LANXESS AG — Interim / Quarterly Report 2013

Nov 19, 2013

Interim Report Q3 2013

January 1 to September 30, 2013

Key Data

€ million	Q3 2012	Q3 2013	Change %	9M 2012	9M 2013	Change %
Sales	2,159	2,050	(5.0)	6,971	6,286	(9.8)
EBITDA pre exceptionals	254	187	(26.4)	984	559	(43.2)
EBITDA margin pre exceptionals	11.8%	9.1%		14.1%	8.9%
EBITDA	250	166	(33.6)	958	501	(47.7)
EBIT pre exceptionals	159	73	(54.1)	710	233	(67.2)
EBIT	155	52	(66.5)	682	169	(75.2)
EBIT margin	7.2%	2.5%		9.8%	2.7%
Net income	92	11	(88.0)	458	45	(90.2)
Earnings per share (€)	1.10	0.13	(88.0)	5.50	0.54	(90.2)
Cash flow from operating activities	344	378	9.9	424	311	(26.7)
Depreciation and amortization	95	114	20.0	276	332	20.3
Cash outflows for capital expenditures	152	146	(3.9)	381	398	4.5
Total assets				7,5191)	7,111	(5.4)
Equity (including non-controlling interests)				2,3301)	2,147	(7.9)
Equity ratio				31.0%1)	30.2%
Net financial liabilities				1,4831)	1,822	22.9
Employees (as of September 30)				17,1771)	17,502	1.9
2012 figures restated

1) previous year as of December 31, 2012

Highlights Q3 2013

LANXESS increases competitiveness

LANXESS is acting to address the challenges posed by the current economic situation – especially for its rubber business – with the "Advance" program announced at the company's Media and Analysts' Day. The aim is to achieve about €100 million in annual savings from 2015 onward through efficiency improvements and selective restructuring. This will lead to a reduction of about 1,000 in LANXESS's global workforce by the end of 2015. Total exceptional charges of roughly €150 million

will be taken for the "Advance" program in 2013 and 2014. At the same time, LANXESS is exploring strategic options for certain non-core businesses that together employ some 1,000 people and account for roughly €500 million in sales and about €30 million in EBITDA pre exceptionals. In addition, the capital expenditure budget for this year was reduced to about €600 million, with the focus on the key strategic projects. The future emphasis will be on small projects and capacity expansions.

Claudia Nemat joins LANXESS Supervisory Board

The Cologne registry court on July 30, 2013 resolved that Claudia Nemat be appointed to the Supervisory Board of LANXESS AG with immediate effect. She assumed the position left vacant by the death of Ulrich Middelmann. An acknowledged expert on high-tech and corporate governance issues, Nemat has been a member of the Board of Management of Deutsche Telekom AG, Bonn, Germany, since October 2011. She is responsible for the Board area Europe and the strategic steering of technology. Before joining Deutsche Telekom, Nemat spent 17 years working in various positions for the consultancy McKinsey&Company.

Contents

Key Data

• Q3 Overview 1
• LANXESS Stock 2
• Interim Group Management Report 4
• Group structure 4
• Business trends and economic environment 4
• Business trends by region 8
• Segment information 9
• Statement of financial position and financial condition 11
• Research and development 13

• Significant opportunities and risks 14

• Outlook 14

• Events after the end of the reporting period 15
• Condensed Consolidated Interim Financial Statements 16
• Statement of Financial Position 16
• Income Statement 17
• Statement of Comprehensive Income 18
• Statement of Changes in Equity 18
• Statement of Cash Flows 19
• Segment and Region Data 20

• Notes to the Condensed Consolidated Interim Financial Statements 21

• Responsibility Statement 26

• Financial Calendar, Contacts 27
• Specialist for innovative lightweight construction solutions 28
• Masthead 29

Group headquarters move to Cologne successfully completed

LANXESS now manages its global operations from the LANXESS Tower in Cologne. The new Group headquarters unites all of the company's central management functions under one roof for the first time, significantly improving efficiency. The LANXESS Tower is not only equipped with modern technology but also stands for sustainable architecture. Cologne has an infrastructure that is unique in North Rhine-Westphalia, with excellent transport connections. The city is also a renowned academic and research center, making it a magnet for the best talent.

The former LANXESS headquarters building in Leverkusen will now serve as the corporate headquarters of the Saltigo business unit. The relocation from Langenfeld to Leverkusen means Saltigo's headquarters will now be in the immediate vicinity of research and production operations, allowing the business unit to more efficiently pursue its growth aspirations. The company plans to invest up to €100 million in its agrochemical active ingredients business in Leverkusen through 2015.

Successful switch to innovative ACE technology

LANXESS has converted its largest production line for Keltan EPDM rubber at the site in Sittard-Geleen, Netherlands, to the innovative ACE technology. The project was completed on schedule and within budget. The capital expenditure volume for the conversion amounted to approximately €12 million. The new line has a capacity of 95,000 metric tons per year, which is more than half the total capacity of what is currently the world's largest EPDM facility. The ACE process enables LANXESS to supply a very broad range of high-quality EPM and EPDM grades in consistent quality, chlorine-free and with high degrees of purity. The process also uses less energy and produces no catalyst waste.

ACE technology will also be used at the new world-scale facility in Changzhou, China. Construction of this plant is fully on schedule. Some 45% of the total €235 million investment is due to be made by the end of 2013. The plant will have a capacity of 160,000 metric tons per year and is expected to be completed at the end of 2014. Start-up is planned for 2015.

LANXESS Stock

Our stock started the third quarter below €50, briefly surpassing this level again in early September. However, the price dipped again toward the end of the reporting period, and LANXESS stock closed on September 30 at €47.98 for a gain of 3.7% on the quarter.

Germany's lead index DAX reached a record high in the third quarter of 2013, topping 8,000 points in early July after ending the previous quarter at 7,959 points. During the third quarter the index continued to gain, sometimes substantially, reaching a high of over 8,600 points in September. Positive economic data from Germany and other eurozone countries continued to drive the DAX at the beginning of the period, while from September onward it was mostly news from the United States that led to fresh records. For example, the U.S. Federal Reserve announced that it would keep its bond purchases at current levels to support the economy. In addition, hope for a diplomatic solution regarding the conflict in Syria and thus the avoidance of U.S. military intervention gave rise to distinct optimism on the stock markets. Thus two major issues that had weighed on the markets for some time – the Fed's monetary policy and Syria – saw some progress in the third quarter. The DAX closed on September 30 at 8,594 points, up nearly 8%.

LANXESS's benchmark index, the Dow Jones STOXX 600 ChemicalsSM, which had performed poorly in the preceding quarter to close at 670 points, gained more than 30 points in the third quarter. It closed on September 30 at 705 points, up 5.2% on the period.

LANXESS stock did not benefit in the third quarter from the generally positive market environment, as capital market participants focused primarily on the company's own corporate newsflow. At the beginning of August, we reported on a persistently challenging market environment and released sales and earnings figures for the second quarter of 2013 that were below the prior-year period. We also reiterated our view that demand would remain weak for the rest of the year and, on that basis, predicted that EBITDA pre exceptionals for the full year 2013 would come in at between €700 million and €800 million. Upon publication of our second-quarter results we announced that additional steps would be taken to increase our competitiveness. These measures were then presented in mid-September at our Media Day and an analysts' meeting. Our "Advance" program is designed to achieve annual savings of €100 million from 2015 onward. The capital market responded favorably to this announcement of measures to address the current challenges. Our stock reached its high for the quarter of €53.16 around that time, but was unable to sustain this level and finished the quarter at €47.98. Not until the beginning of the current fourth quarter did the price rise above €50 once again.

Despite an increase of 3.7%, LANXESS stock underperformed the DAX and DJ STOXX 600 ChemicalsSM, which profited from very positive overall market sentiment.

A summary of other developments at LANXESS during the third quarter is provided on page 1.

		Q4 2012	Q1 2013	Q2 2013	Q3 2013
Capital stock/no. of shares1)	€/no. of shares	83,202,670	83,202,670	83,202,670	83,202,670
Market capitalization1)	€ billion	5.51	4.60	3.85	3.99
High/low for the period	€	68.83/59.33	68.59/54.19	59.15/44.91	53.16/42.45
Closing price1)	€	66.27	55.32	46.28	47.98
Trading volume	million shares	33.257	50.561	61.358	57.833
Earnings per share	€	0.62	0.30	0.11	0.13

LANXESS Stock

1) End of quarter: Q4: December 31, 2012; Q1: March 31, 2013; Q2: June 30, 2013; Q3: September 30, 2013

Interim Group Management Report

as of September 30, 2013

• Market environment remains difficult
• Sales down 5.0% against prior-year quarter
• Selling price adjustments due mainly to lower raw material costs
• EBITDA pre exceptionals down from €254 million to €187 million
• EBITDA margin 9.1% vs.11.8% for year-earlier quarter
• Net income and earnings per share decline to €11 million and €0.13, respectively
• Net financial liabilities reduced from the previous quarter to €1,822 million
• Launch of "Advance" program to increase competitiveness
• Guidance for 2013 narrowed: EBITDA pre exceptionals expected to be between €710 million and €760 million

Group structure

Legal structure

LANXESS AG is the parent company of the LANXESS Group and functions largely as a management holding company. LANXESS Deutschland GmbH and LANXESS International Holding GmbH are wholly owned subsidiaries of LANXESS AG and control the other subsidiaries and affiliates both in Germany and elsewhere.

A list of the principal direct and indirect subsidiaries of LANXESS AG and a description of the Group's management and control organization are provided on page 79 of the Annual Report 2012.

Additions to the Group portfolio

During the first nine months of 2013, we made one acquisition in Singapore and one in France to expand the Group portfolio. Details are given in the Notes to the Condensed Consolidated Interim Financial Statements as of September 30, 2013.

