June 1, 2019
Roughly 30 years of experience in the chemical industry
− Since 1990: working at Bayer / LANXESS
− 2004-2017: Head of RheinChemie (additives) business unit
− 2017-2019 Head of Additives business unit
31Reorganization of Specialty Additives segment
Advanced Specialty Performance Engineering
Intermediates Additives Chemicals Materials
Advanced Industrial Polymer Additives (new) Material Protection Products High Performance Materials
Intermediates − Flame retardants /
other plastics additives Inorganic Pigments Urethane Systems
Saltigo − Head of BU: Karsten Job Leather
Lubricant Additives Liquid Purification
Business (new) Technologies
− Lubricants / lubricant additives
− Head of BU: Martin Saewe
Rhein Chemie
− Rubber additives / colorants
− Head of BU: Philipp Junge
32Advanced Intermediates: Solid backbone with focus
on organic growth
AII SGO
Market positions1 TOP 3 #1
Expected growth ~3-4% Recovery in 2019
Development
Rather organic Organic & External
focus
Invest €100 m into Best prepared for agro
debottleneckings recovery
Ramp up profitability of Expand fine chemicals
Growth drivers Organometallics to peer business
level (around 15%)
1) Position in global market (LANXESS internal market analysis)
33
Growth assumption on existing asset baseSpecialty Additives: Leading additives platform with
broad expansion opportunities
ADD RCH
Market positions1 TOP 3 #1
Expected growth ~4% ~3%
Development
Organic & External Organic & External
focus
Generate synergies until Use unique global scale
2020 to penetrate market
Leverage position in Leverage innovations
Growth drivers dynamic markets
Streamline product
Push product innovations portfolio
(next generation FR) and
synthetic base lubricants
1) Position in global market (LANXESS internal market analysis)
34
Growth assumption on existing asset basePerformance Chemicals: Expect structural changes!
IPG LEA MPP LPT
Market positions1 #1 TOP 2 TOP 3 TOP 3
Expected growth ~ 2% 1 - 2% 3% 4 - 10%
Development
Organic Restructuring Organic & external Organic & External
focus
Benefit from industry Trimmed chrome Expand and enrich Option to build-up
consolidation value chain regulatory production footprint
organization to (new assets) in North
Further penetrate and Potential partnerships penetrate global America or China
Growth drivers develop North markets
American market Further develop
Benefit from high-value market
disinfection trends applications
1) Position in global market (LANXESS internal market analysis)
35
Growth assumption on existing asset baseEngineering Materials: Leading players with clear
strategy for market independent growth
HPM URE
Market positions1 # 2 Europe #1
Expected growth ~5% ~3%
Development
Organic Organic & external
focus
Lightweight trend and Expand market share in
e-mobility Europe and Asia
Capital light compounding Leverage further product
Growth drivers investments innovations (esp. on
low-free isocyanate
Continuous consumer products)
product innovation in E&E
Benefit from automation
trends
1) Position in global market (LANXESS internal market analysis)
36
Growth assumption on existing asset baseLANXESS delivers on organic growth –
upcoming capacity expansions
Organic investment program well on track Capex
BU AII: Expansion of hexandiol production, Krefeld-Uerdingen (Germany) not discl.
Menthol expansion, Krefeld-Uerdingen (Germany) not discl.
Expansion for benzyl alcohol, Krefeld-Uerdingen (Germany) small double-digit €m
BU RCH: Capacity expansion for Macrolex brand dyes, Leverkusen ~€5m
(Germany), available Q2 2019
BU LPT: Ion exchange resigns production, Leverkusen (Germany), single-digit €m
available mid 2019
BU IPG: Planned capacity increase for iron oxides pigments, Krefeld- not discl.
