COLOGNE, Germany (April 26)—Lanxess A.G. booked credible improvements in operating profits last year, but the firm's operating margin still lags that of its major competitors, prompting management to suggest further job cuts and production consolidation in some business units.
Lanxess Chairman Axel Heitmann singled out the Performance Rubber division as the most promising of the four business units and Rubber Chemicals as the worst performing.
Performance Rubber, the synthetic rubber business, reported pretax operating profits before exceptionals of $145.3 million, the unit's profits grew faster than sales as the company more than recovered its increased raw materials costs through higher selling prices. Sales rose 4 percent to $1.78 billion.
Board member Ulrich Koemm said that returns on the rubber business are not yet at the right level across the whole range of products, but that the company will be reasonable in terms of price increases. Koemm also ruled out any new rubber factories in China for the time being.
Heitmann said Lanxess is employing a strategy of "value before volume" in the rubber chemicals and other businesses. He said the rubber chemicals unit is not profitable, but prices are rising in that business and, "We are on the road to improvement" in that business, he said.
Overall, Lanxess reported it was $14.9 million in the red, while sales grew 7 percent to $8.41 billion.