Business and strategy

The LANXESS Group is structured in three segments with, as of January 1, 2013, 14 business units, each of which conducts its own operations and has global profit responsibility. In response to the growing significance of the global EPDM rubber business, we divided the Technical Rubber Products business unit within the Performance Polymers segment into two units, effective as of the beginning of the year. The newly formed Keltan Elastomers business unit focuses solely on synthetic ethylene-propylene-diene rubber (EPDM). The remaining Technical Rubber Products portfolio has been renamed the High Performance Elastomers business unit. Additionally, the Ion Exchange Resins business unit was renamed Liquid Purification Technologies, reflecting the significant expansion of the product portfolio to include membrane filtration technology for reverse osmosis. No other changes have been made to the Group's organizational structure or strategy so far this year. The business units are supported by centralized services and by local organizations in the countries. Further details are given on pages 80–82 of the Annual Report 2012.

There were no material changes to the production base, product portfolio or principal sales markets in the reporting period.

Business trends and economic environment

Business conditions

General economic situation The global economy expanded by 3.3% in the third quarter of 2013. The eurozone as a whole recorded slight growth in economic output, while both private and public debt levels hampered the development of demand in Western Europe. Growth in the U.S. lagged somewhat behind the preceding quarter and was below the global average. Economic momentum was restrained in the emerging economies as well. China, however, showed somewhat positive development in the third quarter, surpassing its annual growth forecast by a small margin.

Chemical industry The global chemical industry continued to expand in the third quarter of 2013, with growth of 3.5%. As in the previous quarter, this growth was mainly driven by China and the United States. By contrast, chemical production in Europe and Latin America declined.

Evolution of major user industries Global automobile production in the third quarter grew by 2.5%, a somewhat slower rate than for the second quarter. Development again varied from one region to another. Significant impetus came from China and the U.S., with Brazil also posting a slight increase. By contrast, European production moved back once more.

The modest recovery in the demand for both original equipment tires and replacement tires that took place in the second quarter continued in the third quarter, with North America outpacing Europe in terms of growth. While China saw a tangible expansion of production as a whole, Brazil registered particularly strong growth in the demand for original equipment tires for heavy-duty commercial vehicles.

Weighed down by the investment-restricting debt levels of private households and the public sector, Europe's construction sector continued to recede. By contrast, the U.S. construction industry continued the expansion that began earlier this year and is being driven by the demand for new housing.

The demand for agrochemicals was at the level of the preceding quarter, rising by 1.3%. The slower growth was due to weak demand in the U.S. and a slight decrease in Europe.

Comparison of forecast and actual business

For fiscal 2013 we had expected the volatile, sideways price trend for raw materials, especially petrochemical raw materials, to continue. During the first nine months, however, procurement prices for our raw materials declined overall compared with the prior-year period, especially because of falling prices for butadiene.

Business development in the first nine months of 2013 was held back by what remained a challenging economic environment. As expected, the situation varied from one segment to another with demand for the products of our Performance Polymers segment remaining weak. In the Advanced Intermediates segment, the forecast of continuing good demand for our agrochemical products proved correct, and sales came in level with the corresponding period of last year. Sales of the Performance Chemicals segment, however, receded in all regions despite largely stable prices and volumes and were weighed down by shifts in currency parities.

EBITDA pre exceptionals for the first nine months of 2013 came in at €559 million. We already stated in our Half-Year Financial Report that the attainment of the earnings target for 2014 – EBITDA pre exceptionals of €1.4 billion – is no longer realistic given the persistently weak demand in the current year.

As usual, the guidance we are now issuing for the current year can be found in the Outlook section of this interim management report.

Comparison of Forecast and Actual Business in 2013

	Forecast for 2013 in Annual Report 2012/ Q1 Interim Report	Forecast for 2013 in H1 Interim Report	Actual Q3 Interim Report 9M 2013
Business development: Group
EBITDA pre exceptionals	EBITDA pre exceptionals in 2013: below €1 billion	EBITDA pre exceptionals in 2013: €700 million to €800 million	9M: €559 million
Business development: segments
Performance Polymers	Most dynamic development in the emerging markets of Asia	Continuing weak demand; most dynamic development in the emerging markets of Asia	9M: sales –15%
Advanced Intermediates	Good demand for agrochemicals	Continuing good demand	9M: sales on prior-year level
Performance Chemicals	Demand stimulus from North America and Asia	Unchanged	9M: sales –4%
Raw material prices	Sideways movement in procurement costs and continuing volatility	Unchanged	below prior-year level
Financial condition: Group
Cash outflows for capital expenditures	€650–700 million	approx. €600 million	9M: €398 million

Sales

Group sales in the third quarter of 2013 amounted to €2,050 million, down €109 million or 5.0% from the prior-year period. The gratifying volume development, which led to a 9.4% rise in sales, did not fully offset the drop in selling prices. Shifts in exchange rates also had a negative effect. However, there was a slight positive effect from the acquisitions made in the second quarter and in the previous year. Adjusted for currency and portfolio changes, operational sales declined by 1.7% against the prior-year quarter.

Effects on Sales

%	Q3 2013	9M 2013
Price	(11.1)	(8.4)
Volume	9.4	0.1
Currency	(3.6)	(1.8)
Portfolio	0.3	0.3
	(5.0)	(9.8)

Our Performance Polymers segment recorded a significant 8.4% decline in sales against the prior-year quarter. Here, lower prices in the procurement market, especially for the key raw material butadiene, and a persistently difficult market environment led to selling price adjustments that were not offset by growth in volumes. Negative currency effects also impacted sales.

Sales of our Advanced Intermediates segment were level with the same period a year ago. Volumes grew in light of ongoing brisk demand for products from the aromatics network for the agrochemical industry. However, lower raw material prices led to selling price adjustments. Sales development was also hampered by currency effects.

Sales in our Performance Chemicals segment receded slightly, coming in 1.6% below the prior-year period. Higher volumes were more than offset by adverse exchange rate developments, while selling prices remained stable. The acquisition made in our Material Protection Products business unit in the second quarter of 2013 had no significant impact on sales.

LANXESS raised sales in the Asia-Pacific region, while sales in all other regions receded. The largest declines were recorded in North America and Latin America, while Germany and EMEA (excluding Germany) remained the most robust regions with declines of 7.1% and 0.8%, respectively. Business development across the regions was particularly dependent on the performance of the Performance Polymers segment.

Order book status

Most of our business is not subject to long-term agreements on fixed volumes or prices. Instead, our business is characterized by long-standing relationships with customers and revolving master agreements. Our activities are focused on demand-driven orders with relatively short lead times which do not provide a basis for forwardlooking statements about our capacity utilization or volumes. Our business is managed primarily on the basis of regular Group-wide forecasts with respect to Group operating targets.

Any disclosure of the Group's order book status as of the end of a reporting period therefore would not be indicative of the Group's short- or medium-term earning power. For this reason, no such disclosure is made in this report.

Gross profit

The cost of sales fell at a slower rate than sales, decreasing by 2.2% to €1,662 million for the quarter. Production costs rose due to higher volumes, while lower raw material prices and currency changes had the opposite effect.

€ million	Q3 2012	Q3 2013	Change %	Proportion of Group sales %	9M 2012	9M 2013	Change %	Proportion of Group sales %
Performance Polymers	1,192	1,092	(8.4)	53.3	4,010	3,404	(15.1)	54.2
Advanced Intermediates	403	403	0.0	19.7	1,231	1,229	(0.2)	19.5
Performance Chemicals	555	546	(1.6)	26.6	1,698	1,627	(4.2)	25.9
Reconciliation	9	9	0.0	0.4	32	26	(18.8)	0.4
	2,159	2,050	(5.0)	100.0	6,971	6,286	(9.8)	100.0

Sales by Segment

EBITDA Pre Exceptionals by Segment

€ million	Q3 2012	Q3 2013	Change %	9M 2012	9M 2013	Change %
Performance Polymers	152	84	(44.7)	664	290	(56.3)
Advanced Intermediates	75	71	(5.3)	224	216	(3.6)
Performance Chemicals	75	72	(4.0)	236	190	(19.5)
Reconciliation	(48)	(40)	16.7	(140)	(137)	2.1
	254	187	(26.4)	984	559	(43.2)
2012 figures restated

Gross profit came in at €388 million, down significantly by €72 million or 15.7% from the prior-year quarter. The gross profit margin declined from 21.3% to 18.9%. This development was mainly attributable to price effects from sales and raw materials that were negative overall, along with higher manufacturing costs. Higher volumes had the opposite effect. Shifts in exchange rates had a slightly negative effect, while capacity utilization was roughly at the level of the prior-year period.

EBITDA and EBIT

The third-quarter operating result before depreciation and amortization (EBITDA) pre exceptionals decreased compared to the same period a year ago by €67 million or 26.4% to €187 million. This was mainly the result of lower market prices, particularly for synthetic rubber, while increased volumes had the opposite effect. Earnings were additionally held back by adverse currency effects. Selling expenses, at €186 million, were more or less flat with the same period of 2012. The expenses for regional and central research activities came to €43 million, against €49 million in the prior-year period. The Group's EBITDA margin pre exceptionals declined from 11.8% to 9.1%.

EBITDA pre exceptionals in our Performance Polymers segment receded by €68 million in the third quarter, to €84 million. The positive volume development did not offset the selling price adjustments, which were driven by raw material prices. Adverse exchange rate effects, inventory devaluation and our targeted destocking likewise had a negative impact.

In our Advanced Intermediates segment, EBITDA pre exceptionals posted a slight decrease of €4 million to €71 million. Lower prices for raw materials were passed along to the market. A positive volume effect from the increased demand for agrochemicals was counteracted by exchange rate developments.

EBITDA pre exceptionals for the Performance Chemicals segment, at €72 million, was only €3 million below the prior-year period. At segment level, positive volume effects were more than offset by higher manufacturing and selling expenses and negative currency effects. There was a small positive portfolio effect from the acquisition made in Singapore in the second quarter.

