Lanxess targets €100mn annual savings from restructuring

18 Sep '13

4 min read

Portfolio management

LANXESS will maintain its current structure of 14 business units under its three established segments. At the same time, the company is pursuing strategic options for specific non-core businesses.

These non-core activities have combined sales of roughly EUR 500 million, close to EUR 30 million in EBITDA pre exceptionals, and a headcount of roughly 1,000. The activities include the High Performance Materials (HPM) business unit’s Perlon-Monofil business line, Rubber Chemicals’ (RUC) accelerators and antioxidants business lines, and High Performance Elastomers’ (HPE) nitrile butadiene rubber business line.

The affected sites are in Brunsbuettel and Dormagen, Germany, Kallo, Belgium, Bushy Park, USA, Jhagadia, India, La Wantzenau, France, and Nantong, China. All options for these sites will be considered in line with legal frameworks and local employee participation.

“Each of these businesses is well positioned in its market, but can develop better over time with a different partner,” said Heitmann.

As part of its portfolio management activities over the mid- to long term, LANXESS is predominantly targeting acquisitions that will strengthen its Advanced Intermediates and Performance Chemicals segments and thus further diversify the Group’s structure.

“Any potential additions to the company must present a clear strategic and cultural fit, as well as being accretive to key financial metrics,” said Heitmann.

Key capex projects

LANXESS will continue to give priority to organic growth. Capital expenditures have been reduced to roughly EUR 600 million this year, while at the same time key strategic projects are being implemented. In the future, the focus will be more on smaller projects and debottleneckings.

LANXESS is currently pushing ahead with three important investment projects serving the megatrend mobility. They are a neodymium polybutadiene rubber (Nd-PBR) plant in Singapore, an ethylene propylene diene monomer (EPDM) rubber plant in China and a polyamide plant in Belgium. Construction is progressing according to plan.

LANXESS believes the long-term growth fundamentals are intact despite the temporary weakness in demand. Heitmann: “We will continue to differentiate ourselves from our competitors as a result of our focus on high-performance products.”

“Our investments in plants for high-performance rubbers and lightweight materials strengthen our position as one of the leading suppliers to the tire and automotive industries and will serve us very well when the markets recover,” said Heitmann. “They will also bring us closer to our mid-term earnings goal of EUR 1.8 billion EBITDA pre exceptionals in 2018.”

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