Auto rubber demand to remain weak into Q2 – LANXESS chairman

21 March 2013 12:28  [Source: ICIS news]

DUSSELDORF (ICIS)--Germany’s LANXESS expects poor first-quarter demand for automotive rubber to only marginally improve in the second quarter, the chairman of the specialty chemicals producer's board of management of said on Thursday.

LANXESS warned today that first-quarter earnings before interest, tax, depreciation and amortization (EBITDA) are expected to plummet to €160-180m compared with €369m a year ago. It blamed poor demand, particularly from the European automotive rubber market.

Speaking at its 2012 annual financial results press conference in Dusseldorf, chairman Axel Heitmann said that the first quarter has been slow, with an operating level similar to the fourth quarter of 2012. This is a change to the company’s usual seasonal demand pattern.

Heitman said: “Typically we have very strong first and second quarters with around 60% of our EBITDA being generated in the first half and 40% in the second half. This year has been different.”

He said that the beginning of the year typically brings a huge surge in demand from the automotive and tyre industry. “But customer sentiment is down. The negative news flow impacts spending behaviour. Even after the Chinese New Year we did not see a significant increase in demand, particularly in Europe,” he said.

He added: “That’s why Q1 [first-quarter] demand is [poor] and we expect only a slight increase for Q2 [second quarter 2013]. However we expect business to pick up in the second half.”

He added that LANXESS will give guidance to full year earnings in May, but the company does not expect to match 2012’s record EBITDA of €1.225bn.

By: Will Beacham
+44 20 8652 3214

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