Cutbacks to hit jobs, spending / Plans target savings of at least EUR 100 mn this year / Q2 earnings continue lower
The widespread need to cut costs within the chemical industry has now arrived at Gemrany’s Lanxess (Cologne; After June’s profit warning and significantly weaker figures for the second quarter, the speciality chemical maker has announced the start of a savings plan called “Forward!” 

CEO Matthias Zachert said he currently does not see the initially hoped for demand recovery coming in the second half of the year.

Strict cost discipline – which also covers investments – and a Europe-wide hiring freeze are meant to bring short-term, one-off savings of EUR 100 mn this year. With the announcement of the departure of CFO Michael Pontzen, his replacement Oliver Stratmann will be tasked with meeting the austerity targets when he takes over on 1 September.

Furthermore, plans foresee using structural measures to reduce costs by EUR 150 mn annually by 2025. At Germany’s Krefeld-Uerdingen site, this includes the shutdown of hexane oxidation by 2026 and the planned sale of chromium oxide production next year, which will affect around 110 employees. Lanxess said it expects costs of EUR 100 mn for the measures.
Drop in earnings spurs action
The austerity measures follow a sharp slowdown in the second quarter, the result of weak sales in “many customer industries”, according to the company. Lanxess reported a steep decline in sales of 22% in Asia, a decrease of 10% in Germany, and a fall of 6% in the rest of the EMEA region.

Group revenues fell 11.1% to just under EUR 1.8 bn last quarter, while EBITDA before special items plunged almost 60% to EUR 107 mn. The consolidated result plummeted to a loss of EUR 145 mn from a profit of EUR 48 mn in the same period of last year.

Despite the slowing, Zachert confirmed the EBITDA forecast for the year, which had already been downgraded, at EUR 600 mn to 650 mn.

Excluding engineering polymers, now part of the Envalior joint venture, only two areas remain in the group with varying relevance for plastics: advanced intermediates operations includes intermediate products, polyurethane prepolymers, and pigments; and speciality additives is home to flame retardants, and the Rheinchemie business unit.

In Q2, additives revenues fell 18.8% on the year to EUR 620 mn, and EBITDA shrank by nearly three-quarters to EUR 37 mn. Intermediate products fared little better with a 17.5% sales decline to EUR 484 mn, and a 69% drop in EBITDA to EUR 23 mn.

Only the third business area for consumer protection increased sales with 8% growth to EUR 602 mn. However, this was mainly driven by takeovers, which also cut EBITDA by just under 9% to EUR 82 mn.
04.08.2023 [253384-0]
Published on 04.08.2023
Lanxess: Sparprogramm mit Stellenabbau und InvestitionskürzungenGerman version of this article...

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