EBITDA pre exceptionals of the Performance Polymers segment was lifted from €376 million to €413 million, an increase of 9.8%. This segment’s EBITDA margin slipped back 1.4 percentage points year on year to 12.6% as a consequence of demand trends. The Performance Butadiene Rubbers and Butyl Rubber business units were the main earnings drivers. Performance Polymers succeeded in passing on the very high raw material prices in full to the market during the year under review. Earnings also brightened perceptibly on the inclusion of the Petroflex group. The Semi-Crystalline Products Business Unit, on the other hand, was impacted by production adjustments at the end of the year necessitated by customers’ higher inventories and a sharp fall in demand. Although the U.S. dollar strengthened in the fourth quarter, exchange rates throughout the year were unfavorable on the whole. The high energy costs also put a strain on earnings in this segment. The structural and efficiency enhancement measures that are being implemented as planned had a compensatory effect.

Exceptional charges of €77 million were incurred in fiscal 2008, €66 million of which impacted EBITDA. These principally related to the efficiency enhancement programs launched at the sites in Sarnia, Canada, and Zwijndrecht, Belgium, in early 2008. The primary aim of the program implemented at the Canadian Butyl Rubber and Technical Rubber production site in Sarnia is to further streamline and align service areas and to close the NBR unit there. NBR production is being transferred to La Wantzenau, France. The Technical Rubber facility in Marl will also be optimized. The efficiency enhancement program for Butyl Rubber production in Zwijndrecht, Belgium, principally involves reducing production costs further and making the facility more competitive in the growing global butyl rubber business. Segment earnings pre exceptionals were also depressed by one-time write-downs of inventories on account of market price trends at the end of 2008.

EBITDA pre exceptionals in the Advanced Intermediates segment increased by 6.9% from €174 million to €186 million. Assisted by the consistent application of LANXESS’s “price before volume” strategy, the Basic Chemicals Business Unit succeeded in offsetting the higher cost of raw materials, energies and logistics services. The Saltigo Business Unit benefited in particular from the steps taken to reduce fixed costs and increase flexibility at its production plants. This business unit’s more flexible operations facilitated a significant expansion of volumes in the area of pharmaceutical precursors.

The segment’s EBITDA margin decreased only slightly, by 0.3 percentage points to 14.2%.

EBITDA pre exceptionals of the Performance Chemicals segment fell sharply by 15.4% from €285 million to €241 million. The value-based pricing policy, which more than compensated for increased raw material costs and adverse currency movements during the fiscal year, did not fully offset the huge drop in volumes, especially in the fourth quarter. This decline dampened EBITDA pre exceptionals. The Material Protection Products Business Unit saw volumes and prices for wood preservatives fall and also had to bear higher costs for product registration and market development. The Inorganic Pigments Business Unit was impacted by the decline in demand in North America, but the effects were compensated by the growth regions of Latin America, central and eastern Europe, and Asia. With the goal of further expanding its business in Asia, LANXESS acquired two production facilities from its former cooperation partner Jinzhuo Chemicals Company Ltd. in Jinshan, near Shanghai, in June 2008. LANXESS had already been using one of these plants since 2007. The acquisition increases this business unit’s production capacities for inorganic pigments by around 5%. While the Functional Chemicals Business Unit was just about able to compensate for the increase in raw material costs, especially for phosphorus chemicals, by raising its selling prices, it came under pressure due to severe volume losses and adverse exchange rate effects. This pressure on margins, further aggravated by the economic and financial crisis, led to the decision to realign this business unit. Its international competitiveness is to be improved by enhancing the efficiency of the global sales organization, production facilities, research and development, and technical services. Up to 120 jobs worldwide, 80 of them in Germany, will be affected by these measures. The segment’s EBITDA margin pre exceptionals narrowed perceptibly from 14.5% to 12.5%, due for the most part to the negative volume and currency trends.

The segment’s exceptional charges of €38 million, €30 million of which impacted EBITDA, included costs relating to the closure of the Ion Exchange Resins Business Unit’s plant in Birmingham, New Jersey, United States. This figure also includes the cost optimization program initiated in the Rhein Chemie Business Unit and costs relating to the realignment of the Functional Chemicals Business Unit. At the end of 2008, this segment’s earnings pre exceptionals were also impacted by one-time write-downs of inventories attributable to market price trends.