ERJ staff report (TP)
Cologne, Germany – Lanxess reported a fall in sales but an improvement in net income in the second quarter of 2014.
Sales were down 5.7 percent to about €2 billion, while Q2 net income rose to €55 million.
The financial results were published in the midst of the company’s major restructuring program – which will see business units merged and a reduction in its workforce.
Lanxess said business development in the second quarter of 2014 was marked by good demand for agrochemicals and a positive impetus from the construction industry, but also by a “persistently difficult competitive situation” for synthetic rubbers and negative currency effects.
The company registered year-on-year volume gains in all regions except Latin America. Volumes for the group as a whole increased by 2 percent, which did not fully offset the 5 percent decline in selling prices. Overall, sales of the Lanxess Group declined by 5.7 percent to approximately €2 billion.
Net income improved “substantially” to €55 million, compared to €9 million for the same period of last year. This was partly due to an improved financial result and lower exceptional charges. In the prior year, €40 million had been incurred for restructuring in the Performance Chemicals segment.
Net financial liabilities fell from roughly €1.7 billion on 31 December 2013, to about €1.5 billion on 30 June 2014, mainly due to the “successful” capital increase in May 2014. Operating cash flow increased “substantially” to €178 million due to the improved business performance and lower bonus payments for fiscal 2013.
Lanxess continues to expect the global economy to show a slight recovery during the remainder of the year. For the businesses with synthetic rubber, which are closely linked with the automotive and tire industries, the company continues to foresee a challenging competitive environment with the associated pressure on prices.
The company continues to anticipate higher earnings in 2014 compared to the previous year, taking into account the start-up costs of about €10 million for the EPDM rubber plant in China in the fourth quarter, as well as maintenance shutdowns.
"We are narrowing our original earnings guidance of between €770 million and €830 million, and now expect to achieve EBITDA pre exceptionals in 2014 of between €780 million and €820 million,” said Matthias Zachert, chairman of the board of management.