07 May 2009 09:02 [Source: ICIS news]
LONDON (ICIS news)--LANXESS reported a net loss of €14m ($18.7m) in the first quarter, down from a profit of €104m in the same period last year due to a significant drop in demand, the German chemicals company said on Thursday.
Sales dropped 31% to €1.05bn from €1.54bn in the first quarter of 2008, while operating profit pre-exceptionals came in at €3m from €159m.
LANXESS again had to make substantial inventory write-downs amounting to €40m due to the continuing decline in raw material prices, the company said.
“All business units were impacted by the global recession,” said Axel Heitmann, chairman of the board of management.
“The drop in demand of more than 35% reached historic proportions. But by immediately launching our extensive ‘Challenge09’ package of global measures, we succeeded in achieving nearly one-third of the very high earnings level seen in the prior-year period,” he added.
The company said it aimed to cut costs by about €250m this year and in 2010 through a combination of numerous technical measures as well as reductions in employee compensation and fewer working hours.
LANXESS said that with conditions in customer industries still difficult to predict, it remained impossible to give a detailed outlook for the full year, but added that sales and earnings would be below last year’s level.
“We anticipate a significant improvement compared to the first quarter, but of course earnings will still be below the second quarter of last year,” said Heitmann, adding that demand in ?xml:namespace>
Although the company said it expected to take another €10m in inventory write-downs, Heitmann said LANXESS was in a sound financial position and had liquidity reserves of well over €2bn.
($1 = €0.75)
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