LANXESS with stable development also in third quarter

Specialty chemicals company LANXESS performed well again in the third quarter of 2019 – despite further deterioration of the economic environment – and earnings in the third quarter were only slightly weaker than in the previous year. At EUR 267 million (S$402.6 million), EBITDA pre exceptionals was 3.6 per cent down on the prior year’s figure of EUR 277 million (S$417.7 million).

Earnings were negatively impacted in particular by lower demand from the automotive industry and the weak chrome ore business. However, this was almost offset by the company’s stable portfolio and advantageous exchange-rate effects, especially from the strong U.S. dollar. The EBITDA margin came in at 15 per cent, against 15.5 per cent in the prior-year quarter.

“Our stable position has once again proven its value, enabling us to remain on track in these turbulent times. Although the environment is still challenging, we are now optimistically embarking on our final spurt for the year,” says Matthias Zachert, Chairman of the Board of Management of LANXESS AG

LANXESS expects its EBITDA pre exceptionals in the fourth quarter to be slightly better than in the previous year. For the full year 2019, the specialty chemicals company expects its EBITDA pre exceptionals to be between EUR one billion (S$1.5 billion) and EUR 1.050 billion (S$1.58 billion).

Group sales in the third quarter of 2019 amounted to EUR 1.781 billion (S$2.686 billion), on a par with the previous year’s level. Net income declined by 13.8 per cent from EUR 80 million (S$120.7 million) to EUR 69 million (S$104 million), mainly due to higher depreciation. Earnings per share decreased less significantly by 10.2 per cent – from EUR 0.88 to EUR 0.79 – due to the lower average number of shares outstanding after the share buyback programme.

Q3 2019: Three of four segments increase their operating result
The Advanced Intermediates segment also performed well in the third quarter. In particular, this was largely due to good project business at Saltigo. Exchange-rate effects also had a positive impact. Despite a negative price effect from lower raw material prices, sales were up 2.8 per cent at EUR 549 million (S$827.9 million) as compared to the previous year’s figure of EUR 534 million. EBITDA pre exceptionals grew by 2.3 per cent from EUR 87 million (S$131.2 million) to EUR 89 million (S$134 million). The EBITDA margin pre exceptionals remained stable at 16.2 per cent.

Despite weaker demand from the automotive industry and the termination of margin-dilutive toll manufacturing contracts, the Specialty Additives segment developed positively in the third quarter. This was thanks to advantageous exchange-rate effects and strong business in the Polymer Additives business unit. Sales were on a par with the prior-year level at EUR 503 million (S$758.5 million). EBITDA pre exceptionals increased by 4.3 per cent to EUR 97 million (S$146.3 million) compared with EUR 93 million (S$140 million) in the prior-year quarter. The EBITDA margin pre exceptionals rose to a strong 19.3 per cent after 18.5 per cent in the prior-year quarter.

The Performance Chemicals segment also performed better than in the prior-year quarter. As in the previous quarters, the business units with water-treatment and material-protection products posted strong growth. There were also positive exchange-rate effects. Weak chrome ore business in the Leather business unit continued to have a negative impact. Sales rose by six per cent from EUR 334 million (S$503.6 million) to EUR 354 million (S$533.8 million). At EUR 56 million (S$84.4 million), EBITDA pre exceptionals was 5.7 per cent above the figure for the prior-year quarter (EUR 53 million). The EBITDA margin pre exceptionals remained stable at 15.8 per cent.

In the Engineering Materials segment, sales and earnings continued to be hit by weaker demand from the automotive industry. Sales were also burdened by lower selling prices due to decreases in raw material prices. Despite advantageous exchange-rate effects sales fell by 10.4 per cent from EUR 394 million (S$594 million) to EUR 353 million (S$532 million). At EUR 59 million (S$89 million), EBITDA pre exceptionals was 15.7 per cent down on the prior year’s figure of EUR 70 million (S$105.6 million). After 17.8 per cent in the previous year, the EBITDA margin came to 16.