COLOGNE—Lanxess A.G. is pressing ahead systematically with its realignment, unveiling a three-phase program that ultimately will result in the consolidation of 14 business units to 10, effective in 2015.
The firm unveiled its “Let's Lanxess Again” plan along with its second quarter results on Aug. 6. The program will focus on three areas: business and administration structure competitiveness; operations competitiveness; and portfolio competitiveness.
Lanxess' sales dropped about 5.7 percent to about $2.86 billion, but its net income increased from approximately $12 million in 2013 to about $73.4 million. The firm attributed the increase in income to lower exceptional charges. In 2013, about $53.4 million had been incurred for restructuring the Performance Chemicals segment.
In addition to the consolidation, Lanxess will reduce its work force on a cross-functional basis and consolidate specific areas of activity. The firm said the more efficient organizational structure is designed to enhance Lanxess' market and customer focus and reduce costs.
“We have been working full steam over the past few months to create the foundation for our realignment,” CEO Matthias Zachert said in a statement. “We, as a team, will significantly improve our competitiveness by systematically implementing our program. We have started talks with employee representatives on the implementation process, and we expect to quickly reach constructive solutions.”
The realignment program comes on the heels of Lanxess' Advance program, which was completed in line with expectations, according to a Lanxess spokeswoman. About 875 of the firm's employees worldwide left or will leave the company as part of the Advance program.
She said the company does not comment on ongoing negotiations, and the results from its realignment program will not be made public until an agreement with employee representatives has been reached.
However, on May 8 Lanxess said it successfully completed the increase of its share capital, which it said resulted in total proceeds of about $574.5 million.
According to the spokeswoman, Zachert said he expected about one half of the proceeds—about $287.3 million—of the capital increase will go toward restructuring efforts, of which one half will be accounted for in 2014 and the other in 2015. Lanxess will present more details on the restructuring at its Media and Capital Markets Day on Nov. 6.