S&P upgrades Lanxess on stronger portfolio

31 July 2007 12:03  [Source: ICIS news]

LONDON (ICIS news)--Standard and Poor’s (S&P) has raised its credit rating for German chemicals firm Lanxess after the divestment of its low-margin businesses, the ratings agency said on Tuesday.

 

“The upgrade reflects Lanxess' improved business risk profile, which it achieved through active portfolio management and strong cashflow metrics,” said S&P credit analyst Tobias Mock.

 

Lanxess’s long-term and short term ratings were raised to BBB and A-2 respectively with a stable outlook.

 

S&P said the company had significant restructuring plans which were well on track and already showing improvements in the operating results.

 

The ratings firm highlighted the divestment of five businesses with low profitability, weak market positions and high sensitivity to raw materials costs since Lanxess' spin-off from German chemicals major Bayer.

 

Lanxess also recently announced the majority sale of its struggling acrylonitrile-butadiene-styrene (ABS) business Lustran Polymers to INEOS.

  

“The stable outlook reflects our expectation that Lanxess will continue to benefit from strong business conditions for at least another two years and from a reduced cyclicality in its earnings,” said Mock.

 

“We expect it to maintain conservative financing policies supporting a BBB rating.”

By: Mark Watts
+44 20 8652 3214

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