The Group operating result (EBIT) came to €52 million in the third quarter of 2013, compared with €155 million in the year-earlier period. Due to the substantial acquisition and capital expenditure activity of recent years, depreciation and amortization was €19 million or 20.0% above the prior-year quarter, at €114 million. The exceptional charges included in other operating expenses totaled €21 million, with the full amount EBITDA-effective. These charges related mainly to the "Advance" program for increasing efficiency and competitiveness and to expenses for the design and implementation of IT projects. Exceptional charges in the prior-year quarter amounted to €4 million.

Financial result

The financial result for the third quarter of 2013 was minus €32 million, compared with minus €36 million for the prior-year period. Interest expense, at €28 million, slightly exceeded the previous year's €25 million. Capitalized construction-period borrowing costs were below the corresponding period of last year due to the start-up of the butyl rubber facility in Singapore. The earnings contribution from companies accounted for in the consolidated financial statements using the equity method was €0 in the reporting period, against minus €3 million in the prior-year quarter.

Income before income taxes

Income before income taxes for the third quarter came to €20 million, compared with €119 million for the prior-year period. The effective tax rate of 45.0% for the quarter is not meaningful due to the low pre-tax earnings. The figure for the year-earlier period was 22.7%.

Net income and earnings per share

Non-controlling interests accounted for a negative income of less than minus €1 million in the reporting period, against positive income of less than €1 million a year ago. Net income for the third quarter came to €11 million, compared with €92 million for the prioryear period. With the number of LANXESS shares in circulation unchanged, third-quarter earnings per share dropped substantially from €1.10 to €0.13.

Business trends by region

Sales in the EMEA (excluding Germany) region decreased by 0.8% to €591 million in the third quarter of 2013. Adjusted for currency effects and minor portfolio changes, sales were down by 0.6%. The slight contraction was mainly attributable to the Performance Polymers segment, which recorded a mid-single-digit percentage decline in sales. By contrast, the Advanced Intermediates segment raised sales by a similar proportion. Business in the Performance Chemicals segment was slightly below the same period of last year. Sales in the region receded especially in France, the Netherlands, Spain and Belgium. Positive impetus came from Ireland, Italy and the Czech Republic, which posted some significant sales gains compared to the prior-year quarter.

With a 28.8% share of total sales against 27.6% in the corresponding period of last year, EMEA (excluding Germany) remained the largest of the LANXESS Group's regions in terms of sales.

In Germany, our sales for the third quarter of 2013 were down by 7.1% to €364 million. This decline was attributable to the Performance Polymers segment, where business showed a low-doubledigit percentage decrease against the year-earlier period. By contrast, sales in the Advanced Intermediates and Performance Chemicals segments nearly matched the prior-year quarter.

Germany's share of Group sales came to 17.8% for the quarter, against 18.2% for the prior-year period.

Sales in North America shrank by 12.5% in the third quarter of 2013 to €342 million. Adjusted for exchange rate effects, business was down by 7.5%. This decline, too, was mainly a reflection of business development in the Performance Polymers segment, where sales receded by a double-digit percentage. By contrast, sales in the Advanced Intermediates segment increased significantly from the prior-year quarter, posting double-digit growth. Business also expanded in the Performance Chemicals segment, where sales rose by a mid-single-digit percentage.

The North America region's share of Group sales came to 16.7% for the quarter, against 18.1% for the same period a year ago.

Sales in Latin America decreased by a substantial 17.1% to €238 million in the third quarter of 2013. Adjusted for currency effects, the decline amounted to 10.9%. This development was attributable to the Performance Polymers segment, where sales declined by a low double-digit percentage. Sales in the Advanced Intermediates segment were also well below the level of the prior-year quarter. The Performance Chemicals segment proved more robust by comparison, with a sales decline in the low single digits. Business development in Latin America was mainly determined by a drop in sales in Brazil and Mexico compared to the prior-year quarter.

The region's share of Group sales came to 11.6% for the quarter, against 13.3% for the same period a year ago.

Third-quarter sales in the Asia-Pacific region increased by 4.5% to €515 million. Adjusted for currency and portfolio effects, sales grew by 11.1%. The Performance Polymers segment drove this development with double-digit growth. Sales in the Performance Chemicals segment increased by a high-single-digit percentage. Business in the Advanced Intermediates segment, however, edged down by a low-single-digit percentage against the corresponding period of last year. China, Hong Kong, India and Thailand accounted for a major share of business growth in the region, while sales in Malaysia and South Korea declined.

LANXESS generated 25.1% of the Group's quarterly sales in this region, compared with 22.8% in the prior-year quarter.

Sales by Market

		Q3 2012		Q3 2013	Change		9M 2012		9M 2013	Change
	€ million	%	€ million	%	%	€ million	%	€ million	%	%
EMEA (excluding Germany)	596	27.6	591	28.8	(0.8)	1,945	27.9	1,838	29.3	(5.5)
Germany	392	18.2	364	17.8	(7.1)	1,204	17.3	1,096	17.4	(9.0)
North America	391	18.1	342	16.7	(12.5)	1,253	18.0	1,026	16.3	(18.1)
Latin America	287	13.3	238	11.6	(17.1)	919	13.2	759	12.1	(17.4)
Asia-Pacific	493	22.8	515	25.1	4.5	1,650	23.6	1,567	24.9	(5.0)
	2,159	100.0	2,050	100.0	(5.0)	6,971	100.0	6,286	100.0	(9.8)

Segment information

Performance Polymers

		Q3 2012		Q3 2013	Change		9M 2012		9M 2013	Change
	€ million	Margin %	€ million	Margin %	%	€ million	Margin %	€ million	Margin %	%
Sales	1,192		1,092		(8.4)	4,010		3,404		(15.1)
EBITDA pre exceptionals	152	12.8	84	7.7	(44.7)	664	16.6	290	8.5	(56.3)
EBITDA	151	12.7	76	7.0	(49.7)	661	16.5	282	8.3	(57.3)
Operating result (EBIT) pre exceptionals	99	8.3	21	1.9	(78.8)	513	12.8	102	3.0	(80.1)
Operating result (EBIT)	98	8.2	13	1.2	(86.7)	510	12.7	94	2.8	(81.6)
Cash outflows for capital expenditures1)	93		86		(7.5)	241		229		(5.0)
Depreciation and amortization	53		63		18.9	151		188		24.5
Employees as of September 30 (previous year: as of Dec. 31)	5,348		5,433		1.6	5,348		5,433		1.6
1) intangible assets and property, plant and equipment

Following a weak first half, business development in our Performance Polymers segment continued to lag behind the prior year in the third quarter of 2013. Sales decreased by 8.4% to €1,092 million. A persistently difficult market environment and lower prices for raw materials, especially the key raw material butadiene, led to a 19.1% decrease in selling prices. Volumes, however, were a significant 14.0% ahead of the prior-year quarter. A positive portfolio effect of 0.3% from Bond-Laminates GmbH, Brilon, Germany, which was acquired in September 2012, was more than offset by negative currency effects of 3.6%.

Decreases in market prices affected all of the segment's business units, while volumes were mostly higher. In addition, selling price adjustments driven by raw material price changes had an adverse impact on sales. Volumes were higher in the Butyl Rubber business unit, partly in light of the capacity added by the completion of the butyl rubber facility in Singapore. The Performance Butadiene Rubbers business unit, which, like Butyl Rubber, has close links to the tire industry and thus to the replacement tire and original equipment manufacturer markets, noted a drop in selling prices that was driven by raw material prices. In the High Performance Materials business unit, higher volumes more than compensated for the lower selling prices. Opposing currency and portfolio effects had no significant effect on aggregate. Our Keltan Elastomers and High Performance Elastomers business units also recorded higher volumes and lower selling prices compared to the same period a year ago. Segment sales developed positively in the Asia-Pacific region, but fell in the other regions.

EBITDA pre exceptionals in the Performance Polymers segment fell by €68 million to €84 million in the third quarter. Although volumes rose in all of the business units against a weak prior-year quarter, this effect was more than offset by a drop in selling prices. Earnings were also affected by inventory devaluation, our targeted destocking and shifts in exchange rates. The segment's EBITDA margin decreased as a result, from 12.8% to 7.7% for the quarter.

The €8 million of exceptional charges in segment EBITDA related mainly to measures associated with the "Advance" program.

Advanced Intermediates

		Q3 2012		Q3 2013	Change		9M 2012		9M 2013	Change
	€ million	Margin %	€ million	Margin %	%	€ million	Margin %	€ million	Margin %	%
Sales	403		403		0.0	1,231		1,229		(0.2)
EBITDA pre exceptionals	75	18.6	71	17.6	(5.3)	224	18.2	216	17.6	(3.6)
EBITDA	75	18.6	71	17.6	(5.3)	224	18.2	220	17.9	(1.8)
Operating result (EBIT) pre exceptionals	58	14.4	51	12.7	(12.1)	174	14.1	160	13.0	(8.0)
Operating result (EBIT)	58	14.4	51	12.7	(12.1)	174	14.1	164	13.3	(5.7)
Cash outflows for capital expenditures1)	22		28		27.3	54		70		29.6
Depreciation and amortization	17		20		17.6	50		56		12.0
Employees as of September 30 (previous year: as of Dec. 31)	2,841		2,871		1.1	2,841		2,871		1.1
1) intangible assets and property, plant and equipment

Sales of the Advanced Intermediates segment in the third quarter of 2013 were flat with the prior-year period at €403 million. Volumes advanced by 4.7%, partly in light of the higher demand for agrochemicals, while selling price adjustments driven by changes in raw material costs resulted in a 2.5% negative price effect. Currency effects led to an additional 2.2% decline in sales.

Continuation of the gratifying demand from the agrochemical sector and the flavors and fragrances industry brought about a positive volume effect in both of the segment's business units. In the Advanced Industrial Intermediates business unit, selling price adjustments made in response to raw material price changes had the opposite effect. Exchange rate developments also had an adverse impact on sales. By contrast, selling prices in the Saltigo business unit were slightly above the previous year. This factor along with the volume growth contributed to the gratifying sales development. Growth in this segment was driven by North America and EMEA (excluding Germany), while business in the other regions receded.

