Lanxess reports drop of 88 percent in net income in 3Q

ERJ staff report (RPN)

Cologne, Germany − Lanxess AG has reported an 88-percent drop in net income to $14.7m (€10.9m) for the third quarter of 2013, reported Rubber & Plastics News.

The company said the drop can be attributed to higher depreciation and amortisation, in addition to charges of $26.8m (€19.9m) for its announced efficiency program.

Lanxess also reported a sales decline of 5 percent to $2.81bn (€2.09bn).

The company reported a 9-percent volume increase year-on-year, but it did not offset the overall price decline of 11 percent. Lanxess said the rubber prices fell particularly in the rubber businesses belonging to the Performance Polymers segment. The firm also cited negative currency effects as an impact.

Sales in the Performance Polymers segment fell by 8 percent to $1.47m (€1.09m). Volumes increased by 14 percent with a strong increase in Asia. The company cited a difficult market environment and lower prices for raw materials − especially butadiene − that led to a 19 percent decrease in sale prices.

Lanxess said apart from the gradual increase in volumes throughout its segments, the ongoing strong demand for agrochemicals and positive sales development in the Asia-Pacific region had a stabilising effect on quarterly results. Third quarter sales in the Asia-Pacific region accounted for 25 percent of the group sales and increased by 5 percent to $691.6m (€514.5m).

The firm expects the market environment to remain difficult, especially in the automotive and tire industries. To address the challenging economic situation, Lanxess has begun implementing its efficiency improvement program, which is comprised of cost savings, a global headcount reduction and portfolio adjustments.

Lanxess will pursue "strategic options" for some of its non-core businesses. The company said those include its rubber chemicals' accelerators and antioxidants lines, nitrile-butadiene rubber business and Perlon-Monofil polyamid and polyester monofilament products.

Its non-core activities combine for approximately $674.1m (€501.4m) in sales and consist of approximately 1,000 employees, according to the company

The company also is aiming to save $135.3m (€100.6m) by 2015 and beyond by eliminating 1,000 jobs worldwide.