COLOGNE, Germany—Lanxess A.G. CEO Matthias Zachert outlined a new strategic focus following the firm's realignment initiative during a Nov. 5 presentation of the firm's third quarter financials.
The firm revealed it plans to invest up to $464 million in growth projects by 2020, which Lanxess said came from the $1.3 billion generated from its recent joint venture agreement with Saudi Arabian Oil Co.
Zachert said the firm's realignment plans are progressing faster than expected. As a result, the company raised its expectations for 2015 and now expects earnings before interest, tax, depreciation and amortization pre exceptionals to come in between about $934 million and $977 million. Its previous forecast was between about $912 million and $956 million.
Lanxess said the effects of the improved administrative and business structures are already evident. The company is set to achieve annual savings of about $163 million with its first phase of realignment by the end of 2015, which is one year earlier than expected.
The first phase of its “Let's Lanxess Again” realignment program resulted in the reduction of 1,000 jobs worldwide and the consolidation to 10 business units, from 14.
Lanxess also said it is accelerating the second phase of its realignment program, the optimization of its global plant network. Zachert said the group anticipates additional savings of about $163 million progressively over the coming years until fully realized by 2019.
The firm said about $10.9 million of this figure already has been achieved in 2015.
Lanxess expects additional savings as a result from a global analysis of its plants and process, which will extend into 2016.
About $108.7 million of the projected $163 million in savings is expected to be generated through a comprehensive package of process improvements at production sites resulting in lower consumption of energy, lower consumption of raw materials and optimized maintenance processes.
The previously announced capacity adjustments and efficiency measures at its rubber production facilities in Latin America and France will contribute about $32.6 million in savings. Its reorganization of its EPDM and neodymium-based performance butadiene rubber production network, also announced previously, will result in further savings of about $21.7 million.
The restructuring of its EPDM and Nd-BR rubber production will affect about 140 employees worldwide. The firm will halt EPDM rubber production at its facility in Marl, Germany, and will realign its EPDM and Nd-PBR production to four strategic regional facilities in Europe, North America, Latin America and Asia-Pacific.