UpdateLANXESS to temp close Belgium butyl rubber, Texas EPDM

07 March 2013 12:58  [Source: ICIS news]

(adds comment from investment bank in paragraphs 5-7)

LanxessLONDON (ICIS)--LANXESS plans to temporarily shut down its butyl rubber plant in Belgium and its ethylene-propylene-diene monomer (EPDM) production in Texas, the US, in the coming weeks, to counter current soft demand, the Germany-based specialty chemical producer said on Thursday.

In an unscheduled earnings and trading update, LANXESS said: “Soft underlying demand in the second half of 2012 has continued into 2013 across most businesses, against the usual seasonal trend.

“Therefore, LANXESS plans to temporarily shut down its butyl rubber plant in Belgium and its EPDM-production in Texas, USA, in the coming weeks,” it added.

The company expects demand to pick up during the year. It also remains confident to achieve its mid-term goals of €1.4bn ($1.8bn) and €1.8bn earnings before interest, tax, depreciation and amortisation (EBITDA) pre exceptionals in 2014 and 2018 respectively.

Investment bank JP Morgan Cazenove said LANXESS’ statement that soft underlying demand in the second half of last year has continued into 2013 across most of its businesses is against the usual seasonal trend, with the first half of the year traditionally contributing the majority of its EBITDA.

“We believe the current Bloomberg consensus of €1,235m [EBITDA in 2013] is, as a consequence, vulnerable to reduction given the likelihood of a weaker than expected first half with consensus therefore dependent on a strong recovery in H2 in order to meet existing numbers.

“An initial calculation suggests consensus may settle at around €1.1bn EBITDA for 2013, -11% versus current Bloomberg consensus,” JP Morgan Cazenove said.

LANXESS also reported that its fourth-quarter EBITDA pre exceptionals rose by 37% year on year to €239m, while sales were flat year on year at €2.12bn and net income increased steeply to €51m from €5m in the same period a year earlier.

Earnings per share (EPS) in the quarter grew to €0.62 compared with €0.06 a year earlier.

“The main factors supporting this result were the company’s strict cost discipline and proven flexible asset management. In addition, the fourth quarter of 2011 included €35m in charges for inventory devaluations,” LANXESS said.

For the full year 2012, LANXESS saw its net income increase by 2% to €514m and EPS up 2% to €6.18. EBITDA pre exceptionals in 2012 rose 7% year on year to €1.23bn, while sales increased by 4% to €9.09bn.

LANXESS will publish its full-year earnings for 2012 at its annual press conference in Dusseldorf, Germany, on 21 March.

($1 = €0.77)

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

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