Lanxess to sell urethanes business

Lanxess A.G. has started the process to sell its urethane systems business, saying it no longer fits with its realigned portfolio.

The unit has production operations on six sites globally, and employs about 400 people.

Weak demand continued to affect the company's sales in the third quarter. Its $1.7 billion in sales for the 2023 quarter represented a 26.7-percent decline vs. $2.3 billion from the same quarter in 2022.

EBITDA (earnings before interest, taxes, depreciation and amortization) before exceptional items were down 50.4 percent, falling from $256 million in last year's third quarter to $127 million in 2023. Lanxess posted a net loss of $139 million, compared with an $85.4 million profit in 2022.

The company cited low demand from almost all industries as a major contributing factor to the falling sales. Ongoing destocking by customers was also an issue, although this now appears to be on the decline, it said.

"The weak demand in the global chemicals industry persists, and we see no signs of recovery for the rest of the year," said Matthias Zachert, chairman of the company's board of management. "On the contrary, demand in the fourth quarter to date seems to be even weaker than expected."

The company says that its restructuring action plan, termed "Forward," is now in full swing. One-time savings of about $106 million are expected for 2023 through a combination of cost reductions and cuts in investments. Structural changes will be made to permanently reduce annual costs by about $160.2 million from 2025 onward. This includes the loss of 870 jobs, more than half of which will be in Germany.

The company has reduced its full-year forecast for 2023 in the light of the lower-than-expected demand. It now expects pre-exceptional EBITDA for the year will be in the range $535 million to $587 million. That would be down from the previous prediction of $640 million to $694 million.