UpdateLANXESS tight-lipped on deal for BASF's leather chemicals arm

06 August 2010 11:56  [Source: ICIS news]

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LONDON (ICIS)--LANXESS’s CEO remained tight lipped on reports that the German specialty chemicals producer was preparing to buy BASF’s leather chemicals business, speaking on Friday at the group’s financial earnings press conference.

“It is policy that the group does not comment on such rumours. We always announce timely reports when the ink has dried,” said Axel Heitmann, chairman of the board of management of LANXESS.

“We will talk about projects when there are projects to talk about,” he added.

However, Heitmann said that LANXESS’s net financial liabilities, which increased 20.3% year on year to €955m ($1.26bn) in the first half of 2010 due to a rise in the group’s working capital after business expansion, were likely to increase in the second half of the year.

“We assume net debt will continue to increase slightly because in the third and fourth quarter we will see more investments,” Heitmann said.

Earlier, LANXESS reported a second-quarter net profit of €131m, representing a sharp increase from a €17m profit recorded in the previous corresponding period due to robust sales.

Sales for the three months ending June surged 48% year on year to €1.83bn, it said in a statement.

The company said it more than doubled its pre-exceptional earnings before interests, taxes, depreciation and amortisation (EBITDA) at €269m during the quarter on the back of strong demand for synthetic rubber in Asia and Latin America.

Sales of the group’s performance polymers segment rose 71% year-on-year to €958m in the second quarter, while its advanced intermediates segment rose 14% to €324m. Sales of its performance chemicals segment in the second quarter increased 40% to €537m compared with the same period last year.

LANXESS said its plants ran at more than 85% of capacity in the June quarter.

“Higher raw material costs were fully passed on to customers through product price increases,” the company said.

Looking ahead, LANXESS raised its full-year pre-exceptional EBITDA forecast to “roughly €800m” from €650m-700m.

The group did not provide a sales forecast, but said that they would exceed 2009 third quarter results.

Heitmann added that the trading environment in the current third quarter to the end of September 2010 remained positive and the company did not expect a pronounced summer lull.

“The global economy continues on its path to recovery, with the emerging markets leading the way,” said Heitmann.

Additional news provided by Pearl Bantillo

($1 = €0.76)

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By: Franco Capaldo
+44 (0)20 8652 3214

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