Lanxess AG (LXS), the chemical maker that joined Germany’s benchmark DAX index in September, forecast a larger-than-estimated drop in profit for the current quarter on weak demand in the tire and automotive industries.
Earnings before interest, tax, depreciation, amortization and one-time items will probably fall to between 160 million euros ($207 million) and 180 million euros in the quarter, the Leverkusen, Germany-based company said today. That compares with 369 million euros a year earlier. Norbert Barth, an analyst at Baader Bank, had forecast 250 million euros.
Lanxess is budgeting for profit to decline in 2013. Earlier this month, the company announced it will idle synthetic rubber factories in Belgium and the U.S. because of weak orders from the auto industry. Europe’s car-market contraction accelerated in February, with registrations dropping 10 percent from a year earlier, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said on March 19.
“The outlook is disappointing,” said Baader’s Barth, who has a buy rating on the stock. “We already saw the announcement that the market is difficult. But it’s surprising that they expect 2013 to be lower.”
Lanxess, which expects a pick-up in demand in the second half, will give a more precise outlook for the current year when it publishes its first-quarter report on May 8, it said today.
The maker of synthetic rubber is proposing to increase its annual dividend payment 18 percent to 1 euro a share for the year 2012, it said today. A payout of 95 euro cents was expected, according to data compiled by Bloomberg.
“In this persistently volatile environment, Lanxess will continue to focus on cost discipline and its proven flexible asset management,” the company said in the statement.
A plant making butyl rubber, used in the inner linings of car tires, in Zwijndrecht in Belgium will be closed for four weeks in May. Production of ethylene propylene diene monomer, or EPDM, used in wiper blades and door sealants, in Orange, Texas, will be stop for as many as six weeks, spokesman Daniel Smith said earlier this month.
The company is sticking to medium term targets for earnings of 1.4 billion euros in 2014 and 1.8 billion euros in 2018, it said today.
Lanxess, which is moving its headquarters to Cologne, said today that the new building will be inaugurated on Sept. 3. Some 1,000 employees will move into the new building on the banks of the Rhine river.
To contact the editor responsible for this story: Simon Thiel at firstname.lastname@example.org