Lanxess AG has reported a fourth-quarter net loss of EUR753 million, compared with a net loss of EUR21 million in the prior-year period, on sales down 27.2% to EUR1.44 billion, said the company.
EBITDA before nonrecurring items declined 44.6%, to EUR97 million, but beat analysts’ consensus estimate of EUR89 million provided by S&P Capital IQ. The EBITDA margin before exceptional items was 2.1 percentage points lower year over year, to 6.8%.
“2023 was a year of multiple crises for the German chemical industry: Weak demand in numerous customer industries and market regions combined with inventory reduction by customers, high energy prices in Germany, and geopolitical tensions,” Lanxess said. This also characterized the financial year 2023 for Lanxess, the company said.
Weaker demand and an associated reduction in sales volumes, as well as higher costs stemming from lower plant operating rates, led to a significant earnings decline, mainly in Lanxess’ specialty additives and advanced intermediates segments, the company said. In addition, lower procurement costs for raw materials and energy in these two segments undermined selling prices, Lanxess said.
Earnings in the company’s consumer protection segment saw a comparatively moderate decline, as the contribution from the microbial control business acquired from IFF in 2022 had a positive effect, Lanxess said.
Lanxess CEO Matthias Zachert said during a press conference earlier today that in the second- and third quarters of 2023, “we saw lots of destocking and weak demand in the customer industries that led to a dramatic decline. Then, we wanted to do our own destocking and that meant that for two to three consecutive quarters, we had a utilization rate of 50% to 60%, which, of course, is rock-bottom for the industry.”
The company added that it is counteracting the effects of the economic downturn with its previously announced plan called Forward, which includes one-time, short-term savings, which totaled €100 million in 2023 through cost reductions and lower investments.
The plan also includes 870 job cuts, 460 of which are in Germany, to support the company’s aim of reducing its annualized costs by about EUR150 million from 2025. “The respective agreements have already been signed for most of the job cuts,” Lanxess said.
Zachert said during the press conference that many parties are exhibiting interest in Lanxess’ urethanes business, but he said that Lanxess will consider its options once a shortlist of potential buyers is in place. The company announced in 2022 its intention to sell the urethanes business.
We remind, Lanxess has successfully completed and put into operation the expansion of its Rhenodiv production line in Jhagadia, Gujarat on February 1, 2024, said the company. With this new facility, the company’s Rhein Chemie business unit has significantly increased its production capabilities and will be able to meet the growing demand of the Indian Sub-continent and the Asian tire and rubber goods markets.
mrchub.com