Specialty chemicals company LANXESS is expanding its Additives segment and plans to acquire the phosphorus chemicals business with a US production site from Belgian chemical group Solvay. Both companies have signed an agreement to this effect. The transaction is projected to conclude in the first half of 2018, subject to customary regulatory approvals. The acquisition fully complements LANXESS’s strategy to grow its business in mid-sized markets and in the regions North America and Asia.
The site in Charleston, South Carolina, includes six production units, where roughly 90 employees manufacture phosphorus chloride plus numerous derivative products such as flame-retardants and intermediates for the agrochemical industry. The business represents annual sales of around EUR 65 million.
"With this acquisition, we are benefitting from a North American platform for phosphorus-based specialty chemicals – a key component of our additive business – and are able to further drive our growth in this key region," said Anno Borkowsky, General Manager of the Additives business unit at LANXESS.
With annual sales of around EUR 2 billion and roughly 2,000 employees around the globe, the additives business is an important pillar of the LANXESS group.
Third quarter results show significant growth in all segments
Global sales increased by 25.1 percent or EUR 483 million to EUR 2.4 billion. A year earlier, they amounted to EUR 1.9 billion. EBITDA pre exceptionals improved by 35 percent to EUR 347 million, compared with EUR 257 million in the prior-year quarter. The contributions from the acquired Chemtura businesses as well as higher volumes had a particularly positive effect. The EBITDA margin pre exceptionals in the third quarter of 2017 stood at 14.4 percent, which was considerably above the value of 13.4 percent reported in the prior-year period.
LANXESS is in full swing. Our clear strategic focus on high-margin specialty chemicals is increasingly paying off, and in operational terms we are performing very well in our new setup. It is particularly pleasing that all regions and all our specialty chemicals segments are seeing considerable earnings growth,” said Matthias Zachert, Chairman of the LANXESS Board of Management.
Due to one-time exceptional charges, net income was EUR 55 million, after EUR 62 million in the prior-year quarter. These one-time effects resulted primarily from the consolidation of the production of lubricant precursors and the associated discontinuation of production at the Ankerweg site in Amsterdam (Netherlands). Net income pre exceptionals increased by 37.7 percent to EUR 106 million, compared with EUR 77 million in the prior-year quarter.
After the strong figures of the third quarter, the Group is refining its earnings forecast for 2017 and lifting the lower end of the range by EUR 25 million. LANXESS now expects EBITDA pre exceptionals of between EUR 1.25 billion and EUR 1.3 billion. This would be a record for the Cologne based company, as its highest operating result to date is the roughly EUR 1.2 billion achieved in 2012.