Interview with Steven Serin, Celanese
How has 2009 been for your company from a financial standpoint?

S. Sterin: We are very pleased with the strong performance across all our segments coming out of the third quarter 2009, and we expect the considerable progress we have made in executing our strategy to deliver significant earnings improvement into 2010 and beyond. We are now seeing a stabilization of demand across our major geographies and end-use applications with modest recovery in select areas. Celanese's growth in Asia has also been solid and we continue to believe that demand in China, where Celanese is well positioned, will lead the global economic recovery.

What measures have been implemented to counter the economic downturn?

S. Sterin: Celanese continues to execute our strategy with continuous - not periodic - productivity improvements. Sustainable spending reductions and productivity measures have been implemented across the business.
Innovation and technology advancements have also implemented across the Celanese manufacturing operation, and we have divested of non-core or underperforming assets.

Are there any divisions in your company that have performed surprisingly well despite the presence of negative outside influences?

S. Sterin: Consistent growth has been seen during the first half of the year in our Consumer Specialties business, where earnings were relatively insulated from the economic downturn. In fact, earnings from this business segment have been up for the year. Continued strength in the Asian region has also positively contributed to the company's results.
Across our business units, we are excited about our earnings growth through an economic recovery, and more specifically we are confident in substantial growth in 2010 and beyond. With our proven ability to generate cash with an attractive capital structure, Celanese has ample strategic funding and flexibility to also increase earnings power through value-enhancing investments and/or acquisitions.

What lessons can you take from the current recession to help improve your business in the future?

S. Sterin: It is essential to have the ability to generate cash and have an attractive capital structure to not only maintain and grow business operations, but also be able to invest in business opportunities when other competitors cannot justify such an investment. Innovation, combined with productivity in 2009-2010, will result in operating leverage to earnings growth in the economic recovery.

What is your strategy for 2010? What do you expect for the year to come?

S. Sterin: At Celanese's May 2009 Investor Day held in New York City, the company outlined its plan to expand the earnings power of Celanese to between $1.6 billion and $1.8 billion of operating Ebitda, with this increase coming from two key areas: First, volume and revenue growth, as the economy returns to historic levels. Second, concrete actions unique to Celanese to drive innovation and productivity.
Innovation and productivity are providing a substantial impact today and will deliver even more earnings growth in 2010 and beyond for Celanese. Leverage to these items will provide substantial earnings growth for Celanese over the next few years as the global economy recovers. Four items that give us this confidence include:
Volume and revenue growth as the economy returns to historic levels.
Substantial benefits from our fixed spending reduction actions.
Benefit from a lower adjusted tax rate.
Continuing benefits of our leading, innovative technology which has given us the ability to substantially reduce our cost base while holding our leading position in the acetyl industry.

Interview with Patrick Jany, Clariant
How has 2009 been for your company from a financial standpoint?

P. Jany: As we have said, the years 2009 and 2010 are restructuring years for Clariant. It is our stated goal to close the performance gap to our peers and to achieve a sustainable above industry return on invested capital (ROIC) by the end of 2010. Our focus in 2009 was on generating cash, reducing cost and reducing our complexity.As we believe that the global economy will only recover slowly, the company continues to focus on cash generation by decreasing its net working capital. At the same time, the cost-savings and restructuring measures will continue to favorably impact the operational result, and increasingly contribute to the cash generation.
As far as the operating income is concerned we have progressed quarter by quarter and generated CHF 107 million in the third quarter, compared to a loss of CHF 13 million in the first quarter and an income of CHF 69 million in the second quarter.
We also strengthened our balance sheet by generating cash and, launching during the second quarter a CHF 300 million convertible bond, which matures in 2014. As a result, net debt has been reduced to CHF 756 million, pushing gearing down to 38%, compared to 61% at the end of 2008.

What measures have been implemented to counter the economic downturn?

