Lanxess Lowers Top-End of Profit Goal as Economies Struggle
Lanxess AG (LXS), the second-worst performer on Germany’s benchmark DAX index this year, lowered the top end of its profit goal range and said it expects “modest” economic momentum to persist in the fourth quarter.
Earnings before interest, tax, depreciation, amortization and one-time items will probably be 710 million euros ($950 million) to 760 million euros this year, the Cologne, Germany-based company said today in a statement. Previously it predicted 700 million euros to 800 million euros.
Chief Executive Officer Axel Heitmann is cutting jobs and bonuses to counter falling demand and selling prices in the Americas region. The maker of synthetic rubber and agro-chemicals said emerging markets will provide only limited impetus and it doesn’t yet see lasting stability in Europe.
“Lanxess expects the environment to remain difficult, especially in the tire and automotive industries,” the company said in the statement.
Ebitda before special items dropped 26 percent to 187 million euros in the quarter, beating a 179 million-euro analyst estimate, according to a Bloomberg survey. Sales fell 5 percent to 2.05 billion euros, in line with estimates. Net income plunged 88 percent to 11 million euros.
Lanxess shares have fallen 21 percent this year, cutting the company’s market value to 4.4 billion euros. Only potash producer K+S AG has dropped further, declining 40 percent.
The chemical maker, which generates about 40 percent of sales from the auto and tire industries, suffered after European car sales dropped to the lowest in more than 20 years. Lanxess has said it will target acquisitions in the mid to long-term to strengthen its chemical units and reduce dependence on rubber.
The manufacturer is exploring strategic options for units that don’t belong to its main business, it said in September. Divisions with about 500 million euros in combined sales and 1,000 workers may be sold or put into joint ventures, the CEO has said.
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