Lanxess profits up 10 % in 2015, but rubber challenges persist

Cologne, Germany – Speciality chemicals maker Lanxess has posted a 9.5-percent, year-on-year rise in earnings (EBITDA, pre exceptionals), to €885 million, on 2015 sales stable at around €8 billion.

The company linked the gains to savings achieved by the company’s realignment plans, a strong US dollar and volume growth. The factors, it said, offset the impact of a “challenging market environment.”

All segments contributed to the earnings improvement, according to Lanxess’ 17 March results announcement .

“We implemented our realignment faster than planned and, at the same time, significantly improved our profit situation and financial position,” said chairman Matthias Zachert.

Sales in the Performance Polymers segment, which includes synthetic rubber, fell 4.5 percent compared with the prior year, to around €3.9 billion. However, earnings rose 28.1 percent to €502 million on favourable exchange rates, savings and higher volumes.

Arlanxeo, the synthetic rubber JV between Lanxess and Saudi Aramco – set to start operating on 1 April – will replace the Performance Polymers segment, which comprises the Tire & Specialty Rubbers and High Performance Elastomers business units and the High Performance Materials business unit.

Lanxess' Advanced Intermediates and Performance Chemicals segments will remain unchanged.

Lanxess said it plans to invest €400 million of the “anticipated” €1.2 billion proceeds – paid by Saudi Aramco – from the JV transaction to drive organic growth.

“The individual segments will have budgets between € 50 million and €150 million for capital expenditures,” said Zachert, noting plans also to use around €200 million for a share buyback programme and some €400 million to reduce financial liabilities.

The group is also looking at external growth opportunities, its chairman saying that it is "investigating options to extend our portfolio into related areas of business that are the right fit. Here, we will consider both integrated chemical value chains and suitable application-driven businesses.”

With regard to the outlook for 2016, the Lanxess boss expects "the challenging competitive environment to persist in the synthetic rubber business, which could result in additional margin pressure.”