P. Jany: We have been focusing on the three core goals of Project Clariant: generating cash; reducing cost; and reducing complexity.
As I have already said, Clariant has made significant progress with regards to cash management and cost reduction, while at the same time strengthening its balance sheet.
As far as costs are concerned, we have reduced our headcount by 1,917 staff at the end of the third quarter and have announced a further reduction of 800 positions, which will be implemented in the remainder of 2009 and in the first quarter of 2010. Hence, Clariant will employ less than 18,000 employees by the end of 2009 - compared to 20,102 at the end of 2008. Further cut backs are inevitable.
Furthermore, we are currently in the process of reviewing our global production network. We have recently announced the first proposals and conclusions, where we nomiated three sites for clousure, one of each in France, the UK and Mexico; and partial closure of two plants in Germany. We are also evaluating all strategic options for our site in Onsan, South Korea. Full implementation of global production network review will be completed between 2011 and 2013. These measures will greatly contribute to reducing our complexity.

Are there any divisions in your company that have performed surprisingly well despite the presence of negative outside influences?

P. Jany: It is difficult to single out one division. Some have been doing slightly better than others, but all businesses have been hurting. But, the good news is that all divisions have contributed to the recovery during the last three quarters.
The Masterbatches business benefited the most from an uptake in demand as it experienced a broad based recovery in its businesses from the weak demand levels earlier this year. However, unlike in the past where the business received larger bulk orders, today it has to cope with multiple smaller orders.
We also saw some modest recoveries in the Pigments and Additives Division, but from the very low levels of the first and second quarter. However, this underlines that de-stocking in the value chain has come close to an end. For instance, our coatings business improved sequentially driven by sound demand in the decorative paints segment and by a small improvement in demand for pigments used in automotive coatings.
The demand for Functional Chemicals is expected to remain subdued but stable on current levels, given the overall uncertain global economic outlook. During the winter months, the business will benefit from our strong de-icing business, so we expect to see the usual seasonal uptake here.
The Textile, Leather & Paper chemical Division has also seen stabilization as sales numbers rise sequentially. The Leather business recovered from the low levels at the beginning of 2009, mainly driven by higher sales in the auto and show industry. The Paper business remains very weak and in Textiles no clear trend can be established at this point.

What lessons can you take from the current recession to help improve your business in the future?

P. Jany: Clariant had to restructure even without a recession. As I have mentioned before, the company was operating with overcapacities - and lagging behind in terms of profitability. So, the lessons we learned are not necessarily related to the economic downturn.
In order to secure the situation and catch up with our peers we had to quickly implement our restructuring measures. We also put a new organizational structure in place which eliminates the divisional management layer. Instead of operating with four complex divisions, as of Jan. 1, 2010, we will operate with 10 smaller business units that will have full profit and loss responsibility and accountability.
With this new structure, we will gain the operational and strategic flexibility we need to manage a company such as Clariant throughout the various economic cycles.

What is your strategy for 2010? What do you expect for the year to come?

P. Jany: Our strategy for 2010 is to continue and complete our restructuring measures in order to achieve profitable growth in 2011. This is our main focus. We will also lay the ground work next year to allow a culture of innovation in research and development for the coming years. But, first we have to do our homework. You can't grow and restructure at the same time.

Interview with Curt Espeland, Eastman
How has 2009 been for your company from a financial standpoint?

C. Espeland: We knew going into 2009 it would be a year of uncertainty with very limited visibility. That's why our focus has been on cash generation, and early on we committed to positive full year 2009 free cash flow. And even with the current economic challenges, our core businesses have already generated $300 million of positive free cash flow greater than $300 million. We are heading toward the end of 2009 in a strong financial position due to our strong cash flows and solid balance sheet.

What measures have been implemented to counter the economic downturn?

C. Espeland: Due to the severity of the recession, we announced a series of actions to reduce costs. The first were announced last December, and another earlier this year in March. With our capacity utilization dropping by greater than we had ever seen, these cost reductions were necessary. In all, we reduced annual costs by more than $200 million. Actions that we took included: targeted reduction in force of 300 professionals; reduced use of contractors; reduced logistics costs; reduced non-critical maintenance costs; reduced discretionary spending; and 5% reduction in base pay
Eastman's "culture" is such that most people would prefer across the board pay cuts to reduce the number of layoffs. We were able to accomplish this with the greatest percentage of reductions occurring in the officer and management ranks.

