Crain News Service report
COLOGNE, Germany (June 2, 2014) — Synthetic rubber producer Lanxess A.G. is facing a difficult time over the next three years as its management seeks to realign the company and counter ongoing market challenges, new CEO Matthias Zachert said.
“We are currently facing major challenges, especially as the competitive environment for our business with synthetic rubber has changed. And this is clearly reflected in our results for fiscal 2013,” Mr. Zachert told shareholders at the group’s annual results meeting on May 22.
In 2013, sales fell by 8.7 percent against the prior year to about $11.3 billion. EBITDA pre exceptionals decreased by 39.9 percent to about $1 billion. The group’s net loss of about $217.1 million was attributable mostly to impairment charges.
Lanxess said its start to the business year 2014 was “subdued.” First-quarter sales were down by 2.5 percent year-on-year to about $2.73 billion. EBITDA pre exceptionals rose by 17.8 percent to about $280 million. Net income came in at the prior-year level of about $34.1 million.
“We were able to increase our operating result, but business still remains at a rather low level,” Mr. Zachert said.
Lanxess will explore options to make its rubber activities more competitive and seeks to balance its business portfolio.
It said it will analyze the profitability of its sites and explore options either to temporarily or permanently shut down some plants.
The firm said it is working to optimize administrative structures and streamline decision-making processes. Customer and market orientation in the business units are going to be improved.
“We must become significantly more competitive and profitable again,” Mr. Zachert said. “All teams are working with great effort and with the goal to bring Lanxess back on track.”
To help finance the realignment and generally strengthen the financial position of the company, Lanxess has increased its share capital by 10 percent, excluding the subscription rights of the shareholders.
At the beginning of May, the new shares were offered to institutional investors immediately by means of a private placement, using an accelerated bookbuilding process. The new bearer shares were placed at a price of about $71 per share. The placement resulted in total proceeds of about $587 million.
Lanxess said it anticipates the economic environment will continue to recover slowly during the remainder of the year, primarily from established economic regions.
However, the group said it believes the challenging competitive environment for its synthetic rubber businesses will continue.
In the second quarter of 2014, Lanxess projects EBITDA pre exceptionals to come in at between $300.4 million and $327.7 million. For fiscal 2014, the group expects EBITDA pre exceptionals to be between about $1.05 billion and $1.13 billion.
The firm said cash outflows for capital expenditures will remain on par with the previous year, when Lanxess spent $852.2 million. After the completion of the major growth projects in Singapore and China, it plans to reduce capital expenditures well below $819.4 million in 2015. In 2016, Lanxess expects to invest between about $546.3 million and about $614.5 million.
“I would like to already prepare you today for the fact that the next two to three years won’t be easy,” Mr. Zachert told shareholders.
This report appeared on european-rubber-journal.com, the website of European Rubber Journal, a U.K.-based sister publication of Tire Business.
How will the new Labor Department rule on overtime pay affect you?
|I've already had to demote some managers and assistant managers because of it||
|I was hoping to hire some new technicians soon. I can't now because of the new overtime rules||
|It won't affect me much||
|I think it's fair for assistant managers to get compensation for overtime||
|I'm voting a straight GOP ticket this November to see if we can get rid of this||
|Total votes: 81|