Uerdingen (Germany) and Porto Feliz (Brazil), available in 2019
BU HPM: New compounding facility in Changzhou (China), available Q2 2019 ~€20m
New compounding facility, Krefeld-Uerdingen (Germany) mid double-digit €m
Capacity expansion for continuous fiber-reinforced thermoplastic single-digit €m
composites at Bond-Laminates, Brilon (Germany), available Q3 2019
BU URE: Additional prepolymers capacity, Porto Feliz (Brazil), available mid 2019 single-digit €m
37Capital allocation priorities after ARL exit: Focus on
deleveraging and building a superior growth platform
Capital allocation after receipt of cash
Attractive growth Deleveraging Share buy-back
M&A following our communicated Funding of German pension liabilities Share buy-back to be executed
financial matrix between January and year end 2019
New funding ratio improved to ~57%*
Investments into new and already
announced brownfield &
debottlenecking projects (until ~2021)
€400 – €X m €200 m of ~ €400 m - €500 m up to €200 m
Use of proceeds in line with investment grade commitment
38 * based on pensions at 31st of December 2018Chemtura synergies realized ahead of plan
Implementation of synergies faster than predicted Key Messages
Synergies confirmed
− €100 m of “hard” costs
[€ m] 2017 2018 2019 2020 Total
− Earlier realization
Synergies ~30 ~40
~20 ~10 ~100
− Topline synergies not included
~10 OTCs and cash-outs confirmed
Expense
(one-time costs)*
~80 ~30 ~20 ~10 ~ 140
Capex confirmed, mainly
related to Manufacturing
Cash
Cashout*
out ~40 ~50 ~40 ~10 ~ 140
Excellence
Capex ~20 ~20 ~10 ~50
* Does not include ~€65 m PPA charges from inventory step-up in opening balance sheet. Transaction related charges were recognized in opening balance
39 sheetBusiness Unit Additives with strong focus on
high value-add industrial lubricant solutions
Well diversified and specialized lubricants portfolio A leading specialties player
Sales of Business Unit Additives
- illustrative Commodities Highly diversified end-market
~20% split with focus on industrial
lubricants
Bromine Strong expertise in high
Solutions Auto- value-add specialty lubricants
Lubricant motive
Leading positions in mid-sized
Additives
General and niche markets
Plastic Industry
Additives Automotive exposure well
balanced with additives and
base stocks only for high
Specialities grade specialty engine oils
~80% (highest category 4 & 5)
40Maturity profile actively managed and well balanced
Long-term financing secured Liquidity and maturity profile as per March 2019
Diversified financing sources [€ m]
− Bonds & private placements 1500
− Syndicated credit facility 1000
Bond Bond Hybrid Bond Bond Hybrid
2021 2022 1st call* 2025 2026 2076*
0.250% 2.625% 4.50% 1.125% 1.00% 4.50%
Average interest rate of financial 500
Cash & cash
Private
placement
liabilities ~2% equivalents 3.95% (2027)
0 Private
Next bond maturity in 2021 placement
3.50% (2022)
-500
All group financing executed -1000
without financial covenants Financial
Syndicated revolving credit
-1500 assets
facility
€1.25 bn
-2000
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028+
Financial liabilities Cash & cash equivalents Financial assets Credit facility
* Hybrid bond with contractual maturity date in 2076 has a first optional call date in 2023.
41Climate protection: Target of specific CO2 emissions
(scope 1+2)1 of -25% by 2025
Greenhouse gas emissions (Scope 1) on track for 2025 targets 2018 development
[t CO2e/t of product] ARLANXEO divestment and linked
changes to portfolio led to higher
-44% -17% (target: -10%2) Target: -25% specific Scope 1 emissions
(generation and use in ongoing
operations comparatively more energy
0.55
from primary energy sources)
Chemtura akquisition (2018 FY full
0.40 contribution) with impact on scope 1
0.32 0.30 0.30 emissions whereas positive on scope
0.29 0.29 0.29
0.25 0.26 0.25 0.27 2+3
0.19 Mitigating effect from reduced use of
coal (China) and higher use of
biomass (India & Brazil)
…
2007–2010 2011–2015 2016–2025
1 Reduction of specific CO emission (scope 1) by 25% until 2025; reduction of specific energy consumptions (scope 2) by 25% until 2025; Reduction of volatile organic
2
42 compounds (NMVOC3, scope 3) emissions by 25% until 2025; 2 Reduction of specific greenhouse gas emissions (scope 1) by 10% per reporting segment achievedAwards in ratings and indices reflect high
sustainability standards
Commitment and entitlement Awards in ratings and indices
Member DJSI World and Europe EcoVadis „Gold Recognition Level“
Klimascore A- Index Member
43LANXESS products enable sustainable solutions in
key areas of application
Quality you can drink Lightweight solutions Protection against diseases
With its Lewabrane® membrane High-performance plastics from Saltidin® is an insect repellent
elements and Lewatit® ion exchange LANXESS, such as Durethan®, proprietary to LANXESS subsidiary
resins, the Liquid Purification Pocan® and Tepex®, can replace Saltigo. It is used in insect repellents
Technologies business unit offers a many of the metal parts in cars to help and lowers the risk of contracting
high-performance solution for ensuring reduce weight and fuel consumption, malaria, dengue fever, Zika virus,
a reliable supply of drinking and without compromising on vehicle borreliosis or encephalitis.
purified water. safety.
44…and LANXESS keeps innovating to meet present
and future sustainability demands
ULP membranes Components for e-scooters Circular leather production
LANXESS’ new ultra-low pressure Pocan AF 4110 enables light housing With the X-Biomer INSITU technology,
(ULP) membranes have the ability to components for bike and scooter retanning agents can be produced
remove trace elements originating for batteries and combines low warpage from by-products on site in the tannery.
instance from drugs, chemicals, with excellent mechanical properties – This means less chemical use, less
cosmetic products and crop protection only one example of the wide-ranging logistics costs, less waste and less
agents almost entirely even at low product portfolio for electric mobility. CO2 emissions.
operating pressures.
