- Net income increases to EUR 443 million due to portfolio measures
- Initial cost savings generated with “FORWARD!” action plan
Mumbai (Maharashtra) [India]: Specialty chemicals company LANXESS had sales in fiscal year 2023 amounted to EUR 6.714 billion, down 17.0 percent from the previous year’s figure of EUR 8.088 billion. EBITDA pre exceptionals decreased by 44.9 percent to EUR 512 million compared with EUR 930 million the year before. The EBITDA margin pre exceptionals reached 7.6 percent, against 11.5 percent the previous year.
The weaker demand and the associated reduction in sales volumes as well as higher idle costs led to a significant earnings decline, primarily in the Specialty Additives and Advanced Intermediates segments. In addition, lower procurement prices for raw materials and energy in these two segments influenced selling prices. Earnings in the Consumer Protection segment saw only a comparatively moderate decline. The contribution from the Microbial Control business acquired from IFF at the beginning of July 2022 had a positive effect here.
“German chemistry and we at LANXESS have never seen a year of crises like this before. But we are doing all we can to make it through this phase as stably as possible and to be in the best possible position when times improve again. With our “FORWARD!” action plan, we have taken the right steps at an early stage,” says Matthias Zachert, CEO of LANXESS.
2023 was a year of multiple crises for the German chemical industry: Weak demand in numerous customer industries and market regions combined with inventory reduction by customers, high energy prices in Germany, and geopolitical tensions. This also characterized fiscal year 2023 for the specialty chemicals company LANXESS. For the current year, however, the Group expects a moderate increase in earnings.
At EUR 443 million, net income in 2023 was significantly higher than the previous year’s figure of EUR 250 million. This was particularly due to the proceeds that LANXESS received from Advent International as a result of the transaction for the formation of Envalior. At minus EUR 843 million, net income from continuing operations was significantly down from