• Positive full-year forecast confirmed;
• R&D spending to rise by 40 percent this year;
• “Green Mobility” driving growth.
Specialty chemicals company LANXESS remains on its growth path in 2012. “We will continue to pursue our successful strategy of focusing on dynamic markets, megatrends, profitable growth and a solid financial basis,” LANXESS CEO Axel C. Heitmann said on Tuesday at the Annual Stockholders’ Meeting in Cologne’s LANXESS arena. The company confirmed its forecast for the full-year 2012: EBITDA pre exceptionals is expected to grow by between 5 and 10 percent compared to last year.
The foundation for this has been laid by the successful first quarter. EBITDA pre exceptionals of LANXESS climbed by nearly 15 percent year-on-year to EUR 369 million in the first quarter. Net income rose 16 percent to EUR 193 million and sales climbed 15 percent to EUR 2.4 billion.
In addition, LANXESS expects that EBITDA pre exceptionals in the second quarter will be roughly level with the first quarter of 2012 and thus well above the EUR 339 million reported for the second quarter of last year.
Medium-term earnings goal
LANXESS continues to pursue its medium-term target of reaching about EUR 1.4 billion EBITDA pre exceptionals in 2015. The company believes the basis for achieving this strategic goal was further improved by last year’s record results. Sales in 2011 climbed by 23 percent from the previous year to nearly EUR 8.8 billion. EBITDA pre exceptionals in 2011 topped EUR 1 billion for the first time, rising to EUR 1.15 billion against EUR 918 million in 2010.
In light of these results, the Board of Management and the Supervisory Board are proposing to the Annual Stockholders’ Meeting that the dividend for 2011 be raised by 21 percent year-on-year to EUR 0.85 per share.
Capital expenditure projects in Germany
LANXESS is adhering to its dual-track growth strategy and will explore both acquisition opportunities and organic growth projects. The company has budgeted approximately EUR 600 million for capital expenditures in 2012. Some EUR 200 million of this will be invested in its home market of Germany, where LANXESS employs more than 7,800 people.
For example, LANXESS is investing more than EUR 20 million to double the capacity of the menthol plant of its Advanced Industrial Intermediates business unit at the Krefeld-Uerdingen site. This project is scheduled for completion in 2012. The formalin plant at the same location was inaugurated in April 2012 following an EUR 18 million capacity expansion.
At the Leverkusen site, the specialty chemicals group is investing some EUR 20 million to expand its cresol production capacity by about 20 percent. The additional capacities for this high-quality intermediate for the global market are due on stream by mid-2013.
Together with U.S.-based DuPont, LANXESS is doubling the capacity of the jointly owned compounding facility for high-tech plastics at the site in Hamm-Uentrop, Germany.
LANXESS is also implementing extensive capital expenditure projects outside Germany. In Singapore, for example, the company is currently building Asia’s largest butyl rubber facility, with a capacity of 100,000 metric tons per year. The project is on schedule and the plant is due on stream in the first quarter of 2013. The total investment will be about EUR 400 million. Also in Singapore, LANXESS is set to construct a new production facility for neodymium polybutadiene rubber. Ground will be broken on this project this September, and the capital expenditure volume will be around EUR 200 million. The plant is scheduled for start-up in the first half of 2015.
Higher research and development spending
To drive growth, LANXESS is stepping up its research and development activities. Spending in this area already rose by about 25 percent to EUR 144 million in 2011 and is planned to grow by another 40 percent this year. R&D spending in the first quarter of 2012 in fact rose by nearly 50 percent against the prior-period figure, to EUR 45 million.
The number of employees working in research and development activities increased by about 200 to more than 730 people in 2011. LANXESS also intends to hire additional scientists and engineers in 2012, mainly in Germany.
“Green Mobility” a growth driver
In his address to the Annual Stockholders’ Meeting, Heitmann described the megatrend of mobility as one of the most important factors for LANXESS’ commercial success. He said sustainable solutions are needed to master the challenges associated with this trend, such as the growing burden on the environment. LANXESS has therefore declared “Green Mobility” – in other words, more eco-friendly mobility – its key theme for 2012.
The specialty chemicals group develops materials that make this possible. For example, its synthetic rubbers increase the service life of “Green Tires”, helping to conserve raw material resources. And the company’s plastic-metal hybrid technology reduces the weight of automotive components, thereby saving fuel without compromising on safety.
“‘Green Mobility’ is an enormous growth area involving numerous fields of application – and we are exploiting this opportunity,” said Heitmann. In 2011, LANXESS already achieved some EUR 1.5 billion in sales – nearly one fifth of the total – with products that enable sustainable mobility. By 2015, the company plans to increase this figure by roughly 80 percent to EUR 2.7 billion.
LANXESS expects the tire labeling regulation coming into effect in the European Union at the beginning of November to stimulate its business with high-performance rubbers for “Green Tires”. As with the system already in place for household appliances, the tire classifications A (best performance) through G (worst performance) will create increased transparency for customers, helping them to make the right choices, when buying new tires. Heitmann: “Of all the possible options for making mobility more eco-friendly, ‘Green Tires’ is the technology with which motorists can achieve the biggest reduction in CO2 emissions for every euro spent.”
LANXESS (lanxess.com) is a leading specialty chemicals company with sales of EUR 8.8 billion in 2011 and currently around 16,700 employees in 30 countries. The company is at present represented at 48 production sites worldwide. The core business of LANXESS is the development, manufacturing and marketing of plastics, rubber, intermediates and specialty chemicals. LANXESS is a member of the leading sustainable indices Dow Jones Sustainability Index (DJSI) World and FTSE4Good.