Lanxess reported a net loss of €41m for the fourth quarter of 2008, in comparison with a net profit of €5m in the year-ago period of 2007. Sales declined by 0.2%, to €1.46 billion. As a result of the global economic crisis, demand from automotive, leather and construction and other substantial customer industries fell sharply in the fourth quarter, consequently Lanxess was also hit hard. Sales in the quarter were almost stable due to the contribution from the Brazilian Petroflex business and the consistent application of price-before-volume strategy, Lanxess comments.
Lanxess’s full-year 2008 net profits increased 52.7%, to €171m. Sales fell 0.5%, to €6.57 billion. Axel C. Heitmann, chairman of the Lanxess board, said: “Despite the weak fourth quarter, 2008 was a very good year, partly because we succeeded in passing on the significant rise in raw material and energy costs to the market in full.”
Sales for Lanxess’ Performance Polymers segment increased by 22.4% in 2008, to €3.28 billion compared to €2.68 billion in 2007. EBITDA margin in 2008 was 12.6% compared to 14% in 2007. Sales for the segment improved because of the positive effect of the first-time inclusion of the sales and earnings of LanxessS Elastômeros do Brasil (formerly Petroflex), Lanxess claims.
Sales for the Advanced Intermediates segment increased 8.8% in 2008, to €1.31 billion, due to the stable markets for agrochemical and pharmaceutical intermediates, Lanxess adds. EBITDA margin for the segment was 14.2% compared with 14.5% in 2007.
Sales in the Performance Chemicals segment fell 2%, to €1.93 billion and EBITDA margin was 12.5% compared to 14.5% in 2007.
The financial market crisis and the global recession are negatively affecting customer industries and that might affect Lanxess adversely also. Therefore, the company assumes, the first quarter of 2009 “will be no better for Lanxess in operational terms than the fourth quarter of 2008.” All three business segments of Lanxess are being hampered by the current downslide in demand, the Performance Polymers segment being particularly hard hit, Lanxess states.
Heitmann said: “There is no sign yet of a turnaround or a recovery in demand. That’s why we are quickly and resolutely responding to this demanding situation with the Group-wide package of measures called ‘Challenge09’.” Through “Challenge09”, Lanxess aims to save €250m over the next two years and mitigate the effects of the expected drop in demand. More than 100 individual measures have been initiated overall which include plans to forego unprofitable production volumes and a contribution of €65 million in the personnel area, Lanxess says.