EBITDA pre exceptionals in the Advanced Intermediates segment decreased by a modest €4 million or 5.3% against the prior-year quarter, to €71 million. The effects of higher volumes and lower raw material costs were offset by a decrease in selling prices and adverse effects from shifts in currency parities. The EBITDA margin remained strong at 17.6%, against 18.6% in the prior-year quarter.

Performance Chemicals

		Q3 2012		Q3 2013	Change		9M 2012		9M 2013	Change
	€ million	Margin %	€ million	Margin %	%	€ million	Margin %	€ million	Margin %	%
Sales	555		546		(1.6)	1,698		1,627		(4.2)
EBITDA pre exceptionals	75	13.5	72	13.2	(4.0)	236	13.9	190	11.7	(19.5)
EBITDA	75	13.5	72	13.2	(4.0)	221	13.0	156	9.6	(29.4)
Operating result (EBIT) pre exceptionals	54	9.7	51	9.3	(5.6)	173	10.2	126	7.7	(27.2)
Operating result (EBIT)	54	9.7	51	9.3	(5.6)	156	9.2	86	5.3	(44.9)
Cash outflows for capital expenditures1)	29		24		(17.2)	61		77		26.2
Depreciation and amortization	21		21		0.0	65		70		7.7
Employees as of September 30 (previous year: as of Dec. 31)	6,031		5,938		(1.5)	6,031		5,938		(1.5)
1) intangible assets and property, plant and equipment

Third-quarter sales of the Performance Chemicals segment declined by 1.6% year on year to €546 million. Selling prices were virtually flat with the prior-year quarter, declining by 0.2%. Volumes rose by 2.9%, and a positive portfolio effect of 0.4% resulted from the recent acquisition in Singapore. Business was hampered by negative currency effects of 4.7%.

Volumes in this segment showed an overall increase from the prioryear quarter. However, developments varied across the individual business units. There was a clearly positive volume effect in the Rhein Chemie, Functional Chemicals, Liquid Purification Technologies and Material Protection Products business units. In the Liquid Purification Technologies business unit, the business with water treatment products posted particularly good growth. The Material Protection Products business unit recorded sales increases, including in the area of paints and coatings. The Rubber Chemicals business unit also showed volume growth along with higher selling prices. The Leather business unit, which experienced operational problems, and the Inorganic Pigments business unit recorded negative price and volume effects. The exchange rate effect was negative in all of the segment's business units.

EBITDA pre exceptionals came in at €72 million, just €3 million or 4.0% below the year-earlier figure of €75 million. The selling price adjustments reflected lower raw material costs at the segment level. The positive volume effect was more than offset by various factors, especially higher selling costs and adverse exchange rate developments. The acquisition in Singapore had no material effect on earnings. The segment's EBITDA margin of 13.2% nearly matched the 13.5% posted for the prior-year quarter.

Reconciliation

	Q3 2012	Q3 2013	Change	9M 2012	9M 2013	Change
	€ million	€ million	%	€ million	€ million	%
Sales	9	9	0.0	32	26	(18.8)
EBITDA pre exceptionals	(48)	(40)	16.7	(140)	(137)	2.1
EBITDA	(51)	(53)	(3.9)	(148)	(157)	(6.1)
Operating result (EBIT) pre exceptionals	(52)	(50)	3.8	(150)	(155)	(3.3)
Operating result (EBIT)	(55)	(63)	(14.5)	(158)	(175)	(10.8)
Cash outflows for capital expenditures1)	8	8	0.0	25	22	(12.0)
Depreciation and amortization	4	10	>100	10	18	80.0
Employees as of September 30 (previous year: as of Dec. 31)	2,957	3,260	10.2	2,957	3,260	10.2
2012 figures restated 1) intangible assets and property, plant and equipment

EBITDA pre exceptionals for the reconciliation came to minus €40 million, compared with minus €48 million in the prior-year period. The €13 million in exceptional charges reported in the reconciliation for the third quarter related primarily to the "Advance" efficiency program and to expenses for the design and implementation of IT projects.

Statement of financial position and financial condition

Structure of the statement of financial position

As of September 30, 2013, the LANXESS Group had total assets of €7,111 million, down €408 million or 5.4% from €7,519 million on December 31, 2012. This was largely the result of a decrease in near-cash assets and inventories, partially offset by an increase in property, plant and equipment.

Non-current assets rose by €5 million to €3,752 million, with intangible assets and property, plant and equipment increasing by €34 million to €3,418 million. Cash outflows for purchases of intangible assets, property, plant and equipment in the first nine months of 2013 came to €398 million, ahead of the €381 million reported for the same period of last year. Depreciation and amortization in the first nine months totaled €332 million, compared with €276 million in the prior-year period. The first-time full consolidation of LANXESS-TSRC (Nantong) Chemical Industrial Co., Ltd., Nantong, China, previously accounted for using the equity method, and the first-time consolidation of PCTS Specialty Chemicals Pte. Ltd., Singapore, which was acquired in April, led to additions in the mid-double-digit million euro range. The carrying amount of investments accounted for using the equity method decreased accordingly by €8 million. The ratio of non-current assets to total assets was 52.8%, up from 49.8% on December 31, 2012.

Current assets amounted to €3,359 million, down by €413 million or 10.9% from December 31, 2012. Inventories decreased by €139 million or 9.1% to €1,388 million. Trade receivables, at €1,136 million, were slightly higher than at the end of 2012. Nearcash assets decreased by €261 million to €150 million following the sale of shares in money market funds. Cash and cash equivalents decreased by €18 million to €368 million, in part because of capital expenditure projects in the current fiscal year and the funding of working capital. The ratio of current assets to total assets was 47.2%, against 50.2% as of December 31, 2012.

The LANXESS Group has significant internally generated intangible assets that are not reflected in the statement of financial position in light of accounting rules. These include the brand equity of LANXESS and the value of the Group's other brands. A variety of measures were deployed in the reporting period to continually enhance these assets. These measures contributed to our continued success in positioning the business units in the market.

Our established relationships with customers and suppliers also constitute a significant intangible asset, which cannot, however, be reflected in the statement of financial position. The long-standing, trust-based partnerships with customers and suppliers, underpinned by consistent service and product quality, enable us to set ourselves apart from our competitors. Our competence in technology and innovation, also a valuable asset, is rooted in our specific knowledge in the areas of research and development and custom manufacturing. It enables us to generate significant added value for our customers.

Our commercial success is also founded on the knowledge and experience of our employees. In addition, we have sophisticated production and business processes that create competitive advantages for us in the relevant markets.

Equity decreased by €183 million or 7.9% compared with December 31, 2012, to €2,147 million, predominantly due to the dividend payment and the net negative effect of currency translation. The net income of €45 million for the first nine months had the opposite effect. The ratio of equity to the Group's total assets was 30.2% as of September 30, 2013, against 31.0% as of December 31, 2012.

Non-current liabilities fell by €497 million to €3,062 million as of September 30, 2013. This change was mainly attributable to the decrease in other non-current financial liabilities, which at €1,661 million were €506 million lower than on December 31, 2012. The decrease was largely the result of the reclassification into other current financial liabilities of the Eurobond that matures in April 2014. Provisions for pensions and other post-employment benefits increased by €24 million compared to the end of 2012, to €917 million. This increase was mainly due to additional vested rights established in the reporting period and interest effects. The ratio of non-current liabilities to total assets was 43.1%, down from 47.3% as of December 31, 2012.

Current liabilities came to €1,902 million, up by €272 million or 16.7% from December 31, 2012. The increase was mainly due to the higher level of other current financial liabilities resulting from the reclassification of the Eurobond maturing in April 2014. This increase was partly offset by the business-related €144 million decrease in trade payables to €651 million and the €73 million decline in other current provisions to €367 million. The latter decline was mainly due to the utilization of provisions to pay employee bonuses for the 2012 fiscal year. In addition, other current liabilities fell by €51 million. The ratio of current liabilities to total assets was 26.7% at the end of the third quarter, compared with 21.7% at the end of 2012.

Financial condition and capital expenditures

Changes in the statement of cash flows In the first nine months of 2013 there was a net cash inflow of €311 million from operating activities, against €424 million in the prior-year period. With income before income taxes amounting to €62 million, the increase in net working capital compared to December 31, 2012 resulted in a cash outflow of €56 million. The corresponding cash outflow in the prioryear period was €339 million. The development in the reporting period was mainly attributable to lower trade payables. Our targeted destocking had an offsetting effect. Changes in other assets and liabilities in the prior-year period included payments that had to be made to counterparties under roll-over hedges for intra-Group foreign currency loans due to the decrease in the value of the euro at that time. These payments did not affect earnings.

There was a €164 net cash outflow from investing activities in the first nine months of 2013, compared with a net cash inflow of €17 million in the same period a year ago. The outflows mainly comprised purchases of intangible assets and property, plant and equipment totaling €398 million, against €381 million in the prior-year period. Depreciation and amortization amounted to €332 million. Cash inflows from the sale of financial assets came to €246 million. Cash outflows for the acquisition of subsidiaries, less acquired cash and cash equivalents, amounted to €15 million. The company acquired was PCTS Specialty Chemicals Pte. Ltd., Singapore.

Net cash used in financing activities came to €161 million, compared with €316 million in the first nine months of 2012. Cash outflows in the reporting period related mainly to interest payments and the dividend payment to LANXESS AG stockholders for fiscal 2012. Cash outflows in the prior-year period included the scheduled redemption of the Eurobond issued in 2005.

Financing and liquidity The principles and objectives of financial management discussed on page 101 of the Annual Report 2012 have remained valid during the current fiscal year. They are centered on a conservative financial policy built on long-term, secured financing.

