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August 12, 2019 06:08 PM

Weak automotive industry among factors to impact Lanxess' half-year results

Shahrzad Pourriahi
Plastics News
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    Lanxess

    COLOGNE, Germany—Lanxess A.G. has reported flat half-year earnings (EBITDA) at $629 million, impacted by lower sales volumes in the specialty additives and engineering materials, weak chrome ore business and strikes at its South African performance chemicals segment.

    Despite a 3.5 percent decline in volumes, revenue in the first six months of 2019 stood at $4.07 billion, only slightly lower than $4.08 registered for the first half of 2018, the company said Aug. 2

    The effect of lower sales volumes was nearly offset by positive developments in exchange rates, higher selling prices and the contribution from the U.S. phosphorus additives business acquired from Solvay S.A. in February 2018.

    Lower sales volumes in the specialty additives and engineering materials segments were due primarily to weak demand from the automotive industry, Lanxess said its quarterly results statement.

    The Advanced Intermediates segment generated half-year sales of $1.23 billion, up 3.2 percent compared to the previous year.

    Lanxess attributed the positive sales development to higher sales volumes in the Advanced Industrial Intermediates business unit and the Saltigo business unit. The segment achieved EBITDA pre-exceptionals of $248 million, up from $223 million registered a year before.

    In the Specialty Additives segment, revenue fell 1.7 percent to $1.1 billion, hit by a 7.5 percent decline in volumes. Sales figures, however, were helped by changes in exchange rates and higher selling prices. Segment earnings remained flat at $193 million, with slightly higher margin at 17.4 percent, compared to 17.1 percent in 2018.

    The Performance Chemicals segment posted sales of $788 million in the first half of 2019, up 1.6 percent from the same period a year ago. In addition to increased volumes, positive currency effects helped to boost sales by 3 percent.

    The segment, however, witnessed declining sales volumes in the chrome ore business and production downtime due to strikes in the Leather business unit. The segment generated EBITDA pre-exceptionals of $128 million, up 3.6 percent compared to last year.

    Lanxess operates a chrome mine, in Rustenburg, South Africa, from which it supplies organic leather chemicals and chrome tanning salts to the company's leather operations in China, Germany, Italy, and South Africa. Lanxess reported that the strikes began June 19 when 290 union members embarked on an "underground sit-strike during their day shift."

    Lanxess has reached a deal with the workers.

    Revenue fell 5.6 percent within the Engineering Materials segment at $838 million, as the high performance materials business was particularly hit by lower demand in the car industry. Segment earnings fell 15.5 percent to $146 million.

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