LANXESS: Realignment taking effect

Guidance for 2015 increased: EBITDA pre exceptionals expected to be between EUR 820 million and EUR 860 million

08-May-2015 - Germany

Lanxess got off to a good start to 2015 in a persistently challenging market and competitive environment. EBITDA pre exceptionals climbed by a substantial 11.7 percent in the first quarter to EUR 229 million, compared with EUR 205 million in the first quarter of 2014. This was at the upper end of the EUR 210 million to EUR 230 million range forecasted in March. This increase was mainly attributable to lower raw material costs and to currency effects, especially the strong U.S. dollar. There was also a positive effect from cost savings related to the realignment, such as the in parts considerable reduction in administrative and selling costs. The EBITDA margin pre exceptionals was 11.2 percent, against 10.0 percent in the prior-year quarter.

Sales were nearly stable at roughly EUR 2 billion, with lower selling prices, which were necessitated by raw material price developments, more or less offset by positive currency effects. Net income came in at EUR 22 million, compared with EUR 25 million in the same period of the previous year, reflecting costs and exceptional charges for realignment measures. Earnings per share declined to EUR 0.24, from EUR 0.30 in the prior-year period.

“The good results in the first quarter show that we are on the right track. The positive development in our businesses is driven by external effects as well as increasingly by our realignment measures," said LANXESS CEO Matthias Zachert. “We expect this favorable trend to persist in the course of the year. Hence, we increase our guidance for full year 2015 and expect EBITDA pre exceptionals to come in between EUR 820 million and EUR 860 million.” In March, the group had announced that it anticipates EBITDA pre exceptionals at around the same level as the previous year. In 2014, EBITDA pre exceptionals was EUR 808 million.

Realignment remains fully on schedule

The three-phase realignment program initiated by LANXESS last year continues to progress rapidly. The cost savings anticipated for this quarter materialized, for instance regarding administrative and selling cost reductions.

The company had already announced the first measures of the second phase, which is aimed at improving operational competitiveness. For example, LANXESS will realign its production networks for ethylene propylene diene monomer rubber (EPDM) and neodymium-based performance butadiene rubber (Nd-PBR).

The third phase will focus on improving the competitiveness of the business portfolio, especially through cooperations in the rubber business. LANXESS is currently in talks with potential partners and will report on further steps in the second half of 2015.

https://www.chemeurope.com/en/news/152757/lanxess-realignment-taking-effect.html