Specialty chemicals company Lanxess saw a significant earnings increase in the third quarter of 2024: EBITDA pre exceptionals came in at 173 million Euros, up 45.4% from the prior-year quarter’s 119 million Euros. This was mainly due to higher volumes, increased capacity utilization and cost savings from the ‘Forward’ action plan.
“Despite the continuing rough sea and the challenging competitive environment for the chemical industry, we are staying on course. Our timely actions to address the global weakness in demand are paying off. Our plants are operating at higher capacity utilization and our ‘Forward’ action plan has significantly improved our cost situation. We are therefore maintaining our guidance for the full year – even though a broad-based recovery is not yet in sight,” said Matthias Zachert, chairman of the Board of management of Lanxess.
At 1.598 billion Euros, group sales remained almost stable compared to the prior-year figure of 1.601 billion Euros. Volumes increased in almost all business units, while selling prices declined, in particular due to lower raw material and energy costs.
The EBITDA margin pre exceptionals reached 10.8 percent in the third quarter, compared to 7.4 percent in the prior-year period. Net income amounted to 1 million Euros and was generated entirely from continuing operations. In the prior-year period, net income from continuing operations was minus 131 million Euros.
Lanxess reaffirms its guidance for the current fiscal year 2024 and continues to expect an increase in earnings of 10 to 20 percent compared to prior-year figure of EUR 512 million. For the fourth quarter, the company expects a subdued performance due to the normal seasonal nature of its business.
At the beginning of October, Lanxess signed an agreement to sell its Urethane Systems business to Japan’s UBE Corporation. The business is valued at 460 million Euros and Lanxess expects to receive proceeds of around 500 million Euros. Zachert said, “We also made strategic progress in this quarter. With the agreed sale of our Urethane Systems business unit we have divested our last polymer business and completed the transformation of our Group into a specialty chemicals company.” Lanxess plans to use the proceeds from the sale to reduce debt. The transaction remains subject to the approval of the relevant authorities. Lanxess expects the transaction to close in the first half of 2025.
Business performance in the segments
The consumer protection segment posted third-quarter sales of 521 million Euros, down 10.3% from 581 million Euros in the year-ago quarter. EBITDA pre exceptionals came in at 71 million Euros, down 15.5% from 84 million Euros recorded in the prior-year period. Earnings were impacted in particular by continued very weak demand from agrochemical customers. By contrast, business with customers in the other industries was positive. The EBITDA margin pre exceptionals was 13.6%, compared to 14.5% in the prior-year quarter.
In the third quarter, the Specialty Additives segment posted sales of 550 million Euros, on a par with the prior-year quarter (549 million Euros). EBITDA pre exceptionals rose 84.8 percent to 61 million Euros from 33 million Euros in the prior-year quarter. Higher capacity utilization and cost savings from the ‘Forward’ action plan had a positive impact on earnings. The EBITDA margin pre-exceptionals rose to 11.1%, against 6.0% in the previous year.
Sales in the Advanced Intermediates segment rose by 12.9% from 403 million Euros in the third quarter of 2023 to 455 million Euros in the third quarter of 2024. EBITDA pre exceptionals reached 68 million Euros, up 126.7% from the prior-year figure of 30 million Euros. Earnings and margins benefited from higher capacity utilization due to volume growth and cost savings from the ‘Forward’ action plan. The EBITDA margin pre exceptionals rose to 14.9%, from 7.4% in the prior-year period.
