Sharp drop in net income for Lanxess

Germany
Published:  06 May, 2020
Lanxess lab in Liyang, China

The specialty chemicals manufacturer has posted Group sales of €1.704 billion in the first quarter of 2020, down 2% on the previous year’s figure of €1.738 billion.

The Group’s net income from continuing operation totalled €63 million, down 27.6% from €87 million recorded in the first quarter of 2019. Lanxess said that a further decline in demand from the automotive industry as a result of the coronavirus crisis had a negative effect on earnings, with EBITDA pre- exceptionals declining 9.9% from €272 million to €245 million in the first quarter of 2020., and EBITDA margin pre-exceptionals standing at 14.4% after 15.7% in the prior-year quarter. Lanxess said its ability to deliver has hardly been restricted to date, and its largest production facilities remained in operation continuously since the coronavirus outbreak. Only plants in China, Italy, India, and Argentina were temporarily shut down, in some cases based on government requirements. So far, 31 employees worldwide are said to have contracted coronavirus, of which 27 have recovered.

The Germany headquartered chemicals Group said intends to focus more sharply on consumer protection products; the Saltigo, Material Protection Products and Liquid Purification Technologies business units make up the new Consumer Protection segment, which replaces the former Performance Chemicals segment. According to Lanxess, the new Consumer Protection segment closed the first quarter of 2020 successfully, particularly attributed to strong business with disinfectants in the Material Protection Products business unit. Sales in the segment rose 5.7% from €264 million to €279 million. At €67 million, EBITDA pre-exceptionals was 11.7% higher than the prior year’s figure of €60 million, while the EBITDA margin pre- exceptionals was at 24%, against 22.7% in the previous year.

“So far, we have been able to keep the economic impact of the coronavirus pandemic within limits, mainly thanks to our balanced portfolio”, said Matthias Zachert, Chairman of the Board of Management, LANXESS AG. “We know that we have not yet reached the peak of the crisis. However, we feel well prepared, as we have a stable positioning and have taken extensive measures for crisis management. The most important thing is that our employees are mostly healthy and our plants are running.”

Among the steps to further strengthen the Group’s liquidity, Lanxess has supended its share buy-back programme until further notice, and expects to also save between €50 million and €100 million by means of cost discipline in fiscal year 2020, and reduce its investment budget by around €50 million by postponing projects. The members of the Supervisory Board are also to waive 20% of their compensation.