Lanxess raises guidance for 2015 following a strong second quarter

Following a strong Q2, speciality chemicals company Lanxess again raised its guidance for the full year 2015. The company now expects to achieve EBITDA pre exceptionals within a corridor of €840M and €880M. It had previously assumed that EBITDA pre exceptionals for the full year would come in at between €820M and €860M.

"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 of Lanxess. "On the basis of these strong figures and the rapid implementation of our realignment programme, we assume that our annual result will be higher than previously anticipated.”

Sales improved by 4.3% to €2.1bn, compared with €2.0bn yr-on-yr. Higher volumes and positive currency effects more than offset the raw material induced lower selling prices. EBITDA pre exceptionals increased by 13% from €239M to €270M. This development was driven by increased volumes, savings generated by the realignment and positive currency effects due to the strong US$. The EBITDA margin pre exceptionals rose accordingly to 12.8%, against 11.8% yr-on-yr.

Net income improved by a substantial 58.2% to €87M from €55M a year earlier. Operational development and proceeds from the sale of noncurrent assets contributed to this increase.

Capital expenditures significantly reduced

At around €1.4bn, net financial liabilities were almost at the same level as at the end of 2014. Following the completion of major projects in Asia, capital expenditures declined by more than half in Q2 against yr-on-yr from €154M to €73M. "The financial consolidation measures we have implemented as part of our realignment process are taking effect,” said Lanxess CFO Michael Pontzen. "This development was recently rewarded by the rating agencies Moody’s and Standard & Poor’s when both confirmed our investment-grade rating with stable outlook.”

The Performance Chemicals segment saw very good performance for the quarter, with sales rising by 6.8% to €553M after €518M yr-on-yr. EBITDA pre exceptionals advanced by a substantial 35.8% from €81M, to €110M. Low raw material prices during the reporting period, positive currency effects and savings especially contributed to this improvement in earnings.

Realignment remains fully on schedule

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 Tire & Specialty Rubbers (TSR) and High Performance Elastomers (HPE) business units, with their 20 production facilities and some 3700 employees as well as supporting administrative functions.