2013 Exhibitions
Speciality chemicals firm Lanxess is confirming its full-year 2012 guidance despite the challenging business environment. The company expects full-year EBITDA pre-exceptionals growth to be at the lower end of the 5-10% range previously guided.
Laxness profited in the third quarter from ongoing strong demand for agrochemicals. This, however, did not completely offset weakening demand in the tire and automotive industries.
Group sales declined by 8% year-on-year to EUR 2.2 billion due to lower volumes and raw material-driven price decreases. Positive currency and portfolio effects could only partially offset this decline.
EBITDA pre-exceptionals decreased by 18% year-on-year to EUR 255 million in the third quarter due to lower volumes, expenses for scheduled plant maintenance and resulting idle costs. The EBITDA margin pre-exceptionals fell to 11.8% in the third quarter from 13.3% a year earlier and the net profit decreased by 39% year-on-year to EUR 94 million mainly due to lower volumes and a lower financial result.
“The third quarter result is in line with our expectations and is, at the same time, being compared to a very strong quarter a year earlier,” said Axel C. Heitmann, Chairman of the Board of Management of Lanxess . “We are reacting to tougher conditions by implementing our proven counter measures such as flexible asset management and strict cost discipline, ” he added.
Net financial debt at the end of the third quarter was roughly EUR 1.6 billion, down 8% from the second quarter of 2012 due to a reduction in working capital. Operating cash-flow has more than doubled year-on-year to EUR 344 million also due to the reduction in working capital.
In the various regions where the company has established its presence, group sales dropped. For example, in Asia-Pacific, sales fell by 5% year-on-year to EUR 493 million in the third quarter and represented 23% of Group. The decline was attributed to the slowed-down business in the Greater China.
Performance Polymers segment also registered 17 percent year-on-year lower sales at EUR 1.2 billion. Selling prices declined by 12% year-on-year due to falling raw material prices, above all butadiene, while volumes fell by 11% EBITDA pre-exceptionals decreased 29%to EUR 152 million in the third quarter due to lower volumes in the replacement and OEM tyre markets. Expenses for scheduled maintenance and resulting idle costs also affected earnings.
In contrast to standard-grade synthetic rubbers, demand for high-performance rubbers such as neodymium-based performance butadiene rubber (Nd-PBR) and solution styrene butadiene rubber (SSBR) remained resilient. These rubbers are essential in producing “Green Tyres” that reduce fuel consumption and help to reduce CO2 emissions.
Advanced Intermediates segment , however increased by 9% year-on-year to EUR 403 million, driven by higher selling prices, positive volumes and effects of currency. EBITDA pre-exceptionals rose 10% year-on-year to EUR 75 million, with both business units, the Advanced Industrial Intermediates and the Saltigo profiting from the ongoing robust demand from the agrochemicals sector.
Meanwhile, aales of the Performance Chemicals segment climbed 6% year-on-year to EUR 555 million in the third quarter due to positive currency effects and portfolio changes resulting from three recent acquisitions in the US. EBITDA pre-exceptionals remained unchanged at EUR 75 million in the third quarter. Inorganic Pigments saw business improve in the Asian construction industry. Subsidiaries Rubber Chemicals and Rhein Chemie saw volumes decline from their customers in the automotive industry.
In lieu of the incessant decline in sales, Lanxess expects that the economic environment will not worsen further in the fourth quarter. Therefore, the company expects full-year EBITDA pre-exceptionals growth to be at the lower end of the 5-10% range previously guided. The company achieved EBITDA pre-exceptionals of EUR 1,146 million in 2011.
For the fourth quarter it expects the automotive sector in Europe to remain weak, whilst growth in North America and China will continue, albeit at a slower rate. Demand from the tyre industry will continue to remain weak, while agrochemicals will continue to show a stable performance. The construction industry in Europe will see no improvement but will show a slight recovery in North America. Raw material and energy prices are also expected to remain stable in the fourth quarter.
“Despite the current macroeconomic situation, the long-term growth drivers for our business remain intact. With our technology-based products, we will continue to capitalise on the megatrends and focus on the growth regions,” said Heitmann.
(PRA)
