Beauty of Additives in a nutshell Meeting the Management Anno Borkowsky, Member of the Board
Agenda 1 Beauty of Additives in a nutshell 2 Why Polymer Additives are attractive 3 Why Lubricant Additives are amazing 2
Beauty of Additives in a nutshell Additives constitute a very attractive product LANXESS Additives “DNA” with very group in the specialty chemical industry attractive business characteristics Demand for technical service Meets enforced regulation Additives Solution provider Process Chemicals Relatively low asset Formulations intensity, high return Fine Chemicals Leading innovation driver Inorganic Specialty Materials Highest customer value add Product enhancement vs. customers’ costs 3
Specialty Additives cater various end markets with a balanced global footprint Leading players in diverse Well balanced end market Strong footprint in growth and growing end markets split regions Sales 2018 TOP #2/ #3 TOP #1 Others Industrial Rhein Polymer APAC Applications Chemie EMEA Additives Constr- uction Lubricant Automotive TOP #2 E&E NAFTA Additives Build on & expand True focus on specialties Further strenghtening of leadership positions & innovations APAC & NAFTA footprint 4
Specialty Additives – Successful business set-up with a clear strategic approach BU Polymer Additives BU Lubricant Additives BU Rhein Chemie Leverage growth from higher Further innovate and specialize the Reduce auto dependency and further regulation & batteries portfolio realignment Sales by 2018 ~20% Commodities Other ~50% auto Plasticizers Specialties exposure & Others Colorants Automotive Additives for Industrial Technical Rubber Specialties Flame Retardants ~80% Specialties 5 O
Agenda 1 Beauty of Additives in a nutshell 2 Why Polymer Additives are attractive 3 Why Lubricant Additives are amazing 6
Leading manufacturer of phosphorus derivatives Comprehensive supply for rising demand in phosphorus flame retardants and batteries Phosphor value chain Expectation: Phosphorus portfolio by 2025 Phosphorus Raw Materials (secured with long-term supply contracts) Phosphorus chlorides & P-Intermediates oxides Other P-flame P-Derivatives retardants P-Derivatives and Flame retardants e.g. applications P-battery Batterie chemistry chemistry Customer 7
Extracting value by pursuing the whole value chain from one of the most efficient bromine resources Bromine reserves Elemental bromine Bromine derivatives End use Construction E&E Bromine well, El Dorado, Arkansas, USA Flame retardants Chlorine Reserves for >70 years and steam Elemental bromine production El Dorado, Arkansas, USA Mercury Brine Biocides Oil drilling control Sodium-/calcium fluids bromides Agro Pharma Industrial Merchant sales HBr/alkyl bromides Products sold by LANXESS 8
LANXESS benefits from structural changes in the Chinese bromine market APAC with attractive growth Chinese bromine resources continuously exhaust and opportunities: face rising regulatory pressure Chinese bromine demand grows while resources continuously 90 5500 decline Chinese bromine capacities in kt LANXESS meets rising 5000 85 environmental standards in China 4500 Huge logistics infrastructure for USD/t SAWR* 80 bromine transportation 4000 75 3500 70 3000 65 2500 Bromine price Chinese bromine capacities 9 * SAWR: Seasonally adjusted weekly rate
Flame retardants well prepared for tightening regulation Strategic focus on developing sustainable FR Illustrative on flame LANXESS flame retardants retardants portfolio mix: Market acceptance Market today 100% Reactive Polymeric 75% + Reactive Polymeric 50% Oligomeric Oligomeric 25% Monomeric 0% Focus on polymeric and Monomeric reactive flame retardants to fight toxicity and leaching risk Technology development 10
There is no alternative to the powerful characteristics of flame retardants 11
LANXESS provides cutting-edge plasticizers and phosphorus specialties Mesamoll™ Stabaxol™ Advanced hydrolysis The only real phtalate free protection for sport shoes plasticizer in the world! and other applications 12
Polymer Additives even goes one step further… Levagard Stabaxol 2100™ P110™ Hydrolysis protection Emission free reactive with best in class flame retardant characteristics 13
Polymer Additives sees growth opportunities driven by demand for batteries PLA = Polymer Additives, AII = Advanced Industrial Intermediates, IPG = Inorganic Pigments, HPM = High Performance Materials, LPT = Liquid Purification Technologies 14
Polymer Additives to strengthen its leadership position in flame retardants and battery solutions Foster leadership position in flame retardants by Strategy leveraging regulatory challenges with innovative execution solutions Leverage on strong R&D pipeline to expand Applied application portfolio and further reduce volatile innovation organic emissions Growth Focus on future growth areas of bromine and driver phosphorus chemistry in APAC region LANXESS saves your life 15
Agenda 1 Beauty of Additives in a nutshell 2 Why Polymer Additives are attractive 3 Why Lubricant Additives are amazing 16
Lubricant Additives benefit from unique integrated value chain and innovation power Backward integrated one-stop-shop for specialized industrial Lubricant Additives Sales 2018 additive solutions with leading market positions Customers Basestocks Finished Fluids Inter- mediates Intermediates Additives Finished Fluids We provide We have them! We add them! them, too! Additives/ Basestocks Packages Packages We make them! We mix them! Customers 17
Increasing regulation and higher performance requirements drive growth for specialty lubricants LANXESS focuses on growing specialty product Lubricant Additives Sales 2018 segments Commodities Basestock Additives Finished Fluids ~20% demand demand demand 4.5% 2.6% Auto- 4.0% motive Automotive LANXESS LANXESS LANXESS 1.1% Industrial 0.8% 0.7% Specialties Total Specialties Total Specialties Total Specialties e.g. Aviation, e.g. PAO, POE e.g. Metal working, Specialities Refrigeration Protect expensive ~80% tools Market growth CAGR 2017 - 2022 * Source: Kline , LANXESS Research; PAO = Polyalphaolefines, POE= Polyoleesther 18
General industry applications provide a variety of independent growth sources Metal Working Turbines Windmills Gear Boxes Highest safety Alternative energy Highest temperatures Highest endurance and standards drives growth and abrasion protection abrasion protection Highest Less One time fill abrasion Any questions? replacement required resistance cycles 19
Innovative lubricant technology leverages growth offering synergistic customers’ advantages Royco™ Hybrid Greases A unique solution Leader in synthetic attracting key global aviation turbine oils customers’ interests 20
Lubricant Additives builds on its leading market positions through innovation and strong growth Strategy Leverage full value chain to grow in key product lines execution & tech transfer in adjacent markets & expand into Asia Succeed on key product launches to fulfill low friction, Applied high temperature and corrosion protection innovation requirements Growth Harvest growth in APAC region driver LANXESS lubricates your world 21
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