Strong first quarter for Lanxess

https://www.chemnet.com   May 21,2010

　　Lanxess more than tripled EBITDA pre exceptionals to EUR 233 million in the first quarter of 2010 due to improved economic conditions worldwide, in particular in Asia and Latin America. Above all, the company’s worldwide synthetic rubber activities benefited from a strong demand in countries such as China and Brazil.

　　Sales increased 53 % year-on-year to EUR 1.61 billion due to the strong pick-up in volumes. In addition, higher raw material prices were fully passed on to customers through product price increases. The company posted a net profit of EUR 104 million in the first quarter of 2010 in comparison to a EUR 14 million loss a year earlier. EBITDA margin pre exceptionals–another key performance indicator–more than doubled to 14.4 %.

　　Performance by region

　　Asia-Pacific was the strongest region in the first quarter, more than doubling sales year-on-year to EUR 376 million. Asia-Pacific represented 23 % of Group sales and was the second largest sales region within the company. Latin America more than doubled sales year-on-year in the first quarter to EUR 195 million and represented 12 % of sales.

　　EMEA (Europe, Middle East, Africa, excluding Germany) remained the largest sales region in the first quarter, with 30 % of overall Group sales. The region increased top-line growth by 35 % to EUR 484 million. Sales in Germany rose 26 % to EUR 308 million in the first quarter and in North America sales grew by 38 % to EUR 250 million.

　　Performance by segment

　　Sales of the Performance Polymers segment rose 85 % to EUR 828 million in the first quarter, driven by strong demand in China and Brazil. Above all, the positive trend was supported by the tyre replacement tyre business as well as customer restocking.

　　The positive top-line development was also driven by price increases, which offset rising raw material costs. EBITDA pre exceptionals jumped to EUR 144 million from EUR 8 million a year earlier.

　　Due to ongoing strong demand for Lanxess’high-quality butyl rubber, the company broke ground for a new 100 kt/y facility on 17 May 2010, in Singapore. In addition, the company announced on 7 May 2010 the creation of a joint venture with Taiwan’s TSRC Corp. to build a new nitrile rubber (NBR) plant in Nantong, China, with a total joint investment of approximately EUR 36 million.

　　First-quarter sales in the Advanced Intermediates segment rose 24 % year-on-year to EUR 320 million, supported by the acquisition of the chemical assets of the Indian company Gwalior as well as an upturn in demand in the customer industries automobile, dyes and coatings. EBITDA pre exceptionals fell 4 % year-on-year to EUR 44 million in the first quarter due to weaker demand for pharmaceutical and agrochemical precursors.

　　Sales of the Performance Chemicals segment rebounded 35 % year-on-year in the first quarter to EUR 455 million, with all seven business units showing substantial volume improvements. EBITDA pre exceptionals rose twofold to EUR 78 million. The main business units that contributed to this strong performance improvement were Inorganic Pigments and RheinChemie, which benefited from an upturn in the construction and automobile sectors respectively.

　　Outlook

　　Assuming the positive economic trend will continue, Lanxess is targeting EBITDA pre exceptionals of EUR 650–700 million for the full year 2010. Nevertheless, the company cautioned that the potential for setbacks remained due to volatile raw material prices, monetary instability in the Euro zone and the end of government-backed stimulus packages.

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