Lanxess expects further pressure on SR unit in 2015

Cologne, Germany – Speciality chemicals group Lanxess has substantially improved its operating result and net income in the year ending 31 Dec 2014, the German company announced 19 March.

While sales declined slightly by 3.5 percent to around €8 billion, primarily due to lower selling prices in mainly the Performance Polymers unit, earnings (EBITDA) pre exceptionals increased by 9.9 percent to €808 million. All segments contributed to the earnings increase.

Year-on-year net income improved by €206 million, rising from a loss of €159 million in 2013 to €47 million. The main reason for this improvement was lower impairment charges.

Lanxess CEO Matthis Zachert said “against the background of the persistently challenging business situation, the substantial improvement in earnings is gratifying.”

In the Performance Polymers segment, which includes Lanxess’ two synthetic rubber units, sales declined year-on-year by 8.0 percent to around €4.1 billion.

This was primarily due to price declines in all business units resulting from lower raw material costs and “the persistently challenging market environment as well as slightly lower sales volumes. Viewed over the year as a whole, exchange rates also had a slightly negative effect on sales.”

EBITDA pre exceptionals for the segment was just about 1 percent ahead of the prior year at €392 million. The significantly lower cost basis in particular and positive currency effects contributed to the improvement in earnings. Lower selling prices and a decrease in volumes had a negative impact.

For fiscal 2015, Lanxess is assuming a persistently challenging competitive environment, especially for synthetic rubbers.

“While the company anticipates a slight year-on-year improvement in demand from the automotive and tire industries for the Performance Polymers segment, price pressures will continue to impact EPDM and butyl rubber especially,” said Lanxess.