LANXESS addresses economic challenges with the “FORWARD!” plan, expecting EUR 100 million in 2023 from cost reduction and lower investments, aiming to achieve a permanent annual cost reduction of EUR 150 million starting in 2025.
Due to slow global demand, LANXESS’s revenues fell 11.1% (EUR 1.778 billion) in the second quarter. EBITDA before exceptionals fell by 57.7% to EUR 107 million. LANXESS expects full-year 2023 EBITDA pre exceptionals to range between EUR 600 million and EUR 650 million, maintaining guidance published on June 19.
Weak demand, customer shortages, and reduced selling prices impacted earnings. China’s market failed to boost demand. Sales growth occurred only in the Consumer Protection segment, aided by the Microbial Control business acquired from IFF in July 2022.
The EBITDA margin before exceptionals declined to 6.0% from 12.7% the prior year. Net income from continuing operations fell to EUR -145 million in Q2 from EUR 48 million the previous year.
Matthias Zachert, Chairman of the Board of Management of LANXESS AG said, “the chemical industry and LANXESS are in a difficult situation right now. There is currently no sign of a recovery in demand anticipated for the second half of the year. We are therefore taking countermeasures: With our ‘FORWARD!’ action plan, we are stabilizing our earnings in the short term, lowering our costs in the long term and refining our structures and processes. When the economy picks up again, we want to get back on track quickly. But that is not enough. 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.”
