LANXESS counteracts the weak outlook with “FORWARD!” plan

Special chemical company LANXESS counteracts the weak economic development with its “FORWARD!” action plan. This will initially save the company around EUR 100 million in 2023 through one-time cost reductions and lower investments.

LANXESS’ business figures for the second quarter were again dominated by the weak global demand in many customer industries: Sales amounted to EUR 1.778 billion, down 11.1% from the previous year’s figure of EUR 1.999 billion. EBITDA pre exceptionals decreased by 57.7% from EUR 253 million to EUR 107 million.

For the full year 2023, LANXESS expects EBITDA pre exceptionals of between EUR 600 million and EUR 650 million. The Group, therefore, confirmed the provisional guidance for the second quarter and the full year 2023 published on June 19.

“Politicians need to finally wake up. In the current phase of economic weakness, the location Germany is not competitive internationally. We urgently need sustainable framework conditions – above all an internationally competitive electricity tariff for the industry, the reduction of excessive bureaucracy and faster approval procedures,” said Matthias Zachert, Chairman of the Board of Management of LANXESS AG.

Matthias Zachert, Chairman of the Board of Management of LANXESS AG.

Low demand affects segment performance

Weak demand, especially from the construction and electronics industries, negatively affected the Specialty Additives segment’s sales and earnings. Sales amounted to EUR 620 million in the second quarter of 2023, down 18.8% compared with the prior-year quarter’s figure of EUR 764 million.

Lower selling prices and volumes negatively affected the Advanced Intermediates segment’s performance. Demand was weak from the construction and chemical industries in particular. Sales amounted to EUR 484 million in the second quarter of 2023, down 17.5% from the previous year’s figure of EUR 587 million.

LANXESS key figures for the second quarter 2023. 

Action plan launched to counteract

The “FORWARD!” action plan has three parts, according to LANXESS. As a first step, the Group has taken immediate measures to quickly stabilize its earnings for the current fiscal year. The measures include strict cost discipline in all areas as well as a Europe-wide hiring freeze. This will result in one-time savings of EUR 100 million, half of which from cost reductions and half from lower investments.

With a package of structural measures, the Group intends to become more efficient in the long term and reduce its costs by EUR 150 million a year. The measures will be implemented successively and will take full effect from 2025 onwards. The focus is on streamlining energy-intensive operations and administrative structures.

The third part of the action plan is the further refinement of the business model by fully leverage the potential of new businesses as well as further expand the range of sustainable products.