LEVERKUSEN, Germany – LANXESS posted lower earnings in the first quarter of 2013 due to a weak market environment, particularly in the tire and automotive industries.
First-quarter sales were down by 12 percent year-on-year to EUR 2.1 billion, mainly due to lower volumes and fallen selling prices. EBITDA pre exceptionals dropped by 53 percent against the prior-year period to EUR 174 million, falling within the company’s target of between EUR 160 million and EUR 180 million. The operating result was lowered by one-time effects of about EUR 30 million for the start-up of the new butyl rubber plant in Singapore and the conversion to Keltan ACE technology at the EPDM rubber plant in Geleen, the Netherlands.
The agrochemicals business as well as the company’s strong position in the growth region of Asia proved to be stabilizing factors in the first quarter.
The group’s EBITDA margin fell from 15.5 percent to 8.3 percent. Net income dropped by 87 percent year on year to EUR 25 million.
“We are not immune to a sharp drop in demand, but we are responding to it proactively as always,” said LANXESS’ Chairman of the Board of Management Axel C. Heitmann. At the start of the year, LANXESS initiated temporary facility shutdowns in the Performance Polymers segment in line with its policy of flexible asset and cost management. Now, additional measures are planned in the Performance Chemicals segment.
LANXESS is also reducing its capital expenditure budget for 2013 to EUR 600 million from the previously planned level of EUR 650 million to EUR 700 million.
Sales declined by double-digit percentages in all regions except for Asia-Pacific, where sales remained roughly at the same level year-on-year at EUR 530 million. This region’s share of group sales rose to 25 percent, from 23 percent in the prior-year quarter.
EMEA (Europe excluding Germany, Middle East, Africa) was the strongest region, accounting for approximately 30 percent of sales compared to 29 percent in the previous year. Business in that region declined by 11 percent to EUR 623 million.
Germany’s share of group sales was nearly 18 percent, compared with 17 percent a year ago. Sales in Germany fell by 11 percent to EUR 370 million.
LANXESS generated some 15 percent of group sales in the North America region against 18 percent in the same period of last year. Sales there dropped by 23 percent to EUR 327 million. This decline is primarily due to the fact that raw materials were used for captive consumption instead of selling them externally.
Sales in Latin America fell by 19 percent to EUR 245 million. The region’s share of group sales was 12 percent, against 13 percent in the prior-year period.
Sales in the five BRICS countries (Brazil, Russia, India, China and South Africa) dropped by 11 percent year-on-year to EUR 492 million. These countries accounted for 24 percent of group sales, compared with 23 percent in the first quarter of 2012.
In the Performance Polymers segment, sales moved back by about 18 percent to EUR 1.1 billion. The Advanced Intermediates segment saw stable development in light of the sound demand for agrochemicals. Sales edged up 1 percent in the first quarter of 2013 to EUR 433 million. Performance Chemicals segment sales decreased by 7 percent to EUR 520 million.
For the second quarter, LANXESS anticipates a slight improvement in business. “The weak demand from the tire and automotive industries persists, but customer destocking is slowing down. We currently anticipate EBITDA pre exceptionals in the second quarter to improve sequentially but to be below EUR 220 million,” said Heitmann. A mid-double-digit million-euro amount of exceptional charges will be incurred for the additional measures.