LANXESS starts 2008 with a strong Q1

20 May '08

5 min read

Sales also increased in eastern Europe. Reported sales receded by 6.4 percent to EUR 552 million (Q1 2007: EUR 590 million). The EMEA region's share of total sales rose from 34.5 percent in the first quarter of 2007 to 36.0 percent in the first three months of 2008.

Adjusted sales in the Americas region grew by 5.4 percent, with both North and Latin America posting single-digit growth rates. Reported sales fell by 19.8 percent to EUR 329 million (Q1 2007: EUR 410 million). The region's share of Group sales moved back from 24.0 to 21.4 percent.

Business trend by segment:
Sales in the Performance Polymers segment rose by 5.3 percent to EUR 693 million (Q1 2007: EUR 658 million). Adjusted sales rose by more than 12 percent. The significant increase in raw material costs was passed along in full to the market.

The Polybutadiene Rubber, Technical Rubber Products and Semi-Crystalline Products business units all registered volume gains, while the Butyl Rubber business unit operated almost continuously at full capacity.

The Polybutadiene Rubber business unit benefited from the additional capacities of the production line brought back on stream in 2007 in Orange, Texas.

EBITDA pre exceptionals for the segment improved by 3.0 percent to EUR 104 million (Q1 2007: EUR 101 million). The EBITDA margin dipped by just 0.3 percentage points below the prior-year quarter, to 15.0 percent.

Sales in the Advanced Intermediates segment rose by a substantial 7.2 percent to EUR 329 million (Q1 2007: EUR 307 million). After adjusting for currency effects, business expanded by a ouble-digit percentage.

The Basic Chemicals and Saltigo business units benefited from growing demand for agricultural intermediates. Saltigo's sales to the pharmaceuticals industry rose slightly year on year.

EBITDA pre exceptionals of the segment remained nearly steady year on year at EUR 56 million (Q1 2007: EUR 57 million). The segment's EBITDA margin declined by 1.6 percentage points to 17.0 percent due to the adverse movement in exchange rates.

Sales in the Performance Chemicals segment dropped by 1.2 percent to EUR 495 million (Q1 2007: EUR 501 million) due to shifts in exchange rates.

Adjusted for this effect, business gained 4.2 percent. The Rubber Chemicals business unit benefited from a good market environment particularly in the Asia-Pacific region and the withdrawal of some competitors from the market.

The decline in volumes in the Inorganic Pigments business unit, which was the result of lower construction activity in North America, was more than offset by higher volumes in other business units in the segment. EBITDA pre exceptionals for the segment held steady at EUR 82 million. The corresponding margin rose by 0.2 percentage points to 16.6 percent.

Outlook for the full year:
LANXESS assumes that global economic growth will continue to slow during 2008. The chemical economy, however, should remain stable overall, bolstered by robust demand in Asia-Pacific, Latin America and central and eastern Europe.

Prospects for the chemical industry in North America, however, are increasingly gloomy. This applies particularly to precursors for the construction and automotive sectors. However, customer industries specific to LANXESS – such as tires and agrochemicals – are expected to experience robust demand.

Further increases in raw material and energy costs need to be offset at global level. Prices for petrochemical raw materials are likely to remain high and volatile.

The strength of the euro against other currencies, especially the U.S. dollar, will also affect business trends. LANXESS believes the euro is unlikely to depreciate against the dollar before the second half of this year at the earliest.

LANXESS AG

More LANXESS AG News... More Textiles News - Germany...