Lanxess Q4 profit falls 43%, to narrow forecast

11 March 2008 07:35  [Source: ICIS news]

SINGAPORE (ICIS news)--Lanxess posted on Tuesday a 42.8% fall in fourth-quarter earnings compared with the same period a year earlier and the German chemicals major said it will narrow its forecast for 2008 due to a slowdown in the US economy.

Its fourth-quarter earnings before interest and tax (EBIT) fell to €5m ($3.3m) from €39m in the same period of 2006 while sales were down 4.8% to €1.7bn on negative currency effects and the divestment of its Lustran polymers unit, the company said in a statement.

For 2007, the company’s EBIT fell 87.2% to €215m while sales dipped 12.1% to €6.6bn.

Its performance polymers segment, which included its synthetic rubber and plastics production, posted an 11% rise in earnings before interest, tax, depreciation and amortization (EBITDA) pre-exceptionals to €376m in 2007 from a year earlier.

Sales rose 4.2% to €2.7bn during the same period amid solid price and volume increases from additional capacities in the butyl rubber and semi-crystalline products business and the recomissioning of a polybutadiene rubber (BR) line.

EBITDA pre-exceptionals for its advanced intermediates segment, which included its basic chemical, pharmaceutical and agrochemical units, was unchanged at €174m although sales rose 5.6% to €1.2bn.

For its performance chemicals segment, EBITDA pre-exceptionals was down 2.1% in 2007 to €285m from the previous year as Lanxess divested its textile processing chemicals unit, it said. Sales in this segment were down 10.7% to €1.97bn.

In 2008, the company will also focus on growth in Asia, Latin America and eastern Europe to offset the slowdown in the US, Lanxess said, adding that it planned to spend up to €350m to replace or expand facilities in 2008.

The group’s EBITDA margin should be in line with the industry average in 2008, a year earlier than planned and all business units should generate an EBITDA margin pre-exceptionals of over 5% this year onwards, it said, although it will narrow its earnings guidance for 2008 when first-quarter results are released.

The company expected the acquisition of a majority interest in Brazilian synthetic rubber maker Petroflex to contribute to its 2008 earnings, CEO Axel Heitmann said, adding that the purchase would make Lanxess among the leading specialty chemicals companies and synthetic rubber producers in Latin America.

($1=€0.65)

By: Florence Tan
+65 6780 4359

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