This news article was originally written in Spanish. It has been automatically translated for your convenience. Reasonable efforts have been made to provide an accurate translation, however, no automated translation is perfect nor is it intended to replace a human translator. The original article in Spanish can be viewed at Lanxess advierte que la planta de estirénicos de Tarragona debe ser productiva

The chemistry of Germany presents its third package of restructuring at the global level

LANXESS warns that estirénicos of Tarragona plant must be productive

María Escribano15/04/2006

"Everything is still in review, even in Tarragona", so strong was on April 4 responsible for the business unit of Estirenos worldwide, Hans-Joachim Kogelnik, in an interview with a group of journalists after the presentation in Germany of the results of the company in 2005. LANXESS closed the year with a net of EUR 64 million loss, although its sales increased by 5.6 per cent.

(From left to right, Dr. Martin Wienkenhoever (director of industrial relations), Dr.), Matthias Zachert (financial officer) and Dr. Axel C. Heitmann (Chairman of the Board of Directors)

Kogelnik confirmed, as it was announced a few months earlier, that the transfer of the European headquarters of the estirénicos business unit to Tarragona will be effective in the third quarter of 2006, and that the expansion of capacity of the plant to 170,000 tonnes will be operational in the first quarter of 2007. This represents an investment of EUR 16 million.

The restructuring that began last year in the European unit of estirénicos is only "the first step we do to minimize the pressure of competition in Europe." Even after the transfer, we cannot guarantee anything in the future. "Everything remains in the review, even in Tarragona," concluded the world responsible for this business.

From left to right, Hans-Joachim Kogelnik, responsible for the business unit of Estirenos worldwide and Ulrich Koemm, Member of the Board of Directors, at a time of the interview.

A new restructuring

For its part, the Chairman of the Board of Lanxess, Axel Heitmann, presented, coinciding with the publication of the results of 2005, a new package of restructuring measures, the third of the company worldwide, maintaining the objective since its creation of clean business and provide them with global competitiveness. To this end, remains a strategy of further centralizing the production, in order to avoid duplication of work in manufacturing.

"About 25 percent of our activity is still not profitable, and 30 per cent is unsatisfactory in terms of profit margins." This means that 45 percent of our activities are now profitable. "Although this is a significant overall increase compared with the previous year, obviously cannot reduce the pace of our restructuring efforts", said Heitmann.

The new measures affect the "sites" of United States, Brazil, France and Belgium, and involve the Elimination of 250 jobs out of Europe. The most drastic measure is the closure of the factory in estirenos of Camacari, in Brazil, which will be closed during the year 2006. In this business, the estirénicos, unit is concentrá all the marketing and sales in Ohio, to the detriment of Pennsylvania, and total transactions, you will lose 80 jobs.

As explained Heitmann "measures that we began to restructure the European activity already have been demonstrably effective." Lanxess is one of the leading providers of estirénicos of the world, we cannot yet correct structures. In the rapid growth of Asian markets, our position is weak, even though we operate in the region with our own facilities. In Europe and in America we have achieved positive results. "Overall, however, there still is a considerable need for action here".

Restructuring gives off

As to the results of 2005, Lanxess says that it is "closed successfully its first year of activity", the Ebitda reached 30 per cent in 2005, before extraordinary results, sales increased by 5.6 per cent, and recorded a net of EUR 63 million loss, compared to 12 million in 2004.

The company expects to reach a total of EUR 50 million annual profits in 2009, through the new measures planned for Polybutadiene Rubber, Butyl Rubber, inorganic pigments and resins Estirénicas.

The capital costs of Lanxess in 2005 added EUR 251 million. (in 2004: 279 million euros). Maintenance costs account for 60 per cent of the total.

In their regional plants, Germany has, by far, with the highest rate of capital expenditure, 46 per cent (approximately EUR 115 million). Investments of capital of the company in Asia are more than twice compared with the previous year.

Textiles, under surveillance

Another element of the Lanxess corporate strategy is that activities which do not achieve significant gains or leading positions in the immediate future will be diverted to partners or removed completely.

Here, the focus is currently in the chemistry business unit of textile processes (TPC), that the current global market development shows that it is still necessary action with regard to this activity.

During this year, Lanxess will therefore consider strategic options for this business unit, which is part of the area of chemical production. TCP products include ignition delayed for professional clothing, textiles and textile special soundproofing in cars. Heitman stressed that "all the activity of Lanxess and its processes, throughout the world, are kept under continuous surveillance".

Perspectives

With regard to overall economic development, Lanxess anticipates that the highest growth rates in 2006 will be recorded again in the emerging markets of Asia, Latin America and Eastern Europe. In the chemical industry, also Asia - and particularly China - expect to show the highest rates of growth.

The strength continued of the euro against the US dollar, along with a number of potential foci of attention around the world, could also negatively impact on economic development

The company expects higher growth in Ebitda before extraordinary income, coupled with a moderate increase in sales from continuing operations. All areas will be budgeted in the first quarter of 2006. Against this backdrop, Lanxess trusts achieve their common goals again this year.

The company stays true to its objective of achieving an Ebitda margin of 9 to 10 per cent, based on the sales of 2004. The reduction of the costs of the headquarters of the company, as a result of its restructuring measures will have a positive effect in this context. Another target for this year is counted positive net benefits for the group.