LANXESS to grow through acquisitions, investment

17 September 2008 10:53  [Source: ICIS news]

LONDON (ICIS news)--LANXESS is on track to achieving its financial goals for 2008 and plans to grow the business through investments in facilities and research and development (R&D) as well as strategic acquisitions, the company’s chairman said on Wednesday.

“I’m very confident for the foreseeable future despite the increasingly difficult market environment," said LANXESS board of management chairman Axel Heitmann at the group’s third international media day in Cologne.

He added that following a good third quarter, the German specialty chemicals company continued to expect further operational sales growth and earnings before interest, tax, depreciation and amortisation (EBITDA) pre-exceptionals of more than €700m ($987m).

Heitmann said the company’s strategy going forward would be to supplement organic growth by investing in existing business units, making selective acquisitions to progressively broaden and strengthen the group’s portfolio and to research and develop innovative products.

Along with projects in Brazil, India and China, LANXESS is preparing to enter the Russian market, said Heitmann.

The group planned to launch its own company in Russia on 1 January 2009 and would open a branch in Moscow to build a platform for further involvement in the CIS countries, it said.

The Russian chemicals market is growing at a rate in excess of 5% a year, with growth in the automotive industry at 9%/year, 5% in the electronics sector and 8% in the construction industry, LANXESS added.

“We plan to derive significant benefit from this expansion,” said Heitmann. “We have identified substantial development potential for LANXESS and will systematically enlarge our market shares. We consider annual sales growth of up to 20% a realistic prospect.”

The company will also invest €35m to increase caprolactam capacity in Antwerp, the Netherlands, by 2010.

LANXESS said it would then have invested a total of €1bn worldwide by 2009, with over half of this amount spent at the main German sites.

“These capital expenditures are helping to ensure our global competitiveness,” said Heitmann.

LANXESS has already earmarked some €250m for further investment projects in Germany in the coming years. The company currently has over 100 projects in its research pipeline that were expected to have a sales potential of around €700m by 2011.

LANXESS CFO Matthias Zachert said at the media day that the company was not directly affected by the current crisis in the financial markets.

“We have renegotiated our credit facilities over the past few years on favourable terms, most recently in fall 2007, thereby safeguarding the group’s long-term liquidity through 2014,” he said.

($1 = €0.71)

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By: Hilde Ovrebekk
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