COLOGNE, Germany—Weak demand from the auto industry hurt Lanxess' sales in the first half of 2020, falling to $3.7 billion—9 percent lower than the same period in 2019.
Pre-exceptional items, EBITDA across the business fell 15 percent and hit $560 million, compared to $660 million in the same period in the previous year.
"Positive earnings in our Consumer Protection segment did not compensate for weak demand from the automotive industry, especially in the Engineering Materials segment," the company said in a statement.
During the half, the company's cost of travel dropped and the company managed to trim some back-office costs. R&D spend at $76 million was almost the same as $77 million in the first half of 2019.
In the company's Engineering Materials business, which contains polyurethanes, sales subsided by 21 percent between the first half of 2019 and 2020. Sales dropped by 21 percent and reached $705 million in the first half of 2020.
Pre-exceptional EBITDA in the division declined by 41 percent, reaching $92 million.
The fall in sales was due to shutdowns at customers because of coronavirus. Lanxess stressed the impact that this had on the High Performance Materials or non-polyurethane part of the business. It added that the Engineering Materials business will be "significantly weaker than in the previous year due to the massive collapse in demand in the automotive industry."
The fall in sales fed through to lower earnings in the half.
Looking ahead to the rest of 2020, Lanxess said it "does not expect the performance of the global economy or of any region to quickly return to the previous year's level. ... We expect significant negative development in the automotive industry in 2020. We assume that the construction industry, the agro-industry and the chemical industry will all decline."
However, chairman Matthias Zachert is more optimistic than the notes to the accounts.
"We are already seeing initial signs of a recovery in Asia," he said. "I therefore remain confident, even though a rapid macroeconomic recovery cannot be foreseen at present."