Lanxess to consolidate biz units

Crain News Service report

COLOGNE, Germany (Aug. 15, 2014) — Lanxess A.G. is realigning its rubber and rubber chemicals activities into new business units as part of a three-phase consolidation program that the performance chemicals producer expects will improve its competitiveness.

The “Let's Lanxess Again” plan ultimately will result in the consolidation of 14 business units to 10 throughout 2015, the company disclosed Aug. 6 along with its second quarter results.

“We have been working full steam over the past few months to create the foundation for our realignment,” according to CEO Matthias Zachert. “We, as a team, will significantly improve our competitiveness by systematically implementing our program. We have started talks with the employee representatives on the implementation process, and we expect to quickly reach constructive solutions.”

The company did not say what amount of savings it expects to achieve.

In the rubber sector, Lanxess will combine the Butyl Rubber and Performance Butadiene Rubbers business units to the Tire & Specialty Rubbers business unit. The firm said this accounts for overlapping customer and regional structures in established markets, as well as complementary strengths in emerging countries. The head of this unit will be Jorge Nogueira.

The firm will combine its High Performance Elastomers and Keltan Elastomers businesses into a High Performance Elastomers unit. Overlapping in customer structure also was a big factor in this move. Lanxess said Jan Paul de Vries will head the new unit.

Lanxess also will combine its Rubber Chemicals business unit's specialty chemicals product line, the Functional Chemicals business unit and its Rhein Chemie business unit to form a Rhein Chemie Additives business unit.

Lanxess said bundling the additives businesses will open new markets and attract new customers. The head of the new unit will be Anno Borkowsky, the CEO and president of Rhein Chemie Rheinau G.m.b.H.

Lanxess is still examining strategic options for the Rubber Chemicals business unit's antioxidants and accelerators business lines, including merging these product lines and placing them into its Advanced Industrial Intermediates business unit. A decision will be made by the end of the third quarter at the latest.

At the same time, Lanxess announced that Luis López-Remón, head of the group's rubber chemicals business since 2007, is now leading its leather business unit. A successor was not named.  

In addition to the consolidation, Lanxess will reduce its workforce by an undisclosed amount on a cross-functional basis and consolidate specific areas of activity. The firm said the more efficient organizational structure is designed to enhance Lanxess' market and customer focus and reduce costs.

The “Let's Lanxess Again” program will focus on three areas: business and administration structure competitiveness; operations competitiveness; and portfolio competitiveness.

The company's remaining business units are High Performance Materials; Advanced Industrial Intermediates; Saltigo; Inorganic Pigments; Ion Exchange Resins; Leather; and Material Protection Products.

The firm's sales dropped about 5.7 percent in the quarter to about $2.86 billion and 4.1 percent in the half year to $5.4 billion. Second quarter net income jumped six-fold to $73.4 million and 143 percent in the half to $103.7 million. Lanxess attributed the increase in income to lower exceptional charges.

Lanxess said it will present further details on the restructuring at its Media and Capital Markets Day on Nov. 6.

The company operates 52 production sites worldwide and employs about 17,000 in 31 countries.

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This article is based on reporting by Rubber & Plastics News, an Akron-based sister publication of Tire Business.