Lanxess raises guidance after strong results; to carve out rubber business

Following a strong second quarter, speciality chemicals company Lanxess has raised its guidance for the full year 2015. The company now expects to achieve EBITDA pre exceptionals within a corridor of EUR840 million and EUR880 million. It had previously assumed that EBITDA pre exceptionals for the full year would come in at between EUR820 million and EUR860 million.

“Lanxess is returning more and more to the right course. In the second quarter of this year, we posted a very good operating result to which all segments of our company contributed,” said Matthias Zachert, Chairman of the Board of Management. “On the basis of these strong figures and the rapid implementation of our realignment program, we assume that our annual result will be higher than previously anticipated.”

Sales improved by 4.3% in the second quarter of 2015 to EUR2.1 billion, compared with EUR2 billion in the prior-year quarter. Higher volumes and positive currency effects more than offset the raw material induced lower selling prices. EBITDA pre exceptionals increased by 13% from EUR239 million to EUR270 million. This development was driven by increased volumes, savings generated by the realignment, and positive currency effects due to the strong U.S. dollar. The EBITDA margin pre exceptionals rose accordingly to 12.8%, against 11.8% in the prior-year quarter.

Net income improved by a substantial 58.2% to EUR87 million from EUR55 million a year earlier. Operational development and proceeds from the sale of noncurrent assets contributed to this increase.

The three-phase realignment programme initiated by Lanxess last year continues to progress on schedule. The company has already successfully implemented the first phase. Measures of the second phase, aimed at improving operational competitiveness, have also been initiated. They include the reorganisation of the production networks for its rubber types EPDM (ethylene propylene diene monomer) and Nd-PBR (neodymium-based performance butadiene rubber).

The third phase of the programme is focused on improving the competitiveness of the business portfolio, especially through potential alliances in the rubber business. “In this connection, we are currently engaged in very constructive discussions and assume that we will achieve concrete results in the course of the second half of the year,” said Zachert.

Lanxess has initiated a carve-out process to transfer its rubber business to a legally independent business entity within the Lanxess Group. “In this way, we are creating the conditions that will enable us to bring the rubber business into an alliance,” continued Zachert. The new entity is supposed to comprise the Tyre & Speciality Rubbers (TSR) and High Performance Elastomers (HPE) business units, with their 20 production facilities and some 3,700 employees as well as supporting administrative functions.