Lanxess AG, the German chemical company whose chief executive officer took his post last month, plans to cut capital expenditures, backtracking from a “very ambitious” approach to investment.
Spending will be “significantly” below 600 million euros ($821 million) in 2015 and will be further reduced to a range of 400 million euros to 450 million euros a year later, the Cologne-based company said today in a statement distributed at its annual shareholders meeting.
The chemical maker can’t cut spending this year, which will be at about the same level as last year’s 624 million euros, because new synthetic rubber factories in Singapore and Shanghai are already well under way, CEO Matthias Zachert said. Lanxess, which gets about 40 percent of sales from car and tire producers, struggled as the European automotive market slumped to a two-decade low last year.
“Lanxess capital spending has clearly exceeded that of its competitors in recent years, the latest figure being between 7 percent and 8 percent of sales,” Zachert said in a speech at the meeting in Cologne. “While this investment has increased our presence in the emerging markets of Asia, we can certainly say in retrospect that we took a very ambitious approach.”
Lanxess rose as much as 1.9 percent and was trading up 0.3 percent at 51.31 euros at 10:50 a.m. in Frankfurt. The stock has gained 5.9 percent this year, valuing the company at 4.7 billion euros.