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Arlanxeo operational April 1

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COLOGNE, Germany—Lanxess A.G. and Saudi Arabian Oil Co. have unveiled the executive team of their Arlanxeo joint venture, set to begin operations April 1.

Lanxess confirmed during its March 17 financial presentation for 2015 that the relevant antitrust authorities have cleared the transaction earlier than expected. The venture will be headquartered in Maastricht, Netherlands.

Once Arlanxeo begins operations, the firm's Performance Polymers segment will be replaced with the High Performance Materials business unit and the 50/50 joint venture, which consists of Lanxess' Tire & Specialty Rubbers and High Performance Elastomers business units. The firm's other two segments, Advanced Intermediates and Performance Chemicals, will remain unchanged.

Arlanxeo is valued at about $3.1 billion. Lanxess received about $1.3 billion from Aramco for its 50 percent stake in the company. Lanxess said it plans to invest about $452 million of the proceeds toward organic growth.

The German-based specialty chemicals company described 2015 as a success, despite a challenging market environment. Net income increased to about $186.7 million, up from $53.2 million in 2014. Sales experienced a slight decline to $8.94 billion, from $9.05 billion in 2014.

“Fiscal 2015 was successful for Lanxess in every respect,” CEO Matthias Zachert said in a statement. “We implemented our realignment faster than planned and, at the same time, significantly improved our profit situation and financial position. We have thus laid a stable foundation for our growth course.”

Arlanxeo represents the third and final phase of Lanxess' realignment program “Let's Lanxess Again.” The first, completed in 2015, resulted in the reduction of 1,000 jobs worldwide and the consolidation to 10 business units from 14.

During the firm's third quarter presentation in 2015, Zachert said Lanxess was accelerating the second phase—optimization of its global plant network. The group anticipates additional savings of about $163 million progressively over the coming years until fully realized by 2019. A global analysis of its plants and process will extend into 2016.

The firm provided no update on the second phase during its recent financials presentation. Lanxess is adjusting capacity of EPDM and neodymium-based performance butadiene rubber production network into four strategic regional facilities in Europe, North America, Latin America and Asia-Pacific.

Management team revealed

Arlanxeo will have representatives from both Lanxess and Saudi Aramco on its executive board, led by CEO Jan Paul de Vries, who has been responsible for the High Performance Elastomers business unit since January 2013.

Other appointments, effective April 1, include:

c Executive Board Member Jorge Nogueria, who has led Lanxess' Tire & Specialty Rubbers business unit since January 2015;

c Chief Financial Officer Ali Ba-Baidhan, who has served as the manager of Saudi Aramco's accounting department since January 2013;

c Chief Procurement Officer Fayez Alsharef, began his career with Saudi Aramco in 2002 and became the manager of domestic sales and logistics department in October 2015; and

c General Counsel Johan Gerrese, who joined Saudi Aramco as counsel in 2014.

“Arlanxeo will be provided with a strong, international executive team who will bring the respective skills of both partner companies in an ideal manner,” said Zachert, who will serve as chairman of Arlanxeo's shareholders committee. “Thus we have created the best possible conditions to position Arlanxeo as a reliable partner for its customers.”

Mixed segment results

Lanxess experienced a sales decline across two of its business segments, but EBITDA before exceptional items increased across all three. Its Performance Polymers segment experienced a 4.5 percent drop in revenue to $4.41 billion while experiencing a 28.1 percent increase in EBITDA to $568 million.

Advanced Intermediates' sales decreased slightly to $2.04 billion with EBITDA increasing 10.1 percent to $383.6 million. Performance Chemicals was the only segment to experience a sales increase, by 4.8 percent to $2.38 billion, and also achieved 21.2 percent growth in EBITDA to $304.4 million.

Lanxess said it's had a good start to the new fiscal year and is forecasting EBITDA pre-exceptionals to be between $271 million and $294 million for the first quarter. For the full year, the firm projects EBITDA to be between $995 million and $1.05 billion. The firm reported EBITDA of about $1 billion for 2015, up 9.5 percent compared to 2014.

The firm employs 16,200 and operates 52 production sites in 29 countries.