LANXESS with stable development in third quarter

LANXESS with stable development in third quarter

Group sales in the third quarter of 2019 amounted to EUR 1.781 billion, which is on par with the previous year’s level.

Group sales in the third quarter of 2019 amounted to EUR 1.781 billion, which is on par with the previous year’s level.

LANXESS, a specialty chemicals company, performed well again in the third quarter of 2019 – despite further deterioration of the economic environment. As expected, earnings in the third quarter were only slightly weaker than in the previous year. At EUR 267 million, EBITDA pre exceptional was 3.6 per cent down on the prior year’s figure of EUR 277 million.

Earnings were negatively impacted in particular by lower demand from the automotive industry and the weak chrome ore business. However, this was almost offset by the company’s stable portfolio and advantageous exchange-rate effects, especially from the strong US dollar. The EBITDA margin came in at 15 per cent, against 15.5 per cent in the prior-year quarter.

“Our stable position has once again proven its value, enabling us to remain on track in these turbulent times. Although the environment is still challenging, we are now optimistically embarking on our final spurt for the year,” says Matthias Zachert, Chairman of the Board of Management of LANXESS AG.

LANXESS expects its EBITDA pre exceptional in the fourth quarter to be slightly better than in the previous year. For the full year 2019, the specialty chemicals company expects its EBITDA pre exceptional to be between EUR 1,000 billion and EUR 1,050 billion (previous year: EUR 1.016 billion).

Group sales in the third quarter of 2019 amounted to EUR 1.781 billion, on a par with the previous year’s level. Net income declined by 13.8 per cent from EUR 80 million to EUR 69 million, mainly due to higher depreciation. Earnings per share decreased less significantly by 10.2 per cent – from EUR 0.88 to EUR 0.79 – due to the lower average number of shares outstanding after the share buyback programme.

Organometallics business realigned

LANXESS is taking another step to further develop its portfolio. The company is realigning its organometallics business in order to focus on profitable growth segments in the future. To this end, LANXESS is investing an amount in the mid-single-digit millions of euros at its location in Bergkamen, Germany, to expand production of aluminum-based organometallics, which are used as catalysts in the production of high-quality plastics. This business is characterized by attractive margins and good growth prospects.

Also in Bergkamen, LANXESS manufactures tin-based organometallics. The company has now sold this business to the PMC Group, a U.S. chemicals company. Both parties signed an agreement to this effect on November 9, 2019. The transaction is expected to close at the end of 2019. The parties have agreed not to disclose the purchase price. Until at least the end of 2021, LANXESS will continue to produce tin-based organometallics on a contract manufacturing basis for the future owner. Tin-based organometallics are mainly used for the production of polyvinyl chloride (PVC), catalysts and other chemical intermediate applications.

“By realigning our organometallics business, it will become much more stable and profitable,” says Hubert Fink, member of the Board of Management of LANXESS AG. “At the same time, we are convinced that the business with tin-based organometallics can be better developed under its new owner.”

Q3 2019: Three of the four segments increase their operating result

The Advanced Intermediates segment also performed well in the third quarter. In particular, this was largely due to good project business at Saltigo. Exchange-rate effects also had a positive impact. Despite a negative price effect from lower raw material prices, sales were up 2.8 per cent at EUR 549 million as compared to the previous year’s figure of EUR 534 million. EBITDA pre exceptional grew by 2.3 percent from EUR 87 million to EUR 89 million. The EBITDA margin pre exceptional remained stable at 16.2 per cent.

Despite weaker demand from the automotive industry and the termination of margin-dilutive toll manufacturing contracts, the Specialty Additives segment developed positively in the third quarter. This was thanks to advantageous exchange-rate effects and strong business in the Polymer Additives business unit. Sales were on a par with the prior-year level at EUR 503 million. EBITDA pre exceptional increased by 4.3 percent to EUR 97 million compared with EUR 93 million in the prior-year quarter. The EBITDA margin pre exceptional rose to a strong 19.3 per cent after 18.5 percent in the prior-year quarter.

