CHICAGO (June 30, 3:45 p.m. EDT) — Lanxess AG still is not content with its business in Asia, reiterating it is “not well-positioned” in its fastest-growing market. Meantime, the spinoff from Bayer AG continues to restructure its operations in the Americas.
Randy Dearth, president and chief executive officer of the company's Pittsburgh-based Lanxess Corp. unit, said at NPE in Chicago that the styrenics business in the Americas is implementing the same restructuring model as in Europe last year, consolidating production and sales to one site.
Actions include downsizing the styrenic resins production site in Addyston, Ohio; moving Rhein Chemie offices from Trenton, N.J., to Ohio; and closing the styrenics facility at Camacari, Brazil, this year.
Other restructuring steps include closing textile processing production site in Wellford, S.C., and closing operations at a former Bayer plant in New Martinsville, W.Va.
The company said styrenics sales volume decreased in 2005. Total pounds sold globally went down, although sales retained positive growth because of rising prices.
Board member Ulrich Koemm said the United States still needs to catch up with resin pricing.
“The ABS pricing in North America is too low to compensate for price hikes in raw materials and energy cost,” he said.
Koemm said the market position of ABS is difference across regions. In the United States, it is used mainly in home appliances, auto, cosmetic packaging and sporting goods, but in Asia it is used by injection molders in the information technology industry.
Lanxess is the largest ABS producer in Europe and India, Koemm said.
In the first quarter, Lanxess AG's global sales increased 6.2 percent to 1.8 billion euros ($2.3 billion) and net profit grew 17.1 percent to 80 million euros ($100.6 million).
The Leverkusen, Germany-based company forecasts EBITDA pre-exceptionals, its key earnings indicator, to fall in between 640 ($804.8 million) and 680 million euros ($855.1 million) this year, up from 581 million euros ($ 730.6 million) in 2005.
In the first quarter of 2006, growth rates in Lanxess' different regional markets seem to be negatively related to the absolute volume of sales, according to data released at a June 20 press conference.
Asia jumped 21.2 percent and represents 16.5 percent of global sales in the first three months, keeping up with the 21 percent annual growth rate in 2005. Sales rose 10.7 percent in the Americas and 6.9 percent in Germany. The fourth region, Europe except Germany, the Middle East and Africa combined, saw sales down 3.3 percent in the first quarter.
Koemm said that the firm is looking for partners in Asia and seeks to increase its presence in underrepresented markets like China.
The firm expects the new sites going on stream in China this year to further increase the sales, which was 50 percent up in 2005. In March, a new plant for polymer-bound chemicals started in Qingdao. In April, a compounding plant in Wuxi opened with annual capacity of 20,000 tons of Pocan-branded polyester and Durethan-branded nylon. A joint venture for the Vulkanox-branded anti-aging additive will start at the end of year in Tongling, Anhui.
Lanxess also opened technology centers in China for leather chemicals and technical rubber products. “China is becoming increasingly important for us as a technology location,” the company commented.
China currently generates 40 percent of Lanxess' sales in Asia.
In India, Lanxess achieved growth of 14 percent in 2005. But Koemm said the ABS business is doing a lot better in India than in China. Lanxess' ABS capacity in India will increase from 20,000 to 80,000 tons in the next two years.
Lanxess also operates a R&D center at Moxi, India.
The company's ABS facility in Thailand is running at full capacity and has sold out the volume scheduled for 2006. The plant in Map Ta Phut is supplying the Asia market including China. About 60 percent of Lanxess' production is Thailand is shipped to China.
Lanxess added more than 100 jobs in Asia last year and plans to add 1,000 over the next three years. A news release said about two thirds of those new hires will be in China. Lanxess currently employs about 1,900 in Asia.
“All production in Asia will be supplying the local region, rather than exporting to other regions,” Koemm said.
Lanxess in the Americas registered annual sales of 1.9 billion euros ($2.4 billion) and has 3,694 employees.