MOSCOW (MRC) -- Lanxess reports a 68.4% year-on-year (YOY) drop in third-quarter net income from continuing operations to EUR25 million (USD29 million) on sales down 14.3% to EUR1.461 billion, said Chemweek.
The company says that COVID-19 continued to impact its business during the quarter, but that there were “positive signals” from markets compared with the previous quarter. Lanxess has confirmed and narrowed its full-year forecast range. At EUR193 million, third-quarter EBITDA before exceptional items was 28.3% lower YOY. The company’s EBITDA margin pre exceptionals declined to 13.2%, against 15.8% in the prior-year quarter. The company says that, in addition to the pandemic, a planned major maintenance shutdown in Belgium, effects from reduced selling prices, and adverse exchange-rate effects, particularly related to the US dollar, burdened the result. However, the company’s consumer protection segment continued to develop well.
“In many businesses, we are seeing indications that things are taking a turn for the better,” says Lanxess chairman Matthias Zachert. “Demand in key customer industries, including the automotive sector, picked up again in comparison to the second quarter. China and the US, in particular, are providing positive stimuli." Demand in Lanxess’s advanced intermediates segment stabilized compared with the second quarter, so that sales volumes almost reached the previous year’s level. However, given lower selling prices and negative exchange-rate effects, sales and earnings were down YOY. Sales decreased 14.4% YOY to EUR470 million. At EUR65 million, EBITDA pre exceptionals was 28.6% lower than the prior-year figure.
COVID-19 continued to impact the specialty additives business in the third quarter. Sales volumes declined significantly, particularly due to lower demand from the automotive and aviation industries. Lower selling prices and negative exchange-rate effects also had a negative impact. Sales fell 18.5% YOY to EUR410 million and at EUR65 million, EBITDA pre exceptionals was 33.0% lower YOY.
Lanxess says its consumer protection segment remained a “strong pillar” of the group thanks to a robust agricultural chemicals business and good demand for disinfectants. In addition, the positive portfolio effect from the acquisition of biocide manufacturer IPEL offset adverse exchange-rate effects. At EUR278 million, sales were stable YOY and at EUR59 million, EBITDA pre exceptionals was 7.3% higher.
Lanxess, meanwhile, says it will pay a special bonus for the “extraordinary commitment” of its employees during the COVID-19 pandemic. “In particular, our colleagues at the plants played a crucial role in keeping our business running during the crisis,” says Zachert. “With this bonus, we would like to thank them and all the others who have made special contributions over the past months.” The company will distribute a high-single-digit million euro sum. The amount of the payment varies from employee to employee. In Germany, the special bonus will be paid out in December, and different rules apply in other countries, Lanxess says.
As per MRC, Lanxess' net profits in the second quarter of 2020 were almost eight times higher than in the same period of the previous year, to EUR798 million (USD943 million). This is primarily due to the sale of its 40% stake in chemical park curator Currenta to Macquarie Infrastructure and Real Assets in April, which resulted in a disposal gain of EUR740 million. Sales declined 16.7% year on year, to EUR1.44 billion, due to weak demand across many industries and lower raw material prices, the company says. EBITDA and EBIT shrank by 23.8% and 57.3%, to EUR198 million and EUR61 million, respectively.
We remind that Russia's output of chemical products rose in September 2020 by 6.7% year on year. At the same time, production of basic chemicals increased by 6.1% year on year in the first nine months of 2020, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-September output. Last month's production of primary polymers decreased to 852,000 tonnes from 888,000 tonnes in August due to shutdowns in Tomsk, Ufa and Kazan. Overall output of polymers in primary form totalled 7,480,000 tonnes over the stated period, up by 16.4% year on year.