Lanxess CEO’s 100 Million-Euro Cost Squeeze Spans Bonuses, Jobs
Lanxess AG (LXS), the synthetic rubber maker that joined Germany’s benchmark DAX index a year ago, said it will cut 1,000 jobs and also management bonuses to save about 100 million euros ($134 million) annually from 2015.
The savings program will cost 150 million euros in one-time charges that will be booked in 2013 and 2014, the Cologne-based company said in a statement late yesterday. Lanxess said it will explore strategic options for units with about 500 million euros in combined sales and 1,000 workers, that are considered peripheral activities.
Chief Executive Officer Axel Heitmann said in August that he would review company strategy after orders slumped and he had to abandon a 2014 profit forecast. Lanxess, which generates about 40 percent of sales from the auto and tire industries, has suffered as European car sales faltered, with August deliveries at the lowest since records began in 1990.
“Lanxess is countering the challenging business environment with a comprehensive efficiency program,” the company said in today’s statement. “Currently, it is foremost the synthetic rubber activities that are experiencing a temporary weakness in demand, increased competition in the market and volatile raw-materials prices.”
Bonuses for this year will be cut for those eligible, including the management board, Lanxess said today. The job cuts will be achieved with the help of early retirement packages and severance pay.
In an effort to reduce the company’s dependence on rubber, Lanxess will target acquisitions in the mid to long-term that will strengthen its chemicals units, it said today.
Lanxess shares have dropped 22 percent this year, making them the second-worst performer on the DAX index after potash maker K+S AG. (SDF) The stock closed down 1.1 percent at 51.40 euros yesterday.
The synthetic rubber maker stuck to a full-year target of earnings before interest, tax, depreciation, amortization and exceptional items of 700 million euros to 800 million euros. The forecast excludes potential inventory devaluations, Lanxess said.
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