Business and strategy

The LANXESS Group is a globally operating chemicals enterprise with a portfolio ranging from basic, specialty and fine chemicals to polymers. Following the spin-off from the Bayer Group, low margins in some areas of the business made it essential to evolve lean, straightforward structures and systematically optimize plants and processes.

To raise profitability to the level typical of other companies in the industry, a strategic package with four phases was adopted in 2004. These phases are performance improvements, targeted restructuring, portfolio adjustments and acquisitions. In past fiscal years, we implemented measures in all four phases. Another key success factor was and is the consistent application of our "price before volume" strategy, which involves passing on rising raw material prices to customers and in certain cases foregoing business that is insufficiently profitable.

In our core businesses, all of the conditions are now in place for long-term success. These include flexible facilities structures, a diversified customer base, global operations with regional flexibility and an entrepreneurial management structure.

Our aim now is for all of our segments to continue building on the strong positions they already hold in their respective markets. This means that our segments will offer premium products, processes and services; the positions of our businesses will be even more stable, solid and reliable; and we will go on expanding in order to reinforce our leadership position in chemicals.

The significant progress made between 2004 and 2007 in realigning the Group now gives us the necessary headroom to more actively pursue our goal of selective organic growth in profitable markets. From 2007 to 2009, we will generate additional organic growth through capital expenditures in our business units totaling €1 billion.

The segments in brief

As a result of LANXESS's structural realignment, we are increasingly positioning ourselves as a specialty chemicals group, a development also reflected in our new segmentation. Our segments were reorganized to enhance our focus on the market for chemical products. Polymers, intermediates and specialties are at the core of the process pyramid of industrial chemistry, an area where LANXESS is able to leverage its chemicals expertise, application know-how, flexible facilities management and proximity to the customer. As of October 1, 2007, LANXESS grouped its 13 business units into three segments: Performance Polymers, Advanced Intermediates and Performance Chemicals. Operations in the Engineering Plastics segment continued until September 30, 2007 and included the Lustran Polymers activities, which were deconsolidated on this date.

All of our polymer-based businesses were combined in the Performance Polymers segment, which thus includes our synthetic rubber and plastics manufacturing activities. Here LANXESS offers a broad portfolio of innovative products, many of which are international leaders. The segment had previously comprised the Butyl Rubber, Polybutadiene Rubber and Technical Rubber Products business units. The Semi-Crystalline Products business unit was integrated into the segment in the course of the realignment. The Performance Polymers segment's production facilities are located in Dormagen, Krefeld-Uerdingen, Leverkusen, Hamm-Uentrop and Marl, Germany; Antwerp and Zwijndrecht, Belgium; La Wantzenau and Port Jerome, France; Sarnia, Ontario, Canada; Orange, Texas, United States; and Wuxi, China. Rubber products have applications in various areas, particularly the automotive and tire industry, construction materials, leisure equipment, machinery and chewing gum. The plastics that LANXESS produces are used in particular in the automotive industry, electronics and electrical engineering, and medical equipment.