Specialty chemicals company Lanxess has recorded another successful year.
Ebitda pre-exceptionals rose by 29.6 % in fiscal year 2017 to EUR1.29 billion, the highest result in the company’s history. In the previous year, ebitda pre-exceptionals amounted to EUR995 million. The operating result was therefore at the top end of the forecast range of EUR1.25 billion to EUR1.3 billion.
The main drivers of the strong rise in earnings were higher volumes in all segments as well as the strong contribution of the Chemtura businesses acquired in the previous year. The ebidta margin pre-exceptionals increased from 12.9 % to 13.3 %, moving another step closer to the mid-term margin target. From 2021, the average margin is expected to be between 14 % and 18 %. Group revenue also rose substantially by 25.5 % to EUR9.66 billion in the last fiscal year compared with EUR7.7 billion the year before.
Net income totalled EUR87 million, after EUR192 million in the previous year. This decline was due to significant one-time exceptional expenses, particularly for the integration of the Chemtura businesses and consolidation of production networks and value chains as well as a one-time charge arising from the U.S. tax reform. Adjusted for these exceptional items as well as amortization of intangible assets, net income was up by 53.9 % from EUR246 million to EUR379 million.
The reported key financial ratios are in line with current market expectations.
“We achieved a lot strategically and operationally in the last fiscal year, laying firm foundations for the future,” said Matthias Zachert, Chairman of the Lanxess Board of Management. “With Chemtura, we successfully completed our biggest acquisition to date, and also significantly improved the quality of our portfolio even more. In this set-up, we achieved the best earnings in Lanxess’s history so far while further enhancing the Group’s profitability.”
Along with its acquisitions, Lanxess also accelerated its organic growth in 2017. The Group invested around EUR550 million in its global plant network, including around EUR235 million in the German sites. It also made progress with its aim of achieving a greater regional balance of its business in 2017. Lanxess continued to expand its presence and its sales in the growth regions of North America and Asia. North America increased its share of global sales from 17 % to 19 %, while that of Asia-Pacific rose from 26 % to 28 %. This means that the Group now generates almost half its sales in these two market regions.
Sales of the Advanced Intermediates segment came to EUR1.97 billion in fiscal year 2017, 13.1 % above the prior-year figure of EUR1.74 billion. Ebitda pre-exceptionals increased by 2.8 % to EUR335 million compared with EUR326 million a year earlier. A solid rise in volumes for intermediates generated this positive performance, offset by weak demand in the agricultural sector and adverse currency effects. The ebitda margin pre-exceptionals was 17.0 %, against 18.7 % in the previous year.
Sales in the Specialty Additives segment almost doubled, soaring by 90.7 % to EUR1.60 billion compared with EUR841 million in the previous year. Ebitda pre-exceptionals again grew strongly by 76.8 % to EUR267 million compared to EUR151 million a year earlier. This strong earnings performance was the result of the integration of the Chemtura additives business. Higher volumes also had a positive impact on earnings. The ebitda margin pre-exceptionals was 16.6 %, against 18.0 % in the previous year.
Sales in the Performance Chemicals segment rose by 10.5 % from EUR1.30 billion to EUR1.44 billion. Ebidta pre-exceptionals amounted to EUR252 million, up 13.0 % on the prior-year level of EUR223 million. The improvement in earnings was mainly attributable to the strong volume growth. The Clean and Disinfect business that Lanxess acquired from Chemours in 2016 also made a substantial contribution to earnings. Accordingly, the ebidta margin pre-exceptionals rose to 17.5 % from 17.1 % in the previous year.
Sales in the Engineering Materials segment increased by 29.4 % from EUR1.06 billion to EUR1.37 billion. Ebidta pre-exceptionals amounted to EUR219 million, up by a substantial 37.7 % on the prior-year level of EUR159 million. This was driven by the urethanes business acquired with Chemtura as well as higher selling prices and volumes. Accordingly, the ebitda margin pre-exceptionals increased from 15.1 % to 16.0 %.
In the Arlanxeo segment, sales were up by 19.2 % to EUR3.23 billion against EUR2.71 billion a year earlier. Ebidta pre-exceptionals amounted to EUR385 million, 3.2 % higher than the prior-year level of EUR373 million. Earnings were affected by the continuing challenging competitive situation, highly volatile raw material prices and the weak U.S. dollar. The ebitda margin pre-exceptionals came in at 11.9 %, against 13.8 % in the previous year.
(RJA)
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