Press Release

Kraton Polymers LLC Announces Fourth Quarter and Full Year 2007 Results
Annual Revenue Grows 4% to $1.1 Billion

HOUSTON, TX. – March 27, 2008 – Kraton Polymers LLC (Kraton), a leading global producer of engineered polymers, announces its financial results for the fourth quarter and twelve months ended December 31, 2007.  Total revenues for the quarter were $258 million compared to $245 million in the comparable period of 2006, an increase of 5%.  Year to date, total revenues grew 4% to $1,090 million. 

Gross profit amounted to $21 million and $151 million in the fourth quarter and full-year 2007, respectively.  These represent declines in gross profit of $16 million and $53 million in the fourth quarter and full-year 2007, respectively as compared to the same periods in the prior year.

Net Loss for the quarter was $36 million, compared with net loss of $25 million in the comparable period of 2006.  For the year ended December 31, 2007 net loss was $44 million versus a net loss of $4 million for 2006.

Last Twelve Months (LTM) Bank EBITDA, a measure used to determine compliance with our debt covenants, totaled $99 million for the period ended December 31, 2007, a decrease of $5 million from the period ended September 30, 2007.  On January 14, 2008 we received an equity investment of $10 million of which $9.6 million was included in LTM Bank EBITDA for the period ended December 31, 2007 as provided under the terms of the senior credit facility.  A reconciliation of net loss to LTM Bank EBITDA is attached. 

“Our 2007 financial performance was below expectation, having been negatively affected primarily by the rise in crude oil prices, particularly in the second half of the year,” said Kevin M. Fogarty, Kraton’s recently appointed President and Chief Executive Officer.  “The resulting impact of rising monomer and other key input costs more than offset a 2% growth in volume. However, despite these difficult headwinds, we lowered our total debt by $44 million in 2007, and significantly advanced our innovation portfolio.”
 

Recent Business Developments:

• Appointed Dan F. Smith, former Chairman and CEO of
   Lyondell, as Chairman of its Board of Directors     
• Promoted Kevin M. Fogarty to President and Chief
  Executive Officer 
• Promoted David A. Bradley to Chief Operating Officer
• Named Stephen E. Tremblay as Chief Financial Officer
• Named Stephen W. Duffy as Vice President, General
  Counsel and Secretary 
• Successfully closed the SIS production at our Pernis, The
  Nederlands plant resulting in an anticipated annual cost
  savings of $6 million to $9 million while preserving the
  sales volume through utilization of existing capacity at
  other Kraton facilities
• Received $10 million equity investment from shareholders
  in January 2008 described above
• Implemented global price increases as of January 1 and
  announced additional increases effective April 1
 
“For 2008 our operating plan includes actions designed to significantly improve pricing and margins, optimize our production assets, and implement selected productivity improvements, while continuing to provide innovation-based value to our customers.  We currently anticipate that these initiatives will begin to positively impact performance in the first quarter of 2008,” added Mr. Fogarty.

Kraton has scheduled a conference call for Friday, March 28, 2008 to discuss the results of today's earnings announcement. The call will begin at 9:00 a.m. central time, 10:00 a.m. eastern time.  To listen to the conference call and view the slide presentation, which will be broadcast live over the Internet, go to Kraton’s website at www.kraton.com, click on Investor Relations and then go to Presentations and select “Fourth Quarter 2007 Earnings Presentation Webcast.”  You may also listen to the analyst conference call by telephone by contacting the conference call operator 5-10 minutes prior to the scheduled start time and asking for the "Earnings Conference Call". US Dial-In #: (800) 857-9091 or International Dial-In #: (210) 234-0007. For those unable to listen to the live call, a replay will be available 24 hours a day beginning at approximately 5:00 p.m. central time March 28th through 5:00 p.m. central time on April 8th.  To hear a telephonic replay of the call, dial (800) 937-5460 or (203) 369-3865 for international callers.  To hear a replay of the call over the Internet, please access Kraton’s website at www.kraton.com.

About Kraton

Kraton is a leading global producer of engineered polymers and, we believe, the world’s largest producer of styrenic block copolymers (SBCs), a family of products whose chemistry was pioneered by us over forty years ago. SBCs are highly-engineered thermoplastic elastomers, which enhance the performance of numerous products by delivering a variety of attributes, including greater flexibility, resilience, strength, durability and processability. Kraton polymers are used in a wide range of applications including adhesives, coatings, consumer and personal care products, sealants, lubricants, medical, packaging, automotive, paving, roofing, and footwear products. Kraton has the leading position in nearly all of its core markets and is the only producer of SBCs with global manufacturing capability. Its production facilities are located in the United States, Germany, France, The Netherlands, Brazil, and Japan.

Kraton, the Kraton logo and design, and “Giving Innovators their Edge” tagline are trademarks of Kraton Polymers LLC.

Forward Looking Statements

This press release includes “forward-looking statements” as that term is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact are statements that could be deemed forward-looking statements and are often characterized by the use of words such as “believes,” “expects,” “estimates,” “projects,” “may,” “will,” “intends,” “plans” or “anticipates,” or by discussions of strategy, plans or intentions.  In this press release, forward-looking information relates to covenant compliance, pricing trends, cost savings, production rates and other similar matters.  All forward-looking statements in this press release are made based on management’s current expectations and estimates, which involve risks, uncertainties and other factors that could cause results to differ materially from those expressed in forward-looking statements.  Among these factors are changes in overall economic conditions, the cyclical nature of the chemical industry, changes in demand for our products, changes in inventories at our customers and distributors, technological and product development risks, availability and cost of raw materials, competitors’ actions, pricing and gross margin pressures, loss of key customers, order cancellations or reduced bookings, the timing and cost of planned capital expenditures, changes in manufacturing yields, control of costs and expenses, significant litigation, risks associated with acquisitions and dispositions, risks associated with our substantial leverage and restrictive covenants in our debt agreements, risks associated with our international operations, the threat or occurrence of international armed conflict and terrorist activities both in the United States and internationally, risks and costs associated with increased and new regulation of corporate governance and disclosure standards (including pursuant to Section 404 of the Sarbanes-Oxley Act of 2002), and risks involving environmental or other governmental regulation. Readers are cautioned not to place undue reliance on forward-looking statements. We assume no obligation to update such information.