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Lanxess sales drop; realignment on horizon

By: Chris Sweeney
RUBBER & PLASTICS NEWS

May 9, 2014

Lanxess AG reported a 2.5 percent decrease in sales for the first quarter of 2014 and net income that held steady compared to 2013.

The Cologne, Germany-based firm's sales came in at about $2.78 billion, with its net income about $34.8 million.

CEO Matthias Zachert said Lanxess is developing measures to realign itself, which will include streamlining its decision-making process and optimizing administrative structures.

“We must become significantly more competitive and profitable again,” Zachert said. “The focus will therefore be on the business portfolio, our business units, the efficiency of our administration and our production sites.”

Lanxess said the personnel adjustments initiated last year as part of its advance efficiency program have been completed in line with expectations.

The program included savings of $135.3 million by 2015 and beyond by eliminating 1,000 jobs worldwide. Lanxess said in an earlier release that approximately 730 employees have accepted voluntary layoffs by the end of 2015, accepting either early retirement or severance packages. Approximately $151.5 million of the estimated $206.5 million in exceptional charges budgeted for the program were incurred in 2013.

The firm said the encouraging increase in volumes throughout all business segments did not offset the drop in selling prices and negative currency effects.

“The first quarter was characterized by a persistently challenging market environment for synthetic rubber,” Zachert said. “The agrochemicals business, however, continued to develop well. Positive impetus also came from the construction industry.”

Sales in the performance polymers segment declined by 6.3 percent, to about $1.53 million. Its advanced intermediates segment’s sales dropped 3.2 percent to about $583 million. Lanxess’ performance chemicals segment’s sales increased by 5.8 percent to about $765.3 million.

Lanxess said it anticipates the economic environment will continue to recover slowly during the remainder of the year, but it said it believes the challenging competitive environment for its synthetic rubber businesses will continue because of persisting price pressure.

Lanxess is a special chemicals producer that reported sales of about $11.5 billion in 2013 and operates 52 production sites worldwide. It employs about 17,000 in 31 countries.