Lanxess again raises guidance for 2016 after strong Q3

Following a strong Q3, speciality chemicals company Lanxess has again raised its earnings guidance for 2016. The Cologne-based company now expects to achieve EBITDA pre exceptionals within a corridor of €960M and €1000M. Previously, Lanxess had assumed earnings of between €930M and €970M.

EBITDA pre exceptionals for Q3 of 2016 rose by 9.4% to €257M, (€235M yr-on-yr). The EBITDA margin pre exceptionals improved yr-on-yr from 12.0% to 13.4%. As in the preceding three-month period, the good overall earnings performance was due especially to the strong operational development of the ‘new’ Lanxess segments – Advanced Intermediates, Performance Chemicals and High Performance Materials – and to improved cost structures.

"We took the momentum from the first half of the year into the third quarter and delivered renewed proof of the operational strength of ‘new’ Lanxess. We are, therefore, again raising our guidance for the full year,” said Matthias Zachert, Chairman of the Board of Management of Lanxess AG. The company is anticipating a normal seasonal business pattern in the final quarter of 2016. In other words, performance will be slightly subdued compared with the preceding quarters.

The good business development in the third quarter was also reflected in net income, which increased by 51.2 % to €62M from €41M yr-on-yr. Earnings per share were €0.68, after €0.45 a year earlier.

Group sales declined by a slight 1.6% in Q3 of 2016 to €1.92bn, (€1.95bn yr-on-yr). Higher volumes in all segments nearly compensated for the lower selling prices resulting from raw material prices.

Advancing on the path of growth

Lanxess continued its path of growth in Q3 as well. On August 31, 2016, it successfully closed the acquisition of the Clean and Disinfect business of USA-based company Chemours. At the end of September, Lanxess then announced the next milestone with the planned acquisition of USA-based chemical company Chemtura, thus positioning itself as a leading supplier of additives. Several working groups have now started planning the integration process. The transaction still needs to be approved by Chemtura’s shareholders and the relevant antitrust authorities and is subject to the standard conditions applying to such transactions. Closing is expected around mid-2017.

Net financial liabilities remain at a low level

At the end of Q3, net financial liabilities were virtually unchanged at a low level, despite payment for the acquisition of the Chemours business, and amounted to €203M. Net Debt was substantially reduced by, in particular, the payment of €1.2bn received by Lanxess in April 2016 from Saudi Aramco for its 50% share in the Arlanxeo joint venture. At the end of 2015, Lanxess still had net financial liabilities of around €1.2bn