COLOGNE, Germany – Specialty chemicals company LANXESS reported a successful fiscal 2015 despite a challenging market environment. EBITDA pre-exceptionals rose by 9.5 percent to €885 million, due to savings achieved by the company’s realignment program, the strong U.S. dollar and volume growth. The operating result was within the recent guidance range of €860 million to €900 million. All segments contributed to the earnings improvement. In 2014, the operating result was €808 million.

The group’s EBITDA margin pre-exceptionals improved from 10.1 percent to 11.2 percent. Net income also increased substantially to €165 million from €47 million. Compared with the prior year, sales remained virtually stable at €7.9 billion (2014: €8.0 billion). Lower selling prices, which were the result of lower raw material prices, were largely compensated by favorable currency effects.

“Fiscal 2015 was successful for LANXESS in every respect. We implemented our realignment faster than planned and, at the same time, significantly improved our profit situation and financial position. We have thus laid a stable foundation for our growth course,” said Matthias Zachert, Chairman of the Board of Management of LANXESS AG.

Net financial liabilities declined by €125 million, to around €1.2 billion due to increased operating results coupled with lower capital expenditures and the further reduction of working capital. This amounts to net financial liabilities being cut by about 30 percent within two years. In 2015, capital expenditures amounted to €434 million, around one-third lower than the prior-year level of €614 million. For 2016, the company is planning capital expenditures of some €450 million. “Although we are on course for growth, we will continue to pursue our solid financing strategy and keep our investment-grade rating in sight,” said Michael Pontzen, Chief Financial Officer of LANXESS AG.

After the relevant antitrust authorities have cleared the transaction earlier than expected, ARLANXEO, the joint venture for synthetic rubber between LANXESS and Saudi Aramco, will start operating on April 1, 2016.

The start of the joint venture will impact LANXESS’ reporting structure from the second quarter of 2016. The Performance Polymers segment will be replaced by ARLANXEO (comprising the Tire & Specialty Rubbers and High Performance Elastomers business units) and the High Performance Materials business unit. The Advanced Intermediates and Performance Chemicals segments will remain unchanged.

The realigned company with its balanced portfolio of specialty chemicals, chemical intermediates and high-performance plastics is on a growth course. In principle, this “new” LANXESS intends to focus on mid-sized markets and the growth regions of North America, China and Southeast Asia. In the years ahead, LANXESS plans to invest some €400 million of the anticipated €1.2 billion proceeds from the rubber transaction in organic growth.

In 2015, sales in the Performance Polymers segment declined by 4.5 percent compared with the prior year, to around €3.9 billion. Despite the challenging environment, EBITDA pre-exceptionals increased by 28.1 percent to €502 million, which was substantially higher than the prior-year level of €392 million. Earnings were lifted by favorable exchange rates, savings achieved by the realignment program and higher volumes. The EBITDA margin pre-exceptionals of the segment increased accordingly from 9.5 percent previously to 12.7 percent.

In the Advanced Intermediates segment, 2015 sales were slightly down on the prior year at around €1.8 billion. EBITDA pre-exceptionals increased by 10.1 percent to €339 million, compared with €308 million a year earlier. Earnings were buoyed by the strong U.S. dollar, the continued good demand for agrochemicals and from other markets, and savings achieved by the realignment program. At 18.6 percent, the EBITDA margin pre-exceptionals was substantially higher than the figure of 16.7 percent posted in 2014.

Sales in the Performance Chemicals segment improved by 4.8 percent in 2015 to around €2.1 billion. EBITDA pre-exceptionals advanced by a substantial 21.2 percent from the prior-year level of €269 million to €326 million. Favorable exchange rate developments in all business units, savings achieved by the realignment program and lower raw material prices resulted in improved earnings. The EBITDA margin pre-exceptionals improved accordingly to 15.6 percent, compared with 13.5 percent in 2014.

LANXESS has had a good start to the new fiscal year and is forecasting EBITDA pre-exceptionals between €240 million and €260 million for the first quarter of 2016. The company is expecting stable to slightly positive business development for the Advanced Intermediates and Performance Chemicals segments for the full year 2016. It also assumes good volume growth in the High Performance Materials segment. The challenging competitive environment is expected to persist in the synthetic rubber business, which could result in additional margin pressure. LANXESS is assuming EBITDA pre-exceptionals for the full year 2016 of between €880 million and €930 million.