Cash and cash equivalents decreased by €18 million compared with the end of 2012, to €368 million. The €150 million of instant-access investments in money market funds, down from €411 million at the end of 2012, were reported under near-cash assets. The Group's liquidity position thus remains sound.

Net financial liabilities totaled €1,822 million as of September 30, 2013, compared with €1,483 million as of December 31, 2012.

Net Financial Liabilities

€ million	Dec. 31, 2012	Sep. 30, 2013
Non-current financial liabilities	2,167	1,661
Current financial liabilities	167	723
less
Liabilities for accrued interest	(54)	(44)
Cash and cash equivalents	(386)	(368)
Near-cash assets	(411)	(150)
	1,483	1,822

Financing instruments off the statement of financial position As of September 30, 2013, LANXESS had no material financing items that were not reported in the statement of financial position, such as factoring, asset-backed structures or sale-and-lease-back transactions.

Significant capital expenditure projects The capital expenditures for significant projects in the Performance Polymers segment in the first nine months of the year included those for the construction of the new butyl rubber facility in Singapore for the Butyl Rubber business unit. The plant entered its commissioning phase in the first quarter of 2013 and started production in the second quarter as planned. Also in Singapore, the Performance Butadiene Rubbers business unit is currently building the world's largest production facility for neodymium-based performance butadiene rubber (Nd-PBR) with an annual capacity of 140,000 tons. This facility is due on stream in the first half of 2015. In Changzhou, China, our Keltan Elastomers business unit is constructing the world's largest production plant for EPDM rubber. This plant, which will utilize the innovative Keltan ACE technology, is due to start up in 2015. Fifty percent of production at the site in Geleen, Netherlands, has been converted to the Keltan ACE technology. The High Performance Materials business unit is investing in a new world-scale plant for polyamide plastics at the site in Antwerp, Belgium. This facility will have an annual capacity of around 90,000 tons and is scheduled for completion in

Interim Group Management Report 13

1. The capacity for glass fiber production, also in Antwerp, has been expanded. In addition, a new plant for compounding high-tech engineering plastics is under construction in Porto Feliz, Brazil. This facility is due to be completed later this year.

The Advanced Intermediates segment's Advanced Industrial Intermediates business unit has expanded cresol production at the Leverkusen site.

The Performance Chemicals segment's Inorganic Pigments business unit is building a plant in Ningbo, China, that will use state-of-the-art process technology to manufacture iron oxide red pigments. The Leather business unit has completed construction of a production plant for leather chemicals with an annual capacity of up to 50,000 tons at the site in Changzhou, China. This facility, featuring the latest technology and eco-friendly processes, came on stream in April 2013. A further investment related to the construction of a CO² concentration unit at the site in Newcastle, South Africa, which was completed in the third quarter. The Rhein Chemie business unit has built a production facility for rubber additives and release agents at the site in Lipetsk, Russia. A production plant for vulcanization bladders has come on stream at Porto Feliz, Brazil. The Liquid Purification Technologies business unit is investing in a new production line for weakly acidic cation exchange resins and a state-of-the-art facility for food-grade filling and packaging at the Leverkusen site.

Research and development

Our systematic investment in research and development has continued in 2013. Existing products and processes are being refined and optimized with a short- to medium-term time horizon. The Innovation & Technology Group Function, in particular, initiates medium- to long-term research projects to ensure the company's success in future growth areas and thus safeguard its viability going forward. In this connection two new alliances were formed with renowned research institutes in China.

Research and Development

€ million	Q3 2012	Q3 2013	Change %	9M 2012	9M 2013	Change %
Research and development expenses	49	43	(12.2)	147	134	(8.8)
in % of sales	2.3%	2.1%		2.1%	2.1%

Third-quarter research and development expenses amounted to €43 million, equivalent to 2.1% of sales revenues. These functional costs were 12.2% below the level of the prior-year quarter. Research and development expenses for the period January to September 2013 declined by 8.8% against the first nine months of last year. Our research programs are aligned to the major global megatrends that are important to us: mobility, urbanization, agriculture and water. As explained on page 132 of the Annual Report 2012, our goal is to strengthen our organic growth by enhancing our products and processes through customer- and market-oriented innovations.

Innovations in the Performance Polymers segment, which focuses on the mobility trend, included the development of two new grades of neodymium-catalyzed polybutadiene rubber. These new rubber grades have high molecular weights, which are essential for the production of tires with particularly low rolling resistance. Thanks to a new polymer chain modification technology used by LANXESS, these rubber grades have properties that make them considerably easier to process. In addition, we succeeded in producing bio-based polybutylene terephthalate (PBT), a component of our high-tech plastic Pocan, at our world-scale facility in Hamm-Uentrop, Germany. Here, sugar – a renewable feedstock – was converted into the raw material butanediol using a strategic partner's commercially proven process. This marks an important step forward in our efforts to offer bio-based versions of Pocan in the future and underscores our position as one of the leading specialty chemicals companies enabling "Green Mobility."

The Saltigo business unit, which is assigned to the Advanced Intermediates segment, launched the development of new applications for the insect repellent Saltidin, which can be added to sunscreens or impregnated into textiles.

We also drove forward our research and development activities in the Performance Chemicals segment in areas such as water treatment. Here we succeeded in developing ion exchange resins with a small bead radius that raise the efficiency of certain membrane-based electrolytic water treatment technologies, thereby extending the service life of both the resin and the membranes. This, in turn, lowers operating costs because less regenerating agent is needed and less wastewater is produced. We are also introducing a new technology and service concept for beamhouse operations in the area of leather processing. The newly developed products for the beamhouse ensure significantly better process design, particularly from an ecological point of view, partly by reducing the amount of waste.

At the end of the third quarter of 2013, LANXESS employed 911 people in research and development, compared to 843 as of December 31, 2012. This increase is partly attributable to an expansion of activities in the areas covered by the central research and development units.

For more information, readers are referred to the "Research and development" and "Opportunity report" sections of the Annual Report 2012 beginning on pages 119 and 131, respectively, including the descriptions of global megatrends.

Significant opportunities and risks

A description of the LANXESS Group's opportunities and risks is provided in the combined management report of LANXESS AG and the LANXESS Group for the 2012 fiscal year, which appears on pages 124 to 135 of the Annual Report 2012. The following changes have occurred compared with December 31, 2012: In our Performance Polymers segment, the synthetic rubber business faces increasing competition, partly from the market entry of new manufacturers, which is resulting in some overcapacities. LANXESS is pursuing a product-specific strategy in these areas based on factors such as product and process differentiation and global positioning. In addition, LANXESS has launched the "Advance" program, a Group-wide program aimed at increasing efficiency and reducing costs. Based on an overall evaluation of risk management information, the Board of Management at the present time cannot identify any sufficiently likely risks or risk combinations that would jeopardize the continued existence of LANXESS.

Outlook

LANXESS anticipates that the modest economic momentum will persist in the fourth quarter, with the emerging economies providing only limited impetus. China's economy is likely to achieve the planned rate of growth for the year. The currently tense economic situation in Europe is predicted to give way to a more stable environment. Growth in the U.S. is expected to remain moderate due to the ongoing budget uncertainty.

Other risk factors for economic development also remain substantial. Even if the situation in Europe is expected to ease, stability has not yet taken hold, and geopolitical conflicts continue to threaten economic development.

LANXESS predicts varying trends among the industry sectors. Automobile production will increase only slightly in the remaining months of 2013, driven mainly by demand in the U.S. and China. The recovery in the tire industry is expected to remain modest. We believe only the U.S. and Chinese construction sectors will develop rather more favorably in the fourth quarter, while the European construction industry should bottom out.

Against this backdrop, there will be only a slight increase in chemical production. In regional terms, most of the sector's growth will take place in the U.S., China and Middle East. In Europe, production is expected to decline slightly.

We believe the agrochemicals business will continue its steady development in the months ahead.

As for our business in the fourth quarter, we expect the sluggish trend in demand to continue. The difficult market environment, especially for our business with the automotive and tire industries, is likely to persist. We are narrowing our earnings guidance for the full year 2013 and expect to post EBITDA pre exceptionals of between €710 million and €760 million. As in the past, this forecast does not reflect any further possible inventory devaluation as these are difficult to predict.

In the second half of the year, we introduced further measures, alongside our flexible asset management and rigorous cost discipline, to cushion the impact of the persistently difficult demand situation. The "Advance" program aims to generate annual savings of around €100 million from 2015 onward through efficiency enhancements, selective restructuring and portfolio adjustments.

The program's implementation is expected to lead to headcount reductions of about 1,000 employees worldwide by the end of 2015. To this end, LANXESS has launched a voluntary separation program that includes early retirement packages and severance pay. In addition, employee and Board of Management compensation for the current fiscal year will be reduced by a certain percentage. All the measures are being implemented in consultation with the employee representatives.

Among the areas where targeted restructuring is underway is the Rubber Chemicals business unit in the Performance Chemicals segment. We have already closed a site of this unit in South Africa and transferred production capacity to Belgium.

Total exceptional charges of roughly €150 million will be taken for the "Advance" program in 2013 and 2014, including some €80 million in the current year.

As part of the portfolio adjustments, we will explore strategic options for certain non-core businesses that together account for roughly €500 million in sales and about €30 million in EBITDA pre exceptionals. These businesses employ roughly 1,000 people and include the Perlon Monofil product line of the High Performance Materials business unit, the accelerators and antioxidants of the Rubber Chemicals business unit and the nitrile butadiene rubber products of the High Performance Elastomers business unit. The affected sites are Brunsbüttel and Dormagen, Germany; Kallo, Belgium; La Wantzenau, France; Bushy Park, United States; Jhagadia, India; and Nantong, China. All options at these sites are being pursued on the basis of statutory regulations and local codetermination practices.

We will continue to prioritize our Group-wide growth strategy, which focuses on organic growth. However, in view of the challenging environment, we have reduced this year's capital expenditure budget to around €600 million and are focusing on crucial strategic projects.

