Outlook
In 2007, we anticipate that the economic environment will remain conducive to the development of our business. This expectation is underscored by the generally favorable economic outlook in Germany and elsewhere in Europe, as well as in Asia. In the United States, however, we anticipate a slight slowing of economic growth that will impact our business.
The growing strength of the euro could also affect our business performance in the medium term. There is no significant short-term impact from exchange rate fluctuations in light of our currency hedging. However, if the euro were to remain above US$1.35, this could adversely affect LANXESS’s earnings by a low single-digit million euro figure in the fourth quarter of 2007.
Raw material and energy prices are expected to remain volatile at a high level. After the recent price hikes, relief is not anticipated until the third quarter at the earliest.
Irrespective of these factors, the LANXESS Group will systematically continue its transformation process. The further earnings improvement in the first quarter of 2007 over the already healthy prior-year quarter is gratifying and provides a good basis for meeting our targets. Against this background, we expect EBITDA pre exceptionals to increase by a medium to high single-digit percentage from the 2006 figure of €675 million. In anticipation of moderate growth in sales from continuing operations, this means we will continue to narrow the gap to our competitors in terms of the EBITDA margin pre exceptionals.
Capital expenditures in the current fiscal year, at or just above €300 million, will significantly exceed the prior-year level of €267 million as a result of our systematic investment and growth strategy.