COLOGNE, Germany – In an economic environment marked by continuing uncertainty, specialty chemicals Group LANXESS has narrowed its guidance range for the full-year 2013. EBITDA pre-exceptionals is expected to be between €710 million and €760 million, within the previously communicated corridor of €700 million to €800 million.
In the third quarter of 2013, the company posted a 9 percent volume increase year-on-year, with all segments contributing. However, this increase did not entirely offset the 11 percent overall price decline. Prices fell particularly in the rubber businesses belonging to the Performance Polymers segment. Negative currency effects, mainly related to the weakness of the U.S. dollar, also had an impact. Group sales fell by 5 percent overall compared with the prior-year quarter to €2.1 billion.
Apart from the gradual increase in volumes in all segments, the ongoing strong demand for agrochemicals and positive sales development in the Asia-Pacific region also had a stabilizing effect on quarterly results.
"Some of our customers have started restocking their inventories. This is highlighted by the year-on-year and quarter-on-quarter volume increases," said Axel C. Heitmann, Chairman of the Board of Management of LANXESS AG. "But, in our view, it is still too early to speak of a general recovery of the business."
Third-quarter sales in the Asia-Pacific region, accounting for 25 percent of group sales, rose by nearly 5 percent compared with the prior-year period to €515 million. This was largely attributable to growth in China, where sales climbed by nearly 21 percent.
Sales in the EMEA (excluding Germany) region, representing 29 percent of group sales, were stable at approximately €591 million.
In Germany, LANXESS recorded sales of €364 million, which was almost 7 percent below the prior-year quarter. The country accounted for 18 percent of group sales.
LANXESS generated 17 percent of group sales in North America. Sales there fell by nearly 13 percent to €342 million.
Sales in Latin America, at €238 million, were roughly 17 percent below the level of the prior-year period. The region’s share of group sales was 12 percent.
Third-quarter sales in the BRICS countries (Brazil, Russia, India, China and South Africa) increased by just under 3 percent overall to €497 million. These countries accounted for 24 percent of group sales.
Volumes in the Performance Polymers segment advanced by a substantial 14 percent against the prior-year quarter, with a particularly strong increase in Asia. A persistently difficult market environment and lower prices for raw materials, especially butadiene, led to a 19 percent decrease in selling prices. Sales, which were also hampered by negative currency effects, fell by 8 percent to €1.1 billion.
Sales in the Advanced Intermediates segment were flat with the prior-year period at €403 million. Both business units – Advanced Industrial Intermediates and Saltigo – benefited from continuing good demand for products used in the agrochemicals and in the flavors and fragrances industries. Volumes rose by nearly 5 percent, while selling prices were reduced by about 3 percent in light of a drop in raw material prices. Exchange rates also had a negative effect on sales.
In the Performance Chemicals segment, third-quarter sales slightly decreased by about 2 percent year-on-year to €546 million. Selling prices were level year on year. Growth of 3 percent in volumes could not compensate for negative currency effects of about 5 percent. Business with water treatment products, rubber chemicals and material protection products for the paints and coatings industry developed well.
Going forward, LANXESS expects the modest economic momentum to persist in the fourth quarter, with the emerging economies continuing to provide only limited impetus. In Europe, although the situation is expected to ease, the company does not yet anticipate lasting stability. Growth in the United States is likely to remain moderate due to the ongoing budget uncertainty.
To address the challenging economic situation, the company has begun implementing the efficiency improvement program "Advance," which was announced in September. The program comprises cost savings, a global headcount reduction of about 1,000 by the end of 2015 and portfolio adjustments. In total, some €150 million in exceptional charges will be booked in 2013 and 2014 to cover the program, thereof €80 million in the current financial year. LANXESS expects "Advance" to generate annual savings of roughly €100 million from 2015 onward.
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