Earnings up on flat sales at Lanxess, urethane systems sale pending

Cologne, Germany – Sales were flat at Lanxess in the third quarter, with the €1.60bn reported on a par with the previous year’s quarter. However, there was a sharp increase in earnings, with EBITDA before exceptionals rising from €119m in the 2023 quarter to €173m this year.

While volumes were up in most business units, selling prices were down, largely because of declining raw material and energy costs. The company said the surge in earnings, despite weak markets, was largely a result of higher volumes and increased capacity utilisation, allied to cost savings from its Forward! action plan.

The company’s chairman Matthias Zachert said that the sale of its urethane systems business is expected to complete in the first half of 2025, subject to regulatory approval. The divestment to Ube Corporation, announced in early October, will turn the company into a purely specialty chemicals business. “The proceeds are going to be around €500m, and the money is going to be used for a debt reduction so that we will then come back to normal leverage for our company,” Zachert said.

Once the urethane systems business has been sold, the company’s remaining activities in the polyurethane sector will be in its specialty additives segment, which includes flame retardants. Here, quarterly sales of €550m were almost the same as the €549m achieved in the 2023 quarter.

Quarterly EBITDA pre-exceptionals spiked by 84.8% from last year’s €33m to €61m this year. Higher capacity utilisation and cost savings had a positive impact on earnings.

“Despite the continuing rough sea and the challenging competitive environment for the chemical industry, we are staying on course,” Zachert said. “Our timely actions to address the global weakness in demand are paying off. Our plants are operating at higher capacity utilisation 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.”

The company has reaffirmed its guidance for the full year. It continues to expect earnings to be up between 10 and 20% on the €512m achieved in 2023. Performance is expected to be more subdued in Q4 in the light of normal seasonality.

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