We will continue to work toward our mid-term earnings goal of €1.8 billion in EBITDA pre exceptionals in 2018, but consider the achievement of this target a greater challenge than before.

Forecasts Unchanged in the Reporting Period

Information in the Annual Report 2012	Page
Future organization and corporate structure	131 ff.
Future corporate objectives and strategy	131 ff.
Future production and products	132 ff.
Future sales markets and competitive position	132 ff.
Future research and development activities	119 ff., 132
Future financing	134 f.
Future dividend policy	135

Events after the end of the reporting period

No events of special significance took place after September 30, 2013 that are expected to materially affect the financial position or results of operations of the LANXESS Group.

Condensed Consolidated Interim Financial Statements

as of September 30, 2013

LANXESS Group Statement of Financial Position

€ million	Jan. 1, 2012	Sep. 30, 2012	Dec. 31, 2012	Sep. 30, 2013
Assets Intangible assets	373	393	390	372
Property, plant and equipment	2,679	2,808	2,994	3,046
Investments accounted for using the equity method	12	13	8	0
Investments in other affiliated companies	19	19	18	14
Non-current derivative assets	8	8	16	20
Other non-current financial assets	82	9	8	11
Deferred taxes	196	233	211	199
Other non-current assets	120	116	102	90
Non-current assets	3,489	3,599	3,747	3,752
Inventories	1,386	1,601	1,527	1,388
Trade receivables	1,146	1,147	1,117	1,136
Cash and cash equivalents	178	302	386	368
Near-cash assets	350	0	411	150
Current derivative assets	8	24	28	50
Other current financial assets	27	6	6	4
Current income tax receivables	64	27	41	38
Other current assets	230	259	256	225
Current assets	3,389	3,366	3,772	3,359
Total assets	6,878	6,965	7,519	7,111
EQUITY AND LIABILITIES
Capital stock and capital reserves	889	889	889	889
Other reserves	1,4491)	1,243	1,238	1,662
Net income	01)	458	508	45
Other equity components	(280)	(294)	(321)	(461)
Equity attributable to non-controlling interests	16	16	16	12
Equity	2,074	2,312	2,330	2,147
Provisions for pensions and other post-employment benefits	679	880	893	917
Other non-current provisions	331	301	304	281
Non-current derivative liabilities	13	8	4	12
Other non-current financial liabilities	1,465	1,704	2,167	1,661
Non-current income tax liabilities	63	50	35	36
Other non-current liabilities	89	82	74	84
Deferred taxes	75	83	82	71
Non-current liabilities	2,715	3,108	3,559	3,062
Other current provisions	446	434	440	367
Trade payables	766	654	795	651
Current derivative liabilities	40	21	10	15
Other current financial liabilities	633	236	167	723
Current income tax liabilities	49	47	45	24
Other current liabilities	155	153	173	122
Current liabilities	2,089	1,545	1,630	1,902
Total equity and liabilities	6,878	6,965	7,519	7,111
2012 figures restated

1) after allocation to retained earnings

LANXESS Group Income Statement

€ million	Q3 2012	Q3 2013	9M 2012	9M 2013
Sales	2,159	2,050	6,971	6,286
Cost of sales	(1,699)	(1,662)	(5,329)	(5,098)
Gross profit	460	388	1,642	1,188
Selling expenses	(183)	(186)	(564)	(575)
Research and development expenses	(49)	(43)	(147)	(134)
General administration expenses	(80)	(76)	(236)	(230)
Other operating income	45	18	129	84
Other operating expenses	(38)	(49)	(142)	(164)
Operating result (EBIT)	155	52	682	169
Income from investments accounted for using the equity method	(3)	0	3	0
Interest income	1	0	5	1
Interest expense	(25)	(28)	(76)	(82)
Other financial income and expense	(9)	(4)	(22)	(26)
Financial result	(36)	(32)	(90)	(107)
Income before income taxes	119	20	592	62
Income taxes	(27)	(9)	(133)	(19)
Income after income taxes	92	11	459	43
of which attributable to non-controlling interests	0	0	1	(2)
of which attributable to LANXESS AG stockholders (net income)	92	11	458	45
Earnings per share (undiluted/diluted) (€)	1.10	0.13	5.50	0.54
2012 figures restated

LANXESS Group Statement of Comprehensive Income

€ million	Q3 2012	Q3 2013	9M 2012	9M 2013
Income after income taxes	92	11	459	43
Items that will not be reclassified subsequently to profit or loss
Remeasurements of defined-benefit pension plans	(81)	8	(196)	0
Income taxes	25	(2)	61	0
	(56)	6	(135)	0
Items that may be reclassified subsequently to profit or loss if specific conditions are met
Exchange differences on translation of operations outside the eurozone	(12)	(71)	(27)	(131)
Financial instruments	40	22	17	(10)
Income taxes	(11)	(6)	(4)	2
	17	(55)	(14)	(139)
Other comprehensive income, net of income tax	(39)	(49)	(149)	(139)
Total comprehensive income	53	(38)	310	(96)
of which attributable to non-controlling interests	0	1	1	(1)
of which attributable to LANXESS AG stockholders	53	(39)	309	(95)
2012 figures restated

LANXESS Group Statement of Changes in Equity

€ million	Capital	Capital	Other	Net	Other equity components		Equity	Equity	Equity
	stock	reserves	reserves	income	Currency translation adjustment	Financial instruments	attributable to LANXESS AG stockholders	attributable to non controlling interests
Jan. 1, 2012 (after allocations to retained earnings)	83	806	1,449	0	(248)	(32)	2,058	16	2,074
Dividend payments			(71)				(71)	(1)	(72)
Total comprehensive income			(135)	458	(27)	13	309	1	310
Income after income taxes				458			458	1	459
Other comprehen sive income, net of income tax			(135)		(27)	13	(149)	0	(149)
Sep. 30, 2012	83	806	1,243	458	(275)	(19)	2,296	16	2,312
Dec. 31, 2012	83	806	1,238	508	(329)	8	2,314	16	2,330
Allocations to retained earnings			508	(508)			0		0
Dividend payments			(83)				(83)		(83)
Total comprehensive income			0	45	(132)	(8)	(95)	(1)	(96)
Income after income taxes				45			45	(2)	43
Other comprehen sive income, net of
income tax			0		(132)	(8)	(140)	1	(139)
Other changes 1)			(1)				(1)	(3)	(4)
Sep. 30, 2013	83	806	1,662	45	(461)	0	2,135	12	2,147

2012 figures restated

1) effects of the transition to full consolidation and the change to proportionate consolidation

LANXESS Group Statement of Cash Flows

€ million	Q3 2012	Q3 2013	9M 2012	9M 2013
Income before income taxes	119	20	592	62
Depreciation and amortization	95	114	276	332
Gains on disposals of intangible assets and property, plant and equipment	0	0	(1)	(1)
Income from investments accounted for using the equity method	3	0	(3)	0
Financial losses	23	29	71	82
Income taxes paid/refunded	(41)	3	(90)	(38)
Changes in inventories	(22)	112	(221)	116
Changes in trade receivables	175	56	(7)	(43)
Changes in trade payables	(58)	6	(111)	(129)
Changes in other assets and liabilities	50	38	(82)	(70)
Net cash provided by operating activities	344	378	424	311
Cash outflows for purchases of intangible assets, property,
plant and equipment	(152)	(146)	(381)	(398)
Cash inflows from/outflows for financial assets	1	(69)	432	246
Cash outflows for the acquisition of subsidiaries and other businesses,
less acquired cash and cash equivalents and net of subsequent purchase
price adjustments	(35)	0	(44)	(15)
Cash inflows from sales of intangible assets, property, plant and equipment	0	0	3	2
Interest and dividends received	1	0	7	1
Net cash provided by (used in) investing activities	(185)	(215)	17	(164)
Proceeds from borrowings	0	0	391	101
Repayments of borrowings	(67)	(45)	(519)	(82)
Interest paid and other financial disbursements	(24)	(17)	(117)	(97)
Dividend payments	0	0	(71)	(83)
Net cash used in financing activities	(91)	(62)	(316)	(161)
Change in cash and cash equivalents from business activities	68	101	125	(14)
Cash and cash equivalents at beginning of period	234	274	178	386
Other changes in cash and cash equivalents	0	(7)	(1)	(4)
Cash and cash equivalents at end of period	302	368	302	368
2012 figures restated

Segment and Region Data

Key Data by Segment Third quarter

€ million	Performance Polymers			Advanced Intermediates		Performance Chemicals		Reconciliation		LANXESS
	Q3 2012	Q3 2013	Q3 2012	Q3 2013	Q3 2012	Q3 2013	Q3 2012	Q3 2013	Q3 2012	Q3 2013
External sales	1,192	1,092	403	403	555	546	9	9	2,159	2,050
Inter-segment sales	0	1	15	13	2	2	(17)	(16)	0	0
Segment/Group sales	1,192	1,093	418	416	557	548	(8)	(7)	2,159	2,050
Segment result/EBITDA pre exceptionals	152	84	75	71	75	72	(48)	(40)	254	187
EBITDA margin pre exceptionals (%)	12.8	7.7	18.6	17.6	13.5	13.2			11.8	9.1
EBITDA	151	76	75	71	75	72	(51)	(53)	250	166
EBIT pre exceptionals	99	21	58	51	54	51	(52)	(50)	159	73
EBIT	98	13	58	51	54	51	(55)	(63)	155	52
Segment capital expenditures	99	88	23	30	29	25	8	9	159	152
Depreciation and amortization	53	63	17	20	21	21	4	10	95	114
2012 figures restated

