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Tuesday, 25 February 2020
Markets & companies, Raw materials market

Lanxess again raises guidance for 2016 after strong third quarter

Monday, 14 November 2016

Following a strong third quarter, specialty chemicals company Lanxess has again raised its earnings guidance for 2016.

The Lanxess Tower in Cologne. Source: Lanxess

The Lanxess Tower in Cologne. Source: Lanxess

The Cologne-based company now expects to achieve EBITDA pre exceptionals within a corridor of EUR 960 million and EUR 1,000 million. Previously, Lanxess had assumed earnings of between EUR 930 million and EUR 970 million.

EBITDA pre exceptionals up 9.4 percent

EBITDA pre exceptionals for the third quarter of 2016 rose by 9.4 percent to EUR 257 million, compared with EUR 235 million a year earlier. The EBITDA margin pre exceptionals improved year-on-year from 12.0 percent to 13.4 percent. 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.

Advancing on the path of growth

Lanxess continued its path of growth in the third quarter as well. On August 31, 2016, it successfully closed the acquisition of the Clean and Disinfect business of U.S-based company Chemours. At the end of September, Lanxess then announced the next milestone with the planned acquisition of U.S-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.

Margins improved in all segments

In the Advanced Intermediates segment, sales decreased by 1.1 percent from EUR 440 million to EUR 435 million. EBITDA pre exceptionals stood at EUR 83 million, 9.2 percent higher than the prior-year figure of EUR 76 million. In the Advanced Industrial Intermediates business unit particularly, sales volumes increased on account of good demand in almost all end markets. In the Saltigo business unit, demand for Saltidin – the active ingredient for insect repellents – was one of the factors which compensated for weaker demand for agrochemicals. The EBITDA margin pre exceptionals of 19.1 percent was significantly above the prior-year figure of 17.3 percent.

The Performance Chemicals segment posted a year-on-year increase in sales of 3.2 percent, from EUR 524 million to EUR 541 million. Alongside higher sales volumes, the Clean and Disinfect business acquired from Chemours at the end of August was one of the factors in this performance. EBITDA pre exceptionals increased by 5.8 percent to EUR 91 million, compared with EUR 86 million a year earlier. In particular, higher sales volumes in almost all business units contributed to the improvement in earnings. The EBITDA margin pre exceptionals increased slightly from 16.4 percent to 16.8 percent.

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