Head of the Lustran Polymers business unit LANXESS Deutschland GmbH

Transcription

1 News release Press Conference "LANXESS at K 2007" on Monday, June 18, 2007 at Dusseldorf Airport LANXESS AG Contact: Udo Erbstößer Corporate Communications Trade & Technical Press Leverkusen Germany Phone Fax udo.erbstoesser@lanxess.com Address by Dr. Hans-Joachim Kogelnik, Head of the Lustran Polymers business unit LANXESS Deutschland GmbH "Lustran Polymers - The Colorful Difference" (Please check against delivery) ( e)

2 Ladies and gentlemen, Page 1 of 15 Welcome to our press conference here in advance of the K 2007 exhibition in Düsseldorf. My presentation is entitled "Lustran Polymers - The Colorful Difference". If you visit our stand at K 2007, you will immediately see that color really does set us apart from the competition. I would first like to give you an overview of our business unit Lustran Polymers and explain the strategy with which we have placed our business on a firm footing once again. Then you will be introduced to some innovative products and applications which demonstrate our skill at developing new ideas and will form the centerpiece of our presence here at K ( e-1) Ladies and gentlemen, our key brands Lustran, Novodur, Centrex, Absolac and Triax are well established and well known in the market. They form the backbone of our success. Our customers associate them with top quality and high-grade properties. You see our products all around you because they make our daily lives easier. They are used in the automotive industry, in the building industry, in electrical engineering and electronics, in the production of household appliances, in information technology and in medical technology.

3 Page 2 of 15 ( e-2) Lustran Polymers holds a unique position in the international market for ABS and SAN. We have production facilities in all the major economic regions. Consequently we are close to our international customers throughout the world. Lustran Polymers occupies an excellent position in all regional markets. We are the number one ABS producer in Europe and India and number two in the NAFTA region. Globally we are the third largest ABS producer. ( e-3)

4 Ladies and gentlemen, following a detailed analysis of our markets, our competitors and our customers we have successfully switched our approach in the market over the last two years. Throughout the world Lustran Polymers is concentrating its ABS business on products colored to meet customer demand and on specialties. We adhere strictly to a price before volume strategy here as, in order to be reliable, a supplier needs to be profitable. We offer a wide range of products tailored to a variety of specific uses that comply with customers' specifications. In doing so we are distancing ourselves from many of our competitors whose portfolios only cover a basic range and who generally leave coloring to the processor. Colored ABS and ABS specialties now make up around 80 percent of our ABS sales. Page 3 of 15 We are able to offer such a range of ABS polymers because we have an extremely versatile technology platform, in some cases patented, supported by a variety of state-of-the-art production processes. These enable us to manufacture ABS through emulsion and mass polymerization and SAN through mass and suspension polymerization. Only in this way can we achieve the necessary flexibility to produce specialties tailored to our customers' requirements. This is particularly true of ABS variants for electroplating or extruding, as well as highly heat resistant, colored and also high-gloss ABS grades. In addition we are constantly fine-tuning our production processes. Using a method we have patented, we can, for example, produce ABS grades for vehicle interiors that are characterized by very low gaseous and condensable emissions, thereby meeting the important targets of the international automotive industry. Our many years' experience in coloring plastics to customers' specific requirements secure us a distinct competitive advantage. Our expertise here serves to a large extent as a benchmark. So we maintain our policy of not passing on to the processor the risks, costs and expense of the coloring process. Many of our blue chip customers have expressly encouraged us to continue producing colored ABS products. The backbone of our expertise in coloring lies in the Color Excellence Centers established in all the major economic regions.

5 Page 4 of 15 ( e-4) These specialize in developing color formulations according to customers' specifications. We can manufacture any ABS formulation in any of our ABS production facilities in the color requested by the customer within a tight tolerance and compliant with quality standards that are consistent throughout the world. In other words: we can supply our international customers with the product in the right color from any of our sites. This worldwide expertise in developing color, which is probably unique to Lustran Polymers, is backed by a global color database in which we store the color formulations for each customer together with the relevant colorimetric data. We have now created a database of around 4000 different colors. Repeat orders for colors can be dealt with swiftly by our experts. We can provide our customers with both color sample sheets as well as material samples in volumes of up to 200 kilograms. We have also reorganized our business model. Instead of pursuing a global unified strategy we are giving the business a strong regional direction. To this end we have set up regional management teams which act autonomously and are invested with extensive operational freedom allowing them to behave locally like independent firms. They are familiar with the peculiarities of their markets and can respond more quickly and in a more targeted fashion to customers' wishes. This regionalization of the business extends to adapting production capacity, product portfolios and research and development activities to local