The Performance Chemicals segment also performed better than in the prior-year quarter. As in the previous quarters, the business units with water-treatment and material-protection products posted strong growth. There were also positive exchange-rate effects. Weak chrome ore business in the Leather business unit continued to have a negative impact. Sales rose by 6.0 percent from EUR 334 million to EUR 354 million. At EUR 56 million, EBITDA pre exceptional was 5.7 per cent above the figure for the prior-year quarter (EUR 53 million). The EBITDA margin pre exceptional remained stable at 15.8 per cent.

In the Engineering Materials segment, sales and earnings continued to be hit by weaker demand from the automotive industry. Sales were also burdened by lower selling prices due to decreases in raw material prices. Despite advantageous exchange-rate effects sales fell by 10.4 percent from EUR 394 million to EUR 353 million. At EUR 59 million, EBITDA pre exceptional was 15.7 per cent down on the prior year’s figure of EUR 70 million. After 17.8 percent in the previous year, the EBITDA margin came to 16.7 per cent.

Adiprene prepolymers from LANXESS offer new possibilities in 3D printing

LANXESS is offering the next generation of Low Free (LF) isocyanate urethane prepolymers that can be formulated into resins for 3D printing (additive manufacturing). In order to create such resins LANXESS works together with 3D printing companies. Based on Adiprene LF pPDI (para-phenylene diisocyanate) prepolymers, these high performance resins are easy to process and safe for industrial manufacturers as well as for the casual home, office or retail user.

The footwear industry is a key user of 3D printing technology for midsole, upper, and structural components such as heels and toes. Footwear components are designed to require both very soft and more rigid elastomers. The wide flexibility to formulate LF prepolymers into printable resins enables 3D printers to drive toward mass customisation, enabling printing across a wide range of hardness from very soft elastomers for cushioning to the more structural shoe elements.

High flexural strength and a wide range of use-temperatures are important to the performance of these components. Adiprene LF pPDI prepolymers are designed to provide superior resistance to low and high temperatures, excellent toughness, and superior resistance to chemicals and abrasion. With excellent property retention up to six weeks at 150°C, athletic shoes, for example, can be stored in a hot car for long time periods without losses. In addition, footwear components benefit from higher flexural fatigue resistance and cold temperature flex performance down to -20 °C.

LANXESS offers urethane prepolymers for 3D printing with other chemistries, including LF MDI and LF HDI. These elastomers provide unique performance, such as optical clarity, UV and hydrolytic stability for outdoor uses, and the elimination of surface imperfections.

Casual users in desktop 3D printing want simple, easy to use resins that increase their manufacturing productivity. This means resins must be liquid at room temperature, or have a low melting point (< 40°C), and they must have very low viscosity (< 3000 cP). One-component (1K) resins can be plugged directly into the machine without the need for blending or mixing.

Adiprene LF pPDI prepolymers can be cured at room temperature, or formulated into dual curing systems that use both UV and heat. Printable resins made with LF prepolymers are more stable, providing a better surface finish, and can be designed to require minimal post curing, which further improves productivity.

LANXESS signs sustainable revolving credit facility of EUR 1 bn

LANXESS takes an innovative approach to Group financing and has linked its main revolving credit facility to the fulfillment of ESG (Environment, Social and Governance) criteria. The specialty chemicals company has now agreed a new syndicated credit facility with 12 banks, whose interest conditions depend, among other things, on the successful reduction of its greenhouse gas emissions (Scope 1) and the increase in the proportion of women on the top three management levels.

With a volume of EUR 1 billion, it replaces the syndicated loan of EUR 1.25 billion expiring in May 2023. The “sustainable” revolving credit facility has an initial term of five years as well as two options for one-year extensions.

“We are convinced that sustainable criteria are also becoming increasingly important for the capital markets. We have therefore developed this innovative financing concept together with our banking partners. With the ‘sustainable’ revolving credit facility, we are also underlining our commitment to achieving our ambitious climate targets,” said Michael Pontzen, LANXESS’ Chief Financial Officer.

In November, LANXESS announced that it will go climate neutral and eliminate its greenhouse gas emissions of currently around 3.2 million metric tons of CO2 by 2040.

The revolving credit facility is intended to secure the company’s liquidity in the long term and thus to provide financial backup for growth. “We have used the good capital market environment and our solid investment grade rating to secure LANXESS’ long-term financing on attractive terms,” said Pontzen.

