EBITDA pre exceptionals improved by LANXESS AG got off to a good start in fiscal 2006, with year-on-year growth in earnings (EBITDA pre exceptionals) in double digits for the period from January to March, 2006. In what is traditionally the strongest quarter of the year, EBITDA pre exceptionals rose 13.3% to 205 million euros in the first quarter of 2006 (181 million euros a year earlier) and the EBITDA margin reached 11.2% (10.5%) with sales up 6.2% to 1,836 million euros (1,729 million). Net income amounted to 82 million euros (70 million) with strong growth in Asia. 640-680 million euro EBITDA pre exceptionals are expected for 2006. All the operating segments contributed to sales growth.

‘With our earnings in the first three months of 2006, we have laid a solid foundation for achieving our full-year expectations’, said LANXESS management board chairman D. Axel C Heitmann. Net income improved considerably in the first quarter, from 70 million euros in the prior-year quarter to 82 million euros. Capital expenditures were down by nearly one third to 37 million euros (51 million). For the full year, however, they will be slightly above the 2005 level.

In the EMEA region (Europe [except Germany], Middle East, Africa), LANXESS

Group sales fell by just 3.3%, to 619 million euros (640 million), while business in Germany expanded considerably, advancing by 6.9% to 417 million euros (390 million). In the Americas region, LANXESS increased sales by 10.7% to 497 million euros (449 million).

Helped by the continuing dynamic growth in the region, sales in Asia/Pacific rose by 21.2% to 303 million euros (250 million). Business in China showed very pleasing growth, increasing by over 40%. The Asia/Pacific region’s share of group sales rose to 16.5%, from 14.5% in the prior-year quarter.

Sales in the Chemical Intermediates segment increased slightly in the first quarter of 2006 to 395 million euros (389 million), up 1.5 from the prior-year period. The Basic Chemicals and Inorganic Pigments business units raised prices to pass on higher raw material and energy costs. The Fine Chemicals business unit, which was transferred to the separate legal entity Saltigo with effect from the start of 2006, posted a decline in sales to agrochemical producers, while the market for pharmaceutical intermediates developed well. EBITDA pre exceptionals for the segment increased by 9.2% to 71 million euros (65 million). The EBITDA margin pre exceptionals improved from 16.7% to 18%.

Sales revenues in the Performance Chemicals segment rose by 8.2% to 517 million euros (478 million), the slight decline in volume being offset by price increases. Nearly all the business units in this segment raised their prices, with the Rubber Chemicals and Leather business units posting significant growth in volume at the same time. The Textile Processing Chemicals business unit recorded a significant drop in volume, especially in Europe and Japan. EBITDA pre exceptionals advanced by 19% to 69 million euros (58 million), thanks largely to the improved business in the Rubber Chemicals and Leather business units. The EBITDA margin pre exceptionals for the segment rose by 1.2% points to 13.3%.

LANXESS expect the world economy to maintain a good rate of growth in 2006, providing a positive operating environment for the chemical industry. Raw materials and energy prices that are volatile at a high level will remain a relevant factor. LANXESS will take this into account in their pricing as they have done in the past.

LANXESS will continue the transformation of the group that has already begun. Implementation of the restructuring program continues at a rapid pace and has already yielded significant results. Against the background of a positive business trend, LANXESS expect EBITDA pre exceptionals to increase to between 640-680 million euros for fiscal 2006, compared to 581 million euros for fiscal 2005. ‘This target is within the upper half of the 9-10% margin range, calculated on 2004 sales, that has been communicated in the past’, said the LANXESS CEO. As a result of their consistently applied ‘price before volume’ strategy, the LANXESS Group anticipate moderate growth in sales from continuing operations. Capital expenditures in 2006 will be at the upper end of the 250-270 million euro range and thus slightly above the previous year.