6 conditions. The following statistic demonstrates that this change in approach has been successful: well over 90 percent of the plastics we produce in a region are also sold and used in that region. Page 5 of 15 To avoid any misunderstanding, I will just say that this regional focusing of the business does not mean that we are neglecting our global customers. We will continue to supply them with the required products in the customary high quality from each of our sites. They will now be taken care of by Key Account Managers from the region in which our customer operates his global business. Experience has shown us that we can do the one thing without abandoning the other. ( e-5) Let me now explain how the market for ABS and SAN is currently developing. Global consumption for both together was around six million tons in We anticipate it will grow by about 5.5 percent per year by While it is increasing in a fairly restrained fashion in the "mature" markets in Europe and the NAFTA region, India and Asia are experiencing a boom. In India, for example, growth rates for engineering thermoplastics are in double figures. Consequently we are going to increase capacity at our Moxi, Katol und Nandesari sites by 20,000 to 80,000 metric tons over the coming year - with the option of extending production volume to a total of 100,000 metric tons. In Map Ta Phut in Thailand we are currently adding an extra 10,000 metric tons p.a. to our ABS compounding capacity. This site is very important to us because of its geographical location.

7 Page 6 of 15 ( e-6) Let us have a quick look at the particular features of the markets in the various regions. In Europe the main ABS customers are the consumer goods, electrical/electronic and automotive sectors. There is strong demand for colored ABS grades for injection molding and for specialties such as highly heat resistant or electroplatable grades. This also applies to the Asia-Pacific area where the electrical/electronic and IT sectors and applications intended for the sports and leisure industry are the main ABS consumers. Extrusion grades are in particular demand in the NAFTA region, especially from the automotive and construction sector. Colored ABS grades which are mainly processed by the consumer goods, automotive and electrical/electronics industry are characteristic of the Indian market. To sum up: the regional markets differ considerably in their customer structure and requirements, reinforcing the need for our regionally-oriented business model. The innovative image of our Lustran, Novodur, Centrex, Absolac and Triax brands is contributing greatly to our current success. We supply the market with new products which we either develop in cooperation with our customers or independently if we see appropriate opportunities for their use. In addition, Lustran Polymers has an excellent reputation as regards application development and application-related expertise. Let me now present a few selected examples of our expertise in innovation and development that will also form the centerpiece of our presence here at K 2007.

8 Page 7 of 15 ( e-7) I would like to begin with Triax DP 3157, our online coatable polyamide + ABS blend for body parts with a class A surface which we have developed in a joint project together with BMW. It is used in the fenders on the BMW 3 series coupé and cabriolet. The material's strong point is its high heat resistance. Our material easily withstands the high temperatures of up to 200 C present during the drying phase of cathodic dip coating. An additional benefit of the material alongside its stiffness at high temperatures and good paint adhesion is its low thermal linear expansion. It allows minimal gaps between neighboring subassemblies. Triax DP 3157 has met with a very positive response. Numerous projects are now running with well-known OEMs from around the world. Alongside online coatability and the excellent surface properties, automobile manufacturers are attracted by the thermoplastic's considerable potential for integration. So, in the case of a fender, for example, fixtures for turn signals, front headlamps and antennae can be integrated enabling savings in logistics, assembly costs and investment in machinery. In addition to fenders, our high-tech blend is also suitable for parts mounted on the body work such as spoilers and gas caps. In truck construction it could be used for large side panels.

9 Page 8 of 15 ( e-8) Our Triax polyamide-abs blends are, however, also well suited to attractive applications in vehicle interiors. We have developed variants such as Triax KU that produce matt high-grade surfaces. It is therefore no longer necessary to coat the injection molded parts, which can halve the cost of a component. Triax is therefore a cost-effective alternative to polycarbonate and ABS blends, as interior parts made of these blends must be coated in a separate stage to achieve a matt surface. A current example of an application of Triax KU is a large instrument housing for the BMW Mini. The visual appearance of this part had to be of a particularly high standard as it is a striking design feature and lies directly in the passengers' field of vision. In addition, our Triax formulations designed for vehicle interiors are also suitable for radio and loudspeaker bezels, air vents and covers for center consoles and seat trim.

10 Page 9 of 15 ( e-9) Now to another innovative product category which is currently successfully establishing itself on the European market. Under the name Lustran Ultra we offer various ABS-based special thermoplastics, characterized by properties superior to the typical levels associated with ABS. They are primarily designed as a costeffective alternative to PC+ABS blends. Examples of this product range are Lustran Ultra 4105, which displays a combination of high impact and heat resistance, and Lustran Ultra 4000 PG, a particularly costeffective ABS grade suitable for electroplating. I would like to present an application of Lustran Ultra This high performance ABS is used to manufacture the rear trim molding cover in the new Opel Astra TwinTop. It is exposed directly to the sun and can consequently heat up considerably. Our material resists temperatures of up to 116 C, close to the high heat resistance of standard PC+ABS blends. Compared with PC+ABS the material has the advantage of lower density, making processing into components more cost-effective. An additional plus is its considerable toughness over a wide temperature range, affording passengers greater safety in the event of a crash.