Key Data by Segment First nine months

€ million		Performance Polymers		Advanced Intermediates	Performance Chemicals		Reconciliation		LANXESS
	9M 2012	9M 2013	9M 2012	9M 2013	9M 2012	9M 2013	9M 2012	9M 2013	9M 2012	9M 2013
External sales	4,010	3,404	1,231	1,229	1,698	1,627	32	26	6,971	6,286
Inter-segment sales	0	1	44	39	7	6	(51)	(46)	0	0
Segment/Group sales	4,010	3,405	1,275	1,268	1,705	1,633	(19)	(20)	6,971	6,286
Segment result/EBITDA pre exceptionals	664	290	224	216	236	190	(140)	(137)	984	559
EBITDA margin pre exceptionals (%)	16.6	8.5	18.2	17.6	13.9	11.7			14.1	8.9
EBITDA	661	282	224	220	221	156	(148)	(157)	958	501
EBIT pre exceptionals	513	102	174	160	173	126	(150)	(155)	710	233
EBIT	510	94	174	164	156	86	(158)	(175)	682	169
Segment capital expenditures	256	241	57	78	62	83	25	31	400	433
Depreciation and amortization	151	188	50	56	65	70	10	18	276	332
Employees as of Sep. 30 (previous year: as of Dec. 31)	5,348	5,433	2,841	2,871	6,031	5,938	2,957	3,260	17,177	17,502
2012 figures restated

Key Data by Region Third quarter

€ million		EMEA (excl. Germany)		Germany		North America		Latin America		Asia-Pacific	LANXESS
	Q3 2012	Q3 2013	Q3 2012	Q3 2013	Q3 2012	Q3 2013	Q3 2012	Q3 2013	Q3 2012	Q3 2013	Q3 2012	Q3 2013
Sales by market	596	591	392	364	391	342	287	238	493	515	2,159	2,050
Proportion of Group sales (%)	27.6	28.8	18.2	17.8	18.1	16.7	13.3	11.6	22.8	25.1	100.0	100.0

Key Data by Region First nine months

€ million	EMEA (excl. Germany)			Germany		North America		Latin America		Asia-Pacific	LANXESS
	9M 2012	9M 2013	9M 2012	9M 2013	9M 2012	9M 2013	9M 2012	9M 2013	9M 2012	9M 2013	9M 2012	9M 2013
Sales by market	1,945	1,838	1,204	1,096	1,253	1,026	919	759	1,650	1,567	6,971	6,286
Proportion of Group sales (%)	27.9	29.3	17.3	17.4	18.0	16.3	13.2	12.1	23.6	24.9	100.0	100.0
Employees as of Sep. 30 (previous year: as of Dec. 31)	3,442	3,508	8,072	8,118	1,553	1,559	1,626	1,591	2,484	2,726	17,177	17,502

Notes to the Condensed Consolidated Interim Financial Statements

as of September 30, 2013

Recognition and valuation principles

The unaudited, condensed consolidated interim financial statements as of September 30, 2013 were prepared in accordance with the International Financial Reporting Standards (IFRS) and related interpretations of the International Accounting Standards Board (IASB) applicable to interim financial reporting, required to be applied in the European Union. The standards and interpretations already mandatory as of January 1, 2013 were observed in preparing the interim financial statements.

Of the standards and interpretations applicable for the first time, the amendments to IAS 19 and the new IFRS 13 (which is applied prospectively), in particular, are relevant to the LANXESS Group. Further details are given under "Accounting for pension and other post-employment benefit obligations" and "Fair value measurement." In accordance with the amendments to IAS 1, items of other comprehensive income are now segregated according to whether or not they may subsequently become reclassifiable to profit or loss, depending on whether certain conditions are met.

In compliance with IAS 34, the company opted for a condensed scope of reporting in the interim financial statements compared with the consolidated annual financial statements. Reference should be made as appropriate to the notes to the consolidated financial statements as of December 31, 2012, particularly with respect to the recognition and valuation principles applied. Joint operations, however, are no longer accounted for using the equity method but according to LANXESS's interest in their assets, liabilities, revenues and expenses. Further details are given under "Changes in the scope of consolidation."

Preparation of the consolidated interim financial statements requires that assumptions and estimates be made that have an impact on the amount and recognition of assets and liabilities in the statement of financial position, income and expenses, and contingent liabilities. All assumptions and estimates are made on the basis of conditions prevailing at the reporting date, using methods generally consistent with those applied in the consolidated financial statements for 2012. The actual figures may differ from the assumptions or estimates if the underlying conditions develop differently than predicted at the reporting date.

The present interim financial statements do not contain any items that are considered unusual because of their nature, scope or frequency and have had a significant impact on the assets, liabilities, equity, results for the period or cash flows.

The business of the LANXESS Group as a whole is not subject to pronounced seasonality. However, in light of the business activities of the individual segments, sales and earnings tend to be stronger in the first half of the year. For example, volumes of agrochemical products in the Advanced Intermediates segment tend to be higher in the first six months of the year because of the growing seasons. The businesses with products for the construction industry in the Advanced Intermediates and Performance Chemicals segments are also seasonal in that sales are higher in the summer than in the winter months, when activity is lower.

Scope of consolidation

The consolidated interim financial statements of the LANXESS Group include the parent company LANXESS AG along with all of its domestic and foreign subsidiaries.

	EMEA (excl. Germany)	Germany	North America	Latin America	Asia-Pacific	Total
Fully consolidated companies (incl. parent company)
Jan. 1, 2013	22	13	5	6	18	64
Additions					2	2
Subtractions		(1)				(1)
Changes in scope of consolidation	1					1
Sep. 30, 2013	23	12	5	6	20	66
Consolidated associates and joint ventures
Jan. 1, 2013		1			2	3
Additions		1				1
Subtractions					(1)	(1)
Sep. 30, 2013	0	2	0	0	1	3
Non-consolidated companies
Jan. 1, 2013	2	2	1	3	1	9
Additions	1				1	2
Changes in scope of consolidation	(1)					(1)
Sep. 30, 2013	2	2	1	3	2	10
Total
Jan. 1, 2013	24	16	6	9	21	76
Additions	1	1			3	5
Subtractions	0	(1)			(1)	(2)
Sep. 30, 2013	25	16	6	9	23	79

In addition, two special purpose entities in the EMEA (excluding Germany) region are included in the consolidated interim financial statements.

LANXESS acquired all of the shares of Singapore-based PCTS Specialty Chemicals Pte. Ltd. on April 5, 2013. First-time inclusion in the consolidated interim financial statements was effected from that date. The acquisition was funded from existing liquidity of the LANXESS Group. The company was assigned to the Material Protection Products business unit of the Performance Chemicals segment. The acquisition, which mainly strengthens LANXESS's portfolio of biocides for paints and coatings, was accounted for as a business combination in accordance with IFRS 3. Thus, in allocating the purchase price, the acquiree's identifiable assets, liabilities and contingent liabilities were included at fair value. The purchase price allocation was carried out in light of the information available at and immediately after the date of acquisition. According to IFRS, it can be adjusted within one year after the date of acquisition to reflect new information and findings.

The goodwill resulting from the acquisition reflects, in particular, additional sales opportunities to existing and new customers, primarily in the Asian market.

The following table shows the effects from the acquisition on the Group's financial position.

€ million	IFRS carrying amounts prior to first-time consolidation	Purchase price allocation	Carrying amounts upon first-time consolidation
Intangible assets	0	6	6
Property, plant and equipment	0	5	5
Other assets	7	0	7
Total assets	7	11	18
Non-current liabilities Current liabilities	0 1	1 0	1 1
Total liabilities	1	1	2
Net acquired assets (excluding goodwill)	6	10	16
Acquisition costs			18
Acquired goodwill (provisional)			2

Additions from the Acquisition of PCTS

The acquired activities did not materially impact Group sales or earnings, nor would they have done so if the business had already been consolidated from January 2013.

On September 14, 2013, LANXESS also acquired the phosphorus chemicals portfolio of Thermphos France S.A.R.L., Epierre, France. The acquisition essentially involved selected property, plant and equipment. The activities have been assigned to the Functional Chemicals business unit in the Performance Chemicals segment. The acquisition will not materially impact 2013 sales or earnings. Further information including the provisional purchase price allocation will be provided in the notes to the consolidated financial statements for 2013.

Tire Curing Bladders, LLC, Little Rock, United States, which was acquired last year, was consolidated for the first time as of March 14, 2012. The first-time consolidation of Bond-Laminates GmbH, Brilon, Germany, was effected from September 12, 2012. The provisional purchase price allocations were not adjusted in light of any new information or knowledge within twelve months of the respective acquisition dates and are therefore final. Details of these acquisitions and their effects on the LANXESS Group's consolidated statement of financial position are provided in the notes to the consolidated financial statements as of December 31, 2012, under the heading "Companies consolidated."

Due to the transfer of control to LANXESS AG, the investment in LANXESS-TSRC (Nantong) Chemical Industrial Co., Ltd., Nantong, China, ceased to be accounted for as a joint venture using the equity method as of the first quarter of 2013. Instead, the company was fully consolidated as a subsidiary for the first time. The transition to full consolidation had no effect on earnings. Upon the first-time full consolidation, the 50% equity attributable to non-controlling interests was included at its pro-rata share of the fair value of the fully consolidated company's net assets.

The company OOO LANXESS Lipetsk, Lipetsk, Russia, was consolidated for the first time. This had no material impact on the LANXESS Group's financial position or results of operations.

Starting in the third quarter of 2013, the investment in DuBay Polymer GmbH, Hamm, Germany, is no longer fully consolidated due to the LANXESS Group's loss of control over that company. Instead, it is included in the consolidated financial statements as a joint venture. In the LANXESS Group, joint ventures are no longer accounted for using the equity method, but according to LANXESS's interest in their assets, liabilities, revenues and expenses. The change to the latter method had no effect on earnings.

Accounting for pension and other post-employment benefit obligations

Since January 1, 2013, the LANXESS Group has applied the revised version of IAS 19 that was published in June 2011. The revisions address the recognition and measurement of expenses for definedbenefit pension plans and termination benefits. In compliance with the respective financial reporting standards, the accounting change has been applied retrospectively. There are also changes regarding the information required to be disclosed in the notes to the annual financial statements.

