Lanxess expects earnings to increase by 10-20% in 2024
The speciality chemicals group Lanxess expects an increase in earnings of 10 to 20 percent for the current financial year – even though the results for the first quarter were still affected by the weak global economic environment in the chemical industry.
Sales in the first quarter fell by 15.4 per cent compared to the comparatively strong prior-year quarter of EUR 1.899 billion and reached EUR 1.607 billion. EBITDA pre exceptionals stood at 101 million euros, down 46.6 per cent on the previous year’s figure of 189 million euros. The main reasons for the decline in earnings were lower sales prices and continued weak demand in numerous customer industries.
Compared to the fourth quarter of 2023, however, there are signs of a slight upward trend – primarily due to an increase in volumes sold. Sales rose by 11.9 per cent quarter-on-quarter from EUR 1.436 billion to EUR 1.607 billion, while EBITDA pre exceptionals increased by 4.1 per cent to EUR 101 million compared to EUR 97 million in the fourth quarter of 2023. The Advanced Intermediates (+54%) and Specialty Additives (+17%) segments recorded particularly strong growth in EBITDA pre exceptionals.
“It appears that we have reached the bottom of the economic cycle in the chemical industry. At the same time, our Forward! action plan is having a positive impact with the first structural savings,” said Matthias Zachert, Chairman of the Board of Management of Lanxess. “We assume that the positive trend will continue in the second quarter and that we will achieve better results for the full year than in 2023. However, it is clearly too early to sound the all-clear. Global demand has not yet returned to normal levels and 2024 will therefore certainly remain a challenging year for the chemical industry.”
Despite an economic environment that continues to be characterised by many uncertainties, Lanxess expects demand to pick up slightly over the course of the year. The Group also expects higher plant utilisation and an improved cost base as a result of the structural measures in its Forward! For 2024 as a whole, the Group therefore expects EBITDA pre exceptionals to increase by 10 to 20 per cent compared to the previous year’s figure of EUR 512 million. For the second and third quarters of 2024, Lanxess expects a sequential increase in EBITDA pre exceptionals and a more subdued development in the fourth quarter due to the normal seasonal pattern.
Business development in the segments
The Consumer Protection segment generated sales of EUR 509 million in the first quarter of 2024, a decrease of 21.3% compared to the prior-year quarter’s figure of EUR 647 million. EBITDA pre exceptionals reached 49 million euros, down 47.9 per cent from 94 million euros in the same period of the previous year. This was primarily due to lower sales volumes resulting from intensive destocking by customers in the agrochemicals sector and lower plant utilisation. The EBITDA margin pre exceptionals was 9.6 per cent, compared to 14.5 per cent in the previous year.
In the first quarter of 2024, the Specialty Additives segment recorded sales of EUR 566 million, 14.8% below the sales of EUR 664 million in the first quarter of 2023. EBITDA pre exceptionals fell by 51.0 per cent from EUR 98 million in the same quarter of the previous year to EUR 48 million. Lower sales prices and lower sales volumes due to weaker demand had a negative impact on earnings and the margin. The EBITDA margin pre exceptionals was 8.5 per cent, compared to 14.8 per cent in the previous year.
The Advanced Intermediates segment generated sales of EUR 465 million in the first quarter of 2024. Compared to the previous year’s figure of EUR 516 million, sales fell by 9.9 per cent. EBITDA pre exceptionals amounted to EUR 37 million, down 15.9 per cent from EUR 44 million in the previous year. Lower purchase prices for raw materials and energy led to lower sales prices. However, the segment’s volumes developed positively. The EBITDA margin pre exceptionals was 8.0 per cent and therefore only slightly below the previous year’s margin of 8.5 per cent.
