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August 10, 2016 02:00 AM

Lanxess remains optimistic despite financial declines

Rubber & Plastics News Report
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    COLOGNE, Germany—Arlanxeo, the synthetic rubber joint venture between Lanxess A.G. and Saudi Aramco, reported a 14.1 percent decrease in sales for the second quarter, Lanxess said in its financial report.

    The joint venture's sales came in at about $749.4 million compared to $872.4 million in 2015. Lanxess cited ongoing price pressures for synthetic rubbers as the primary cause for the sales decline, in addition to production outage at a major supplier in Asia.

    Lanxess' sales declined by 7.7 percent to about $2.17 billion with net income also declining by 13.8 percent to about $83.9 million.

    Despite the decreases, Lanxess CEO Matthias Zachert remains optimistic, raising its forecast for 2016. It now projects EBITDA pre exceptionals within a range of $1.04 billion and $1.08 billion, up from its previous range of $1 billion and $1.06 billion.

    EBITDA pre exceptions increased 8.5 percent to about $327.7 million, citing strong development of its newly structured segments. The company is now virtually debt free, using the nearly $1.34 billion payout for its 50 percent share in Arlanxeo to reduce its net financial liabilities to about $221.5 million, a drastic change from the $1.34 billion on its balance sheet as of December 2015.

    “The strong operating result derived especially from increased volumes, leaner cost structures and an improved product mix achieved by the new Lanxess segments shows that our realignment has enabled us to create a powerful and efficient organization and that we are operating in the right markets with the right products,” the executive said in a statement. “We are very optimistic for the second half of the year and expect new Lanxess to improve earnings against the prior year. Although the rubber business remains difficult, we are again raising our forecast for the full year.”

    Sales declined across the board among Lanxess' other three business segments—Advanced Intermediates reported a 5.3 percent drop to $495.5 million, Performance Chemicals declined 1.8 percent to $607.4 million and High Performance Materials dropped 5.8 percent to $307.6 million. However, all three segment's EBITDA margin pre exceptionals increased by at least 16.4 percent, with Advanced Intermediates coming in at 19.9 percent and Performance Chemicals at 21 percent. Arlanxeo's EBITDA pre exceptionals came in at 14.2 percent, a slight drop compared to 14.9 percent in 2015.

    Lanxess reported $8.84 billion in sales for 2015 and employs about 16,600 employees in29 countries with 52 production sites.

    Related Articles
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    Arlanxeo opens headquarters in Netherlands
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