45Adding value to business and society – various
concepts to asses and measure our impacts
Societal Added Value
Sustainability profile and The quantified impact of our Our contribution to the Agenda
societal impacts of our gate-to-gate business 2030 goals to overcome society
products operations on society challenges
Sustainable Development Goals
Product Portfolio Assessment Impact Valuation Concept
Analysis
46Management compensation
Fixed annual base salary
Fix Annual base salary
Compensation in kind (mainly tax value of perquisites)
Based on: Targets for EBITDA pre exceptionals
Annual Performance
Cap: 200% of individual budget
Payment (APP)
Deduction in case of serious safety and/or environmental problems
Long-term orientation
Long-Term Based on: Individual APP target for 2 successive fiscal years
Performance Bonus
Variable (LTPB) Cap: 45% of annual base salary (Ø APP target attainment of 100%)
Based on: LXS stock performance vs. MSCI World Chemicals Index*
Cap: 30% of annual base salary
Long-Term
Vesting period: 4 years**
Stock Performance
Plan (LTSP)* Until 2017: Personal investment in LXS shares (5% of annual base salary)
Since 2018: Share performance rights plus share ownership guidelines
(investment in LXS shares: CEO 1.5x and board members 1x of base salary)
*LTSP 2014–2017; Dow Jones STOXX 600 ChemicalsSM serves as a reference index for the LTSP 2010–2013
** Five year vesting period applies to LTSP 2010–2013
47Slightly higher exceptional items (on EBIT) due to
plant closure in Jinshan and projects
[€ m] Q1 2018 Q1 2019 FY 2018 FY 2019
Thereof Thereof Thereof Thereof
Excep. Excep. Excep. Excep.
D&A D&A D&A D&A
Advanced Intermediates 0 0 0 0 0 0 0 0
Specialty Additives 0 0 1 0 0 0 1 0
Performance Chemicals 1 0 4 0 1 0 4 0
Engineering Materials 0 0 0 0 0 0 0 0
Reconciliation 14 0 17 0 14 0 17 0
Total 15 0 22 0 15 0 22 0
48Upcoming events 2019 / 2020
Proactive capital market communication
mBank Chemicals Day June 4 Warsaw
dbAccess Berlin Conference June 5/6 Berlin
Exane BNP Paribas 21st CEO Conference June 11/12 Paris
J.P. Morgan Cazenove European Materials Conference June 12 London
Morgan Stanley Cannon Ball Run June 25 Cologne
Q2 2019 results August 2
Goldman Sachs & Berenberg German Corporate Conference September 23-25 Munich
Q3 2019 results November 13
Meeting the Management November 15 Cologne
Annual Stockholders’ Meeting 2020 May 13 Cologne
49Contact details Investor Relations
Oliver Stratmann Katharina Forster
Head of Treasury & Investor Relations
Institutional Investors / Analysts / AGM
Tel.: +49-221 8885 9611
Tel.: +49-221 8885 1035
Fax.: +49-221 8885 5400
Mobile: +49-151 7461 2789
Mobile: +49-175 30 49611
Email: Katharina.Forster@lanxess.com
Email: Oliver.Stratmann@lanxess.com
André Simon Eva Frerker
Institutional Investors / Analysts
Head of Investor Relations
Tel.: +49-221 8885 3494
Tel.: +49-221 8885 5249
Mobile: +49-175 30 23494
Mobile: +49 151 74612789
Email: Andre.Simon@lanxess.com
Email: Eva.Frerker@lanxess.com
Janna Günther
Laura Stankowski Private Investors / AGM
Assistant to André Simon
Tel.: +49-221 8885 3262
Fax.: +49-221 8885 4944 Tel.: +49-221 8885 1989
Email: Laura.Stankowski@lanxess.com Mobile: +49 151 7461 2615
Email: Janna.Guenther@lanxess.com
Jens Ussler
Institutional Investors / Analysts
Tel.: +49-221 8885 7344 Visit the IR
Mobile: +49 151 74612913
Email: Jens.Ussler@lanxess.com website
50Abbreviations
Advanced Intermediates Performance Chemicals
AII Advanced Industrial Intermediates IPG Inorganic Pigments
SGO Saltigo LEA Leather
MPP Material Protection Products
LPT Liquid Purification Technologies
Specialty Additives Engineering Materials
LAB Lubricant Additives Business HPM High Performance Materials
PLA Polymer Additives URE Urethane Systems
RCH Rhein Chemie
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