Are there any divisions in your company that have performed surprisingly well despite the presence of negative outside influences?

C. Espeland: Eastman has solid core businesses in that we serve diverse end markets and geographies. Also, we have a diverse portfolio of products and advantaged feedstocks. As a result, we have a mix of businesses that are resilient even in this very challenging environment - for example, I'd point out we didn't have one quarter of negative EPS during the deepest recession in a generation.
That said, despite the very challenging economy, two of our five businesses - our Fibers segment and our Coatings, Adhesives, Specialty Polymers and Inks segment, performed exceptionally well in 2009. For example, for our Fibers business, 2009 will be a record earnings year despite the headwinds we faced, which included the global recession and higher key raw materials costs. And our CASPI - that's coatings, adhesives, specialty polymers and inks - segment has had strong results, particularly in the second half of the year, due to improving customer mix and lower raw material and energy costs.

What lessons can you take from the current recession to help improve your business in the future?

C. Espeland: The recession proved out the importance of our flexible cost structure, which allowed us to quickly and decisively respond and implement cost reduction actions. And, just as quickly as we responded during the downturn, we will be able to respond as the economy rebounds. For example, our flexible workforce allowed us to reduce our number of contractors as capacity utilizations dropped. Once our volume returns, we will be able to dial this back up as appropriate. I also think we demonstrated our ability to generate strong cash flow during a very difficult economic environment. We did a particularly good job with working capital, and I think that will stick with us going forward.
Finally, another key lesson was ensuring active communication with fellow employees about the issues facing the company and the actions being considered. It never ceases to amaze me that positive actions taken by the Eastman team when faced with challenges. Our employees responded quickly and decisively when the economic downturn started dramatically impacting our fourth quarter 2008 results.

What is your strategy for 2010? What do you expect for the year to come?

C. Espeland: There is still a great deal of uncertainty as we look ahead to 2010. Our business is improving, but there is still a question about the overall health of the global economy and whether it will continue to improve. In the near term, we are very leveraged to an improved economy, and therefore to a volume recovery. We also expect to see a good return on our recent capital investments. Combined, we expect this to lead to a recovery earnings per share to be above our last cycle peak earnings per share.
Looking out longer-term, we do have a very strong balance sheet, and we will be disciplined and balanced in how we allocate capital. One area we are working on is joint ventures and acquisitions (JVA). We are actively pursuing JVAs in targeted areas, such as emerging geographies, or in areas that are favorable to macro-trends in the marketplace like sustainability.

Interview with Klaus Engel, Evonik
How has 2009 been for your company from a financial standpoint?

K. Engel: Evonik's chemicals business areas felt the brunt of the global economic crisis in the first half of 2009. Earnings were affected by shrinking volumes and lower prices. The economic upturn that started in the spring has gathered strength, and we have managed to make up some of the lost ground over the year. In the third quarter, we reported a year-on-year improvement in our operating result, partly due to substantial cost-savings, which exceeded our internal target. Nevertheless, the recession will have a significant impact on our full-year financial performance.

What measures have been implemented to counter the economic crisis?

K. Engel: To overcome the short term challenges of the economic crisis and improve the competitive position of the Evonik group in the longer term, we are focused on our efficiency improvement program on track. The three main elements of this program are systematic reorganization of administrative structures; active portfolio management; and tough cost cutting. In 2009, we will exceed our short-term goal of cutting costs by €300 million. We are also making good progress towards our target of leveraging sustained savings of around €500 million annually by 2012.
In addition, we have made good headway in improving our liquidity position and reducing debt. Overall, Evonik is well placed to emerge stronger and more competitive from this crisis.

