COLOGNE, Germany—Lanxess A.G. will replace Axel Heitmann as CEO and chairman of the board of management, effective Feb. 28.
The Lanxess supervisory board and Heitmann arrived at a mutual agreement, according to a company news release issued on Jan. 26.
The supervisory board has appointed Matthias Zachert as Heitmann's successor. Zachert, the former chief financial officer of Lanxess from 2004-11, currently is chief financial officer at Merck KGaA, a position he has held since June 2011.
Zachert has asked for an early release from his current duties, and Merck said it will accommodate his request, but it did not disclose when his departure becomes effective. Lanxess said Zachert will join Lanxess when he fulfills his contractual obligations with Merck, no later than May 15.
Bernhard Duettmann, Lanxess chief financial officer, will serve as chairman of the board of management during the transition period between Heitmann and Zachert.
A Lanxess spokeswoman said the remaining executive board members will retain their positions.
End of an era
Heitmann was appointed the first CEO of Lanxess on Sept. 16, 2004. The firm said Heitmann played a key role in shaping the company since it spun off from a number of underperforming units from Bayer A.G. He sold a quarter of the initial portfolio and made a number of strategic investments to shape the company into the global specialty chemicals company it is today.
Lanxess was placed in Germany's blue-chip DAX Index in 2012.
"Mr. Heitmann has played a key role in shaping the company since its creation through consistent restructuring and strategic portfolio measures," said Rolf Stomberg, chairman of the supervisory board, in a news release. "He has formed Lanxess into a leading global specialty chemicals company, achieving many noticeable successes. The supervisory board expresses its sincere gratitude and high regard for Mr. Heitmann, also on behalf of all employees."
However the firm's businesses serving the automotive and tire markets have struggled in recent years. The company was the second-worst performer on Germany's DAX index last year. Lanxess reported an 88 percent drop in net income to $14.7 million for the third quarter of 2013, which it attributed to higher depreciation and amortization. The firm's sales also declined 5 percent to $2.81 billion.
The company reported a 9 percent volume increase year-on-year, but it did not offset the overall price decline of 11 percent. Lanxess said rubber prices fell particularly in the rubber businesses belonging to the Performance Polymers segment. The firm also cited negative currency effects as an impact.
Sales in the Performance Polymers segment fell by 8 percent to $1.47 million. Volumes increased by 14 percent with a strong increase in Asia. The company cited a difficult market environment and lower prices for raw materials—especially butadiene—that led to a 19-percent decrease in sale prices.
As a result, Lanxess revealed its plan in September 2013 to restructure its rubber business to reduce costs and jobs by 2015. It projects it will save $135.3 million annually by 2015 through the elimination of 1,000 jobs worldwide.
The company will spend approximately $202.1 million in one-off charges to cover its restructuring efforts, $107.8 million in 2013 and $94.3 million in 2014.
Lanxess said it also will pursue "strategic options" for some of its non-core businesses, including its rubber chemicals' accelerators and antioxidants lines, nitrile-butadiene rubber operation, and Perlon-Monofil polyamid and polyester monofilament products.
"Lanxess is facing significant challenges, for example in terms of market capacities and business portfolio," Stomberg said in a news release. "Therefore, the supervisory board believes it is the right time to hand over responsibility to a new leadership in order to overcome these challenges. Mr. Zachert performed excellent work as chief financial officer at Lanxess and has an outstanding reputation among employees as well as in the capital market."
Old face, new direction
Merck said Zachert has realigned the global finance organization and played a significant role in Merck's transformation program during his three years with the firm.
"I thank Matthias Zachert very much for the successful and collegial cooperation, which all of us would have liked to continue," said Karl-Ludwig Kley, chairman of the Merck executive board, in a news release. "He has significantly contributed to further developing Merck KGaA in a positive way. His transparent capital market communication has clearly helped boost investor trust in our company."
A Lanxess spokeswoman cited Zachert's familiarity with the company, his track record during his first tenure as chief financial officer and his reputation among employees and the capital market as factors supporting his appointment.
Lanxess said Zachert played a key role in establishing the global finance organization, restructuring the portfolio and realigning the Bayer spinoff during his first tenure with the company.
Prior to joining Lanxess, he was the chief financial officer at Camps A.G. from 2002-04, where he helped restructure the company.
From 1999 to 2002, Zachert worked in Paris as chief financial officer of the International Region of Aventis Pharma A.G., which was formed by the merger of Hoechst Marion Roussel and Rhone-Poulenc Rorer. Prior to the merger, Zachert held various senior management positions in the pharmaceutical business of Hoechst A.G.
Merck is a global pharmaceutical, chemical and life science company with total revenues of $15.3 billion. It is headquartered in Darmstadt, Germany, and employs 38,000 in 66 countries.
Lanxess is a global specialty chemicals company with sales of $12.4 billion in 2012. It is headquartered in Cologne and employs 17,500 in 31 countries with 52 global production sites.