Lanxess reports strong 2012, notes Q1 2013 weakness

In the introduction to Lanxess AG’s 2012 annual report, Board of Management chairman Axel Heitmann comments that “when Lanxess became an independent company eight years ago, few people believed it would have a successful future. That’s why I can look back on the 2012 fiscal year with particular pride. There is hardly any other year in our history that demonstrates more clearly just how successful we have become since 2005, despite many predictions to the contrary.”

Heitmann notes that EBITDA and net income reached new highs in 2012. Yet he also cautions that such results shouldn’t be interpreted as evidence of an easy 2012 at Lanxess. “We had to work incredibly hard for our success until the last day,” he comments. Positive final quarter results were mainly the product of fewer one-time effects compared to the previous year, and Heitmann shares that economic conditions deteriorated in the second half of the year, with weaker growth in parts of Asia and sluggish economic momentum in Latin America adding their weight to the eurozone crisis’s effect on the European economy.

For full year 2012, Lanxess achieves sales of 9.094 billion euros, a year-on-year increase of 3.6 per cent, while fourth quarter 2012 sales of 2.123 billion euros remained at the same level as the final quarter of 2011. EBITDA pre-exceptionals reached 1.225 billion euros in the year and 239 million euros in the fourth quarter, respective year-on-year increases of 6.9 and 37.4 per cent, with margins of 13.5 per cent for the full year and 11.3 per cent for the last quarter. EBITDA amounted to 1.188 billion euros for full year 2012, a 7.9 per cent increase, and in the final quarter amounted to 228 million euros, up 58.3 per cent year-on-year. Operating result, or EBIT, at 810 million euros for the year, rose 4.4 per cent in 2012, while in the fourth quarter it amounted to 126 million, up 142 per cent from the last quarter of 2011. Net income rose 1.6 per cent year-on-year to 514 million euros and 920 per cent to 51 million euros in the fourth quarter of 2012.

Lanxess’ Performance Polymers segment made sales of 5.176 billion in 2012, up 2.3 per cent year-on-year and a result described by the specialty chemicals company as “a very solid performance compared to the strong prior year.” The company says all the segment’s business units saw declining demand from their principal customer industries. “Our Butyl Rubber and Performance Butadiene Rubbers business units, which are closely allied with the tyre industry, posted slight declines in volumes in light of the weak sales in the automotive industry,” wrote Lanxess. “The extremely low to negative growth rates posted by the tyre and automotive industries in some regions had a tangible effect on our Performance Polymers segment.”

As for this year, Heitmann opines that “2013 is not going to make life any easier for us. Thus far, there are no signs of a fundamental improvement in the economic climate.” Lanxess anticipates demand from its customers will remain low in the first quarter of 2013 but pick up successively in the second half. The company thus sees itself as being on course to achieve its mid-term target of 1.4 billion euros EBITDA pre-exceptionals in 2014.