11 Page 10 of 15 ( e-10) I would like to show you this housing for a new Miele vacuum cleaner as an example of our expertise in tailoring coloring to specific customer requirements. This component is produced from Lustran H702. This ABS is not only very heat and impact resistant but also has very good flowability. The housing can therefore be produced with thin walls, keeping the weight of the component to a minimum. The surface quality of the housing was an important criterion. Lustran H702 delivers uniform surfaces with high gloss and good depth of color. As you can see here on the chart, we supply our ABS colored in a range of shades. Miele provided us with original color samples. The challenge lay in meeting the rigorous color requirements exactly in order for the material to be passed by Miele. Incidentally, the metal-colored housing is coated. Lustran H702's good coatability proves beneficial in such cases.

12 Page 11 of 15 ( e-11) Medical technology is an attractive market for thermoplastics. We are also developing tailored products for this sector using a constant formulation with long-term availability. This is expected by customers in this sector in part due to the strict and tedious approval regulations. An example of a new product developed for medical technology is Lustran M205FC. Compared with Lustran M203FC, the established product, it displays improved strength and stiffness, giving the resulting components greater dimensional stability. This ABS polymer can be sterilized with gamma rays and ethylene oxide. In addition it meets the most important standards relating to the biocompatibility of plastics. The material is listed in the Drug Master File (DMF) of the US Federal Drug Administration, a condition for manufacturing products for the American market. It could be used, for example, for producing roller clamps and piercing pins due to its high dimensional stability. It is also just as suitable for inhalers.

13 Page 12 of 15 ( e-12) Two new materials developed by our American colleagues are Lustran ST 4566 and Centrex ST We are currently also launching them on the European market. They allow matt soft touch surfaces to be applied to ABS materials by coextrusion or lamination. Both materials represent, above all, a cost-effective alternative to coextrusion systems with polyvinyl or TPU surfaces. Lustran ST 4566 is based on ABS, Centrex ST 4766 on ASA. Their strengths are resistance to chemicals and weathering. Centrex ST 4766 also displays excellent UV stability and is consequently particularly suitable for components that are exposed to direct sunlight. Both products are targeted at soft touch components used, for example, in the interiors of trucks, buses and automobiles and on the outsides of boats, agricultural machinery and construction vehicles. A current application is the main trim of the A- pillar of a Volvo bus.

14 Page 13 of 15 ( e-13) A new material for sheet extrusion with which we are enjoying considerable success in the Asia-Pacific area is Lustran ABS 595CP. The qualities of this white-colored ABS make it ideally suited to the manufacture of inliners for refrigerators and freezers. It is easy to thermoform, is highly impact resistant and has good color stability. In addition it is extremely resistant to cyclopentane and other blowing agents contained in polyurethane foam for low-temperature insulation. ( e-14)

15 A further example of our expertise with color, this time from an application in Asia, is the coated trim for Honda motorbikes. This is made from Lustran ABS 970. The coatability of this material has been optimized to offer excellent surface quality with standard paint systems used by Asian automobile and motorbike manufacturers. Its high impact resistance ensures that the trim does not fracture or splinter in the event of a crash, thereby injuring the driver. The parts are colored in the same shade as the paint. In this way small scratches and signs of wear are not immediately obvious. Page 14 of 15 ( e-15) The use of SAN in these housing components for UPS (Uninterrupted Power Supply) batteries is an application which presents challenges because of the size of the parts involved. These batteries provide alarm systems, emergency lighting or computer systems, for example, with an uninterrupted supply of electricity in the event of a power cut. The parts are made of Absolan 2300 from Lustran Polymers in India. Our thermoplastic was chosen for its excellent transparency, which allows the battery interior to be checked visually, and good resistance to chemicals typically used in batteries. SAN is also extremely stiff, lending stability to large components. Ladies and gentlemen, I have galloped rather rapidly through some new and attractive applications of our products. All these examples not only demonstrate our innovative potential, but also reflect the fact that we have successfully steered our business in a new strategic direction. Wide-ranging restructuring measures and programs have also

16 contributed to the increase in efficiency. Lustran Polymers is now profitable even if returns do not yet come up to expectations. High energy and raw material costs, in particular, are currently exerting strong pressure on the margins of all ABS and SAN producers. These cannot be absorbed by the business. Nevertheless we are on the right path strategically and will continue to work at making improvements. All in all our efforts are aimed at becoming even more competitive and being a reliable partner for our customers at a global level. Page 15 of 15 Thank you for your attention. Forward-looking Statements This news release contains forward-looking statements based on current assumptions and forecasts made by LANXESS AG management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.