Are there any divisions in your company that have performed surprisingly well despite the presence of negative outside influences?

K. Engel: Yes. Our Feed Additives business produces a product called methionine, and demand for this product has remained high. Methionine is an amino acid used as an additive to improve the nutritional benefits of animal feeds and enables us to respond to one of the world's current megatrends: producing enough food to feed the world's population. Hand in hand with this trend, more and more people are eating meat. Secondly, our Superabsorber business, which produces a key material for babies' diapers, has done well.

What lessons can you take from the current recession to help improve your business in the future?

K. Engel: No company can completely avoid exposure to a global economic crisis. However, our diversified business serving a wide range of markets and sectors and our broad customer base give us a more secure and competitive footing than companies with a narrower focus. For example, the operations of our chemicals business area are broadly based: None of its end-markets accounts for more than 20% of total sales and the five largest customers only generate 10% of sales. Besides, our chemicals sales come from very different markets. More than 40% of sales are generated outside Europe. Consequently, our portfolio is geographically diversified as well as containing a broad mixture of industries and end-customers. That will help us overcome the present crisis in the medium term.

What is your strategy for 2010? What do you expect for the year to come?

K. Engel: 2010 will confront us with further major challenges. It is difficult to predict whether the gradual upturn seen in recent months will continue into next year or whether we face another downturn when the numerous economic stimulus packages come to an end.
Irrespective of that, one fact is irrefutable: Europe's comparatively high energy, raw material and labor costs mean that it can only remain a competitive international base for industry in the long term if we maintain our innovative capability, even in periods of crisis, and strengthen research and development to generate growth and create value. I am firmly convinced that innovations and new products are more important than ever. They are the driving force we need to ensure we not only emerge stronger from this crisis but continue to grow profitably. Evonik is a creative industrial group and 20% of sales in our chemicals business area already come from products, processes and applications introduced in the past five years. We intend to maintain that innovative edge in the future.

Interview with Axel Heitmann, Lanxess
How has 2009 been for your company from a financial standpoint?

A. Heitmann: We got off to a very weak start to the year, but operating earnings have since then picked up sequentially due to an upturn in demand - in particular in China - as well as our cost-cutting measures. This year's pattern of earnings differs strongly from Lanxess' traditional business development. In the past, the first quarter was always the strongest for the company but this year's trend shows how much the economic crisis has turned things upside down!
Despite the difficult economic conditions, Lanxess has also proven its financial resilience by lowering net debt and maintaining a healthy cash flow, which gives us the flexibility to pursue our key strategic objectives.

What measures have been implemented to counter the economic downturn?

A. Heitmann: Lanxess responded quickly to the crisis by postponing major investment projects and launching significant cost-cutting measures, which are expected to yield total savings of €360 million by 2012. The measures are a combination of flexible asset management and remuneration decreases for all employees worldwide, including the management board. As a result, we believe Lanxess will emerge strengthened from the crisis.

Are there any divisions in your company that have performed surprisingly well despite the presence of negative outside influences?

A. Heitmann: Our businesses that supply the less cyclical agrochemicals industry have weathered the storm very well, while other businesses are benefiting from current mega trends - in particular in Asia - such as mobility and clean water.

What lessons can you take from the current recession to help improve your business in the future?

A. Heitmann: What helped us get through the tough year were our previous experiences of dealing with difficult business conditions at the time of our spin-off in 2005. We took, at that time, important steps to optimize our portfolio, cut costs and focus on growth opportunities. This strategy has kept us in good stead, and we will continue to pursue it in the future.

What is your strategy for 2010? What do you expect for the year to come?

A. Heitmann: We will strengthen our focus on BRIC countries - in particular China - which is expected to achieve 8% GDP growth this year, an outstanding performance given the global crisis.
Although the worst seems to be over, it is too early to say when we will return to the good old days. There is a danger of setbacks to the economic recovery such as higher unemployment and the end of government-backed stimulus packages. Therefore, our utmost priority at the moment is to concentrate on managing the crisis.