• Operational sales growth of 5.0% in fiscal 2007
• EBITDA pre exceptionals climbs 6.5% to €719 million
• EBITDA margin pre exceptionals up to 10.9% from 9.7% in 2006
• Operating result weighed down by exceptional items for the divestment of the Lustran Polymers business
• Net income of €112 million after €197 million in previous year
• Significant increase in dividend to €1 per share

Summary of the fiscal year

2007 was a very successful year for LANXESS from both an economic and a strategic viewpoint. The expectations we voiced at the beginning of the year were fulfilled, with sales rising by a moderate 5% after adjusting for portfolio and currency effects. We lifted our operating result before depreciation and amortization (EBITDA) pre exceptionals by 6.5% to €719 million, close to the top end of our earnings guidance of €700 to €720 million communicated mid-year. The EBITDA margin rose by 1.2 percentage points to 10.9%, thus moving closer to the level of our competitors as we had predicted. The operating result (EBIT) pre exceptionals rose by 12.1 % year-on-year to €472 million. Targeted business expansion with a clear focus on value creation, continuous efficiency enhancements, and the systematic implementation of our restructuring programs contributed to this positive development.

Thanks to the portfolio adjustments undertaken in recent years, the LANXESS Group has grown continually stronger. The proportion of our business with an EBITDA margin pre exceptionals of below 5% has further declined. At the end of September 2007, we completed the transfer of the Lustran Polymers business unit to a new company managed by the British INEOS Group. We have tapped additional growth potential by acquiring CISA in South Africa and, notably, with the announced takeover of Petroflex S.A., Brazil. The exceptional items resulting from the divestment of the Lustran Polymers business, along with other restructuring measures, pulled down the operating result (EBIT) by 42.8% to €215 million.

The financial result improved by 51.7%, partly because of an increase in income from affiliates. The above-mentioned portfolio adjustments and restructuring measures depressed net income for the Group by 43.1% to €112 million. Given the sustained improvement in the operating result pre exceptionals, the Board of Management and Supervisory Board will propose to the Annual Stockholders' Meeting on May 29, 2008 that the dividend be increased substantially from the previous year to €1.00 per LANXESS share.

Sales and earnings

As announced during the year, the LANXESS Group recorded an encouraging improvement in sales from continuing operations in 2007. Although Group sales slipped €336 million, or 4.8%, to €6,608 million, LANXESS saw sales growth of 5.0% after adjusting for currency and portfolio effects of 9.8%.

This resulted from price increases of 1.7% combined with 3.3% growth in volumes. In the Performance Polymers segment in particular, selling prices were adjusted because of increases in raw material costs. All segments with business operations at the reporting date experienced volume growth, especially Performance Polymers and Advanced Intermediates. The 3.4% negative currency effects were largely attributable to the continuing weakness of the U.S. dollar against the euro. The negative portfolio effects of 6.4% related to the divestment of the Textile Processing Chemicals business unit at the end of the previous year and the transfer of the Lustran Polymers activities to a new company in late September 2007. Also, sales for 2006 still included the Fibers and Paper Chemicals businesses prior to their divestment in the first quarter of 2006.

¹⁾ operating segment until September 30, 2007