Earnings gains buoy new-look Lanxess

Cologne, Germany –  A “good” start to the year for Lanxess has prompted the new-look polymers and chemicals maker to up its previous earnings forecast for fiscal 2016.

First quarter earnings (EBITDA pre-exceptionals) reached €262 million, 14 percent higher than in the prior-year quarter, on sales of 6 percent lower at €1.92 billion.

Lanxess linked the earnings gains to higher volumes, increased capacity utilisation, positive currency effects, and the absence of ramp-up costs for new rubber plants in Asia last year.

The sales dip, it said, “resulted particularly from the adjustment in selling prices to reflect lower raw material prices.”

With the higher profitability, the Cologne-based group now expects full-year earnings of between €900 million and €950 million – compared to €880-930 million before.

Lanxess’ quarterly results were the first since the 1 April launch of Arlanxeo, its 50/50 synthetic rubber joint venture with Saudi Aramco.

Sales in the Arlanxeo segment fell by around 11 percent in the first quarter of 2016 to €640 million, as lower raw material prices pegged back selling prices.

Earnings rose 16 percent to €113 million, but this was largely linked to the ramp-up costs for new rubber plants in Asia in early 2015. The EBITDA margin pre-exceptionals was 17.7 percent at the synthetic rubber business, against 13.4 percent in the prior-year quarter.