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Lanxess targets €100mn annual savings from restructuring
18
Sep '13
LANXESS is countering the challenging business environment with a comprehensive efficiency program. Currently, it is foremost the synthetic rubber activities that are experiencing a temporary weakness in demand, increased competition in the market and volatile raw materials prices. As part of the “Advance” program, the company therefore plans to reduce costs and headcount, as well as optimize its portfolio.
 
“Due to the current situation we must now take action,” said LANXESS’ Chairman of the Board of Management, Axel C. Heitmann, at today’s Media Day. “We have a strong track record of managing our business in challenging economic environments. We will undertake all necessary steps in order to return to sustainable and profitable growth as soon as possible. We are seeing first signs of stability in the market but it is too early to say when and how quick a recovery will take hold.”
 
Heitmann confirmed the company’s full-year guidance for 2013 of EUR 700-800 million EBITDA pre exceptionals, excluding potential inventory devaluations. 
 
Greater efficiency
As part of the “Advance” program, LANXESS is aiming to achieve about EUR 100 million in annual savings from 2015 onward through efficiency improvements and targeted restructuring. This will lead to a headcount reduction of about 1,000 employees worldwide by the end of 2015. 
 
The positions will be phased out through a voluntary separation program, which includes early retirement packages and severance pay. In addition, the variable compensation for the current business year will be reduced for those who are eligible. This includes the Board of Management. All measures are being coordinated with employee representatives.
 
Restructuring has already been implemented within the Rubber Chemicals business unit, which is closing a site in South Africa and downsizing its operations in Belgium. In addition, LANXESS will adjust its business operations globally to reflect the current market situation. The company will also continue with its proven flexible asset management strategy.
 
In total, some EUR 150 million in one-off charges will be booked in 2013 and 2014 to cover the “Advance” program.
 
 


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