Welcome to LANXESS Annual Report 2012!

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Principles and objectives of financial management

LANXESS pursues a conservative financial policy characterized by secured long-term financing and the forward-looking management of financial risks. Our aim is to be able to provide sufficient liquidity to our business operations at all times, regardless of cyclical fluctuations in the real economy or financial markets. The debt level is largely aligned to the ratio systems of the leading rating agencies for investment-grade companies. In addition, as an expression of the company’s forward-looking debt management, LANXESS defined its first targeted leverage range in 2012. Measured as the ratio of net financial debt to EBITDA pre exceptionals, the debt level should stay between 1.0 and 1.5 through a normal business cycle. In addition to liquidity risk, financial management also covers other financial risks, such as interest and foreign exchange risks. Here too, we aim to mitigate the financial risks that arise and increase planning reliability, partly by using derivative financial instruments. Detailed information about the management of these risks is contained in the Risk Report and in Note [35], “Financial instruments,” to the consolidated financial statements. The success and accuracy of our financial management was confirmed in fiscal 2012, as in previous years. The ongoing volatility of the capital markets in the year under review had no negative impact on our solid financial position or our rating. This stable financial condition reliably supported our growth strategy and the attainment of our operational targets.

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