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LANXESS on course for record year

Dec 05, 2017
LANXESS on course for record year

Following an excellent third quarter of 2017, specialty chemicals company LANXESS is still on course for the highest earnings in its history.

Global sales increased by 25.1 per cent or EUR 483 million to EUR 2.4 billion. A year earlier, they amounted to EUR1.9 billion. EBITDA pre exceptionals improved by 35 percent to EUR347 million, compared with EUR 257 million in the prior-year quarter. The contributions from the acquired Chemtura businesses as well as higher volumes had a particularly positive effect. The EBITDA margin pre exceptionals in the third quarter of 2017 stood at 14.4 percent, which was considerably above the value of 13.4 per cent reported in the prior-year period.

“LANXESS is in full swing. Our clear strategic focus on high-margin specialty chemicals is increasingly paying off, and in operational terms we are performing very well in our new setup. It is particularly pleasing that all regions and all our specialty chemicals segments are seeing considerable earnings growth,” said Matthias Zachert, Chairman of the LANXESS Board of Management.

Due to one-time exceptional charges, net income was EUR 55 million, after EUR 62 million in the prior-year quarter. These one-time effects resulted primarily from the consolidation of the production of lubricant precursors and the associated discontinuation of production at the Ankerweg site in Amsterdam (Netherlands). Net income pre exceptionals increased by 37.7 percent to EUR 106 million, compared with EUR 77 million in the prior-year quarter.

After the strong figures of the third quarter, the Group is refining its earnings forecast for 2017 and lifting the lower end of the range by EUR25 million. LANXESS now expects EBITDA pre exceptionals of between EUR1.25 billion and EUR1.3 billion. This would be a record for the Cologne-based company, as its highest operating result to date is the roughly EUR1.2 billion achieved in 2012.

Continuous portfolio management

After the consolidation of production of chrome chemicals and lubricant precursors, LANXESS drives the announced optimisation of its portfolio. The Group sold the non-core business with chlorine dioxide disinfectant solutions to the Canadian Superior Plus Corp. The chlorine dioxide business, with its headquarters in North Kingstown, USA, and around 40 employees, was part of the Clean & Disinfect division acquired from Chemours in August 2016.

Sales of the Advanced Intermediates segment in the third quarter of 2017 were EUR 479 million, 10 percent or EUR 44 million above the prior-year figure of EUR 435 million. EBITDA pre exceptionals increased by nearly 5 per cent or EUR4 million to EUR87 million, compared with EUR 83 million a year earlier. Higher volumes in the Advanced Industrial Intermediates business unit had a particularly positive effect. The EBITDA margin pre exceptionals was 18.2 per cent, against 19.1 per cent in the previous year.

Sales in the new Specialty Additives segment climbed by a very significant 124 per cent or EUR 265 million to EUR 478 million, compared with EUR213 million in the previous year. EBITDA pre exceptionals amounted to EUR77 million up EUR42 million or 120 per cent on the prior-year level of EUR 35 million. This substantial earnings increase was mainly due to the integration of the Chemtura additives business. The EBITDA margin pre exceptionals of 16.1 percent was slightly below the prior-year level of 16.4 per cent.

Sales in the Performance Chemicals segment rose by 11 percent or EUR36 million in the third quarter of 2017 to EUR364 million, against EUR328 million a year earlier. EBITDA pre exceptionals advanced by EUR9 million or 16.1 per cent to EUR 65 million, compared with the prior-year level of EUR56 million. All business units increased their sales volumes. The Clean and Disinfect specialties business acquired in the previous year made a significant contribution to the good earnings. The EBITDA margin pre exceptionals increased to 17.9 percent from 17.1 percent previously.

In the Engineering Materials segment, sales increased by 36.6 per cent or EUR94 million to EUR 351 million, up from EUR257 million a year earlier. EBITDA pre exceptionals increased by a considerable EUR22 million or 52.4 per cent to EUR64 million, compared with EUR42 million a year earlier. In the High Performance Materials business unit, the positive earnings development resulted from higher volumes and the trend toward higher-margin products. The high-margin urethane business acquired as part of the Chemtura acquisition also contributed to the earnings increase. The EBITDA margin pre exceptionals was 18.2 per cent, up from 16.3 per cent in the prior-year quarter.