Since the option used by the LANXESS Group in accounting for actuarial gains and losses already corresponds to the future mandatory method, application of the revised version of IAS 19 does not significantly impact the financial position or results of operations.

The accounting change increases the provisions for pensions and other post-employment benefits and the other reserves reported as of September 30, 2012, by €1 million and €4 million, respectively, and those reported as of December 31, 2012, by €1 million and €5 million, respectively. The net incomes for the first nine months of 2012 and full year 2012 are diminished accordingly. It increased other reserves as of September 30, 2013 by €4 million and correspondingly diminished net income for the reporting period. The decline in net income was predominantly due to a higher negative balance of other financial income and expense, taking into account deferred taxes.

Earnings per share

Earnings per share for the third quarters and first-nine-month periods of 2012 and 2013 were calculated on the basis of the number of shares outstanding at the ends of the respective periods. They are derived solely from continuing operations. Since there are currently no equity instruments in issue that could dilute earnings per share, basic and diluted earnings per share are identical. For more information about equity instruments that could dilute earnings per share in the future, readers are referred to the notes to the consolidated financial statements as of December 31, 2012.

Earnings per Share

	Q3 2012	Q3 2013	Change %	9M 2012	9M 2013	Change %
Net income (€ million)	92	11	(88.0)	458	45	(90.2)
Number of outstanding shares	83,202,670	83,202,670	0.0	83,202,670	83,202,670	0.0
Earnings per share in € (undiluted/diluted)	1.10	0.13	(88.0)	5.50	0.54	(90.2)
2012 figures restated

Payment of the dividend for fiscal 2012

Pursuant to the resolution of the Annual Stockholders' Meeting on May 23, 2013, the sum of €83 million out of the distributable profit of €96 million reported in the annual financial statements of LANXESS AG as of December 31, 2012 was paid out to the stockholders on May 24, 2013. The dividend per eligible no-par share was €1.00. The remaining amount of €13 million was carried forward to new account.

Fair value measurement

The following table shows the volumes of assets and liabilities that were measured at fair value on a recurring basis as of the end of the reporting period and the levels of the fair value hierarchy into which the inputs used in valuation techniques were categorized.

Assets and Liabilities Measured at Fair Value

€ million	September 30, 2013
	Level 1	Level 2	Level 3
Non-current assets
Investments in other affiliated
companies	5	–	–
Non-current derivative assets	–	20	–
Other non-current financial assets	–	1	–
Current assets
Near-cash assets	150	–	–
Current derivative assets	–	50	–
Other current financial assets	0	–	–
Non-current liabilities
Non-current derivative liabilities	–	(12)	–
Current liabilities
Current derivative liabilities	–	(15)	–

The fair value hierarchy gives the highest priority (Level 1) to (unadjusted) quoted prices in active markets for identical assets or liabilities, the next highest priority (Level 2) to other directly or indirectly observable inputs, and the lowest priority (Level 3) to unobservable inputs.

The investments in other affiliated companies measured at fair value pertain to shares in the listed companies Gevo Inc., Englewood, United States, and BioAmber Inc., Minneapolis, United States. The item "Investments in other affiliated companies" in the statement of financial position also includes €9 million in non-listed equity instruments whose fair values at the end of the reporting period could not be reliably measured and which are therefore recognized at cost. There are currently no plans to dispose of these investments.

Most of the derivative financial instruments used by LANXESS are traded in an active, liquid market. The fair values as of the end of the reporting period pertain exclusively to forward exchange contracts and are derived from their trading or listed prices using the "forward method." Where no market price is available, values are determined using recognized capital market pricing methods based on observable market data. When determining the fair values, adjustments for LANXESS's own credit risk and counterparty credit risk are calculated for each net position.

The near-cash assets include units of money market funds that can be sold at any time and are expected to be realized within twelve months after the end of the reporting period.

In the case of financial instruments accounted for using valuation principles other than fair value measurement, the fair value – where this can be reliably determined – is normally the carrying amount. An exception in this respect are the bonds, which have a carrying amount of €1,947 million and a fair value of €2,053 million.

Additional information about the measurement of fair value and about financial instruments is provided in the notes to the consolidated financial statements as of December 31, 2012.

Notes to the segment reporting

Reconciliation of Segment Result

The reconciliation of EBITDA pre exceptionals to income before income taxes is presented in the following table:

€ million	Q3 2012	Q3 2013	9M 2012	9M 2013
Total of segment results	302	227	1,124	696
Depreciation and amortization	(95)	(114)	(276)	(332)
Other/consolidation	(48)	(40)	(140)	(137)
Exceptional items (EBITDA-effective)	(4)	(21)	(26)	(58)
Net interest expense	(24)	(28)	(71)	(81)
Income from investments accounted for using the equity method	(3)	0	3	0
Other financial income and expense	(9)	(4)	(22)	(26)
Income before income taxes	119	20	592	62

2012 figures restated

There were no segment changes in the reporting period.

Related parties

In the course of its operations, the LANXESS Group sources materials, inventories and services from a large number of business partners around the world. These include companies in which LANXESS AG has a direct or indirect interest. Transactions with these companies are carried out on an arm's-length basis.

Transactions in the third quarter and first nine months of 2013 with associated companies accounted for in the consolidated financial statements using the equity method, or subsidiaries of such companies, mainly comprised the purchase of site services in the fields

of utilities, infrastructure and logistics totaling €95 million (Q3 2012: €121 million) and €327 million (9M 2012: €363 million), respectively. Receivables of €3 million and payables of €117 million existed as of September 30, 2013 as a result of these transactions (December 31, 2012: €4 million and €67 million). Existing payment obligations to these companies under operating leases or under purchase agreements relating to planned or ongoing capital expenditure projects in the area of property, plant and equipment are immaterial.

No material business transactions were undertaken with other related parties. As in the previous year, no loans were granted to members of the Board of Management or the Supervisory Board in the first nine months of 2013.

Changes in the Composition of the Supervisory Board

On July 30, 2013, the Local Court of Cologne resolved a change to the LANXESS Supervisory Board pursuant to Section 104 of the German Stock Corporation Act. Claudia Nemat of Düsseldorf, Germany, was appointed as a stockholder representative on the Supervisory Board in place of former member Dr. Ulrich Middelmann.

Employees

The LANXESS Group had 17,502 employees as of September 30, 2013, which was 325 more than on December 31, 2012 (17,177). The principal reasons for the increase were the Group's selective growth strategy and the first-time inclusion of the employees of LANXESS-TSRC (Nantong) Chemical Industrial Co., Ltd., China, which has been fully consolidated since the first quarter of 2013. By contrast, the inclusion of the previously fully consolidated DuBay Polymer GmbH, Hamm, Germany, as of the third quarter of 2013 according to LANXESS's interest in its assets, liabilities, revenues and expenses led to a proportionate decrease in the number of employees.

The number of employees in the EMEA (excluding Germany) region rose by 66 to 3,508. Headcount in Germany came to 8,118, against 8,072 as of December 31, 2012. The workforce in North America increased by 6 to 1,559. In Latin America, headcount decreased compared to December 31, 2012, from 1,626 to 1,591. The number of employees in the Asia-Pacific region advanced by 242 from 2,484 to 2,726. This was mainly due to the investment activities in those countries and the inclusion of the employees of LANXESS-TSRC.

Responsibility Statement

To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the group, and the interim management report of the group includes a fair review of the development and performance of the business and the position of the group, together with a description of the principal opportunities and risks associated with the expected development of the group for the remaining months of the financial year.

Cologne, November 8, 2013

LANXESS Aktiengesellschaft, Cologne

The Board of Management

Dr. Axel C. Heitmann

Dr. Bernhard Düttmann

Dr. Werner Breuers

Dr. Rainier van Roessel

Financial Calendar 2014

March 20 Publication of results for fiscal 2013

May 8 Interim Report Q1 2014

May 22 Annual Stockholders' Meeting

August 6 Interim Report H1 2014

November 6 Interim Report Q3 2014

Please do not hesitate to contact us if you have any questions or comments.

Contact Corporate Communications Tel. +49 221 8885 6251 E-mail: mediarelations@lanxess.com

Contact Investor Relations Tel. +49 221 8885 3851 E-mail: ir@lanxess.com

This Interim Report was published on November 12, 2013.

LANXESS – Specialist for innovative lightweight construction solutions

Lightweight construction is an important trend and, especially in the automotive industry, a decisive aspect of the transformation that the sector must help to shape. Mobility in the future will need to become more sustainable and consume fewer resources than it does today. Lighter materials reduce vehicle weight – and lighter vehicles mean reduced fuel consumption and lower emissions.

LANXESS has many years' experience and outstanding products in the field of hightech plastics and composite materials that are increasingly used in a variety of automotive components. For example, even complex car front-end carriers can now be made entirely of plastic using an efficient injection-molding process – thanks to the high-tech plastic Durethan®.

The numerous advantages of lightweight materials will continue to drive worldwide demand for components like these, opening up further growth opportunities for LANXESS.

Disclaimer

This publication contains certain forward-looking statements, including assumptions, opinions and views of the Company or cited from third party sources. Various known and unknown risks, uncertainties and other factors could cause the actual results, financial position, development or performance of the company to differ materially from the estimations expressed or implied herein. The company does not guarantee that the assumptions underlying such forward-looking statements are free from errors nor does it accept any responsibility for the future accuracy of the opinions expressed herein or the actual occurrence of the forecasted developments. No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, neither the Company nor any of its parent or subsidiary undertakings nor any of such person's officers, directors or employees accepts any liability whatsoever arising directly or indirectly from the use of this document.

Masthead

LANXESS AG Kennedyplatz 1 50569 Cologne Germany Tel. +49 221 8885 0 www.lanxess.com

Agency Kirchhoff Consult AG, Hamburg, Germany

English edition Currenta GmbH & Co. OHG Language Service

Printed by Kunst- und Werbedruck, Bad Oeynhausen, Germany

Publisher: LANXESS AG 50569 Cologne Germany www.lanxess.com