InterviewLANXESS chairman 'cautiously optimistic' on 2014 targets

21 March 2013 13:59  [Source: ICIS news]

DUSSELDORF (ICIS)--Germany-based LANXESS is “cautiously optimistic” for the full year 2013 and is sticking to its 2014 and 2018 targets despite current poor demand conditions, its chairman of the board of management said on Thursday.

The specialty chemicals group will benefit from stronger growth in China, an end to customer destocking, new product releases, and capacity expansions during 2013, together with flexible asset management, according to chairman Axel Heitmann.

Speaking on the sidelines of the company’s 2012 financial results conference in Dusseldorf, Heitmann said: “We face some weakness from the automobile industry in Europe. Growth in China has become a bit slower but it is expected that after the change in administration, business will pick up. This has been confirmed by the new leadership and this will impact demand.”

He added: “Our customers are also telling us they expect a pick-up in the second half of the year. Also destocking will have definitely come to an end as we move forward in Q1. We believe the crisis in Europe will not get worse – we are through the worst of it.”

Heitmann said earlier he expects earnings before interest, tax, depreciation and amortization (EBITDA) not to match 2012’s record of €1.23bn (€1.60bn). The company is sticking to its 2014 target of €1.4bn and €1.8bn for 2018.

EBITDA in 2013 will also benefit from a number of growth projects which will introduce new products and increase the company’s footprint in emerging markets, said Heitmann. In Singapore, a new butyl rubber plant is under construction and will start production in the third quarter of the year as planned.

Heitmann highlighted the company’s flexible asset management programme: LANXESS recently said it would temporarily close a butyl rubber plant in Belgium and an ethylene-propylene-diene monomer (EPDM) facility in Texas, the US, because of poor market conditions.

“When demand is slowing we’re not pushing for volume or reduced pricing. We respond by reducing output or shutting plants and this maintains our pricing power and mitigates costs.”

Heitmann also highlighted the strength of the company’s growing agrochemicals and specialty chemicals businesses.

He added: “These are the elements: The macroeconomic situation is getting better plus we have new product initiatives with a strong focus on technology, competitiveness and emerging markets. All this combined with our flexible asset management scheme. These give us the confidence to say 2013 will be a good year for EBITDA and in preparing for 2014.”

“I’m cautiously optimistic for 2013. We will not beat 2012 but 2013 will be a good year for LANXESS," the Heitmann said.

($1 = €0.77)

By: Will Beacham
+44 20 8652 3214

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