The transaction was coordinated by Deutsche Bank and UniCredit. LANXESS is a leading specialty chemicals company with sales of EUR 7.2 billion in 2018. The company currently has about 15,400 employees in 33 countries and is represented at 60 production sites worldwide. The core business of LANXESS is the development, manufacturing and marketing of chemical intermediates, additives, specialty chemicals and plastics. LANXESS is listed in the leading sustainability indices Dow Jones Sustainability Index (DJSI World and Europe) and FTSE4Good.

LANXESS is a leading specialty chemicals company with sales of EUR 7.2 billion in 2018. The company currently has about 15,400 employees in 33 countries and is represented at 60 production sites worldwide. The core business of LANXESS is the development, manufacturing and marketing of chemical intermediates, additives, specialty chemicals and plastics. LANXESS is listed in the leading sustainability indices Dow Jones Sustainability Index (DJSI World and Europe) and FTSE4Good.

Stephanie Coßmann appointed to LANXESS Board

Stephanie Coßmann, currently head of the Human Resources group function, has been appointed by the Supervisory Board to become member of the Board of Management and Labor Director. Coßmann, who holds a doctorate in law, will take up her new position on January 1, 2020. She succeeds Rainier van Roessel, who will resign from the Board and retire at the end of the year.

Paying tribute to van Roessel’s achievements, Chairman of the Supervisory Board Matthias Wolfgruber said: “13 years as Labor Director of LANXESS – that speaks for itself! Rainier van Roessel has skillfully helped shape the company over this long period. He has always been focused on objectivity, efficiency and collegial cooperation – both in his dealings with employees and in dialogue with negotiating partners and trade unions. Cooperation with the Supervisory Board was also characterised by fairness, mutual understanding and trust. On behalf of the entire Supervisory Board, I would like to express my sincere thanks to van Roessel and wish him all the best for his well-deserved retirement.”

van Roessel joined Bayer in 1988 after completing his business studies and doctorate. In 2004, when LANXESS was established, he became head of the Rubber Chemicals business unit. In addition to this role, he was appointed Managing Director of LANXESS N.V. in Antwerp, Belgium, in 2006. Since 2007, van Roessel has been a member of the Board of Management and Labor Director of LANXESS AG.

Stephanie Coßmann studied law in Paris, France, and Muenster, Germany. After working as a lawyer for several years, she joined LANXESS in 2004. Here she was responsible for setting up the processes and structures required in a listed company in various areas and held various management positions in the Legal and Internal Audit group functions. From 2014, she headed the General Law department in the Legal and Compliance group function. Since July 1, 2017, she has been head of the Human Resources group function, which she and her team have completely realigned.

Matthias Zachert: “In recent years, I have come to know Stephanie Coßmann as an absolutely reliable, experienced and competent colleague. I am looking forward to an even closer cooperation with her and extend a warm welcome to her to the Board of Management.”

New management for HR & Legal functions

Katja Conner, currently Senior Director HR EMEA at U.S. chemicals company Celanese, will succeed Stephanie Coßmann as head of Human Resources. Conner studied law in Heidelberg after completing her training as a foreign language correspondent. Her professional career took her through several positions in the personnel department at Hoechst AG and later the Celanese Group.

Jochen Schroer, who has been head of the Legal and Compliance group function for many years, will also retire on December 31, 2019. His successor will be Markus Lehner, currently head of Compliance & Corporate Audit at LANXESS. After having studied law, Schroer worked in academic research, followed by an assignment in the Central Staff of the Management Board of former WestLB. He joined the legal department of Bayer AG in 1988. In 1994, he became head of the legal department of the affiliate Haarmann & Reimer GmbH. In 2002, Schroer came back to Leverkusen, where he took over as head of the legal department of the newly founded Bayer Chemicals AG. In this position, he was closely involved in the founding of LANXESS, conducting contract negotiations regarding the spin-off from Bayer AG. Since 2005, he has headed the legal department of LANXESS, and since 2014 also Compliance & Corporate Audit, Corporate Security as well as Country & Agency Management.

After studying law, Markus Lehner worked in the legal department of Bayer AG before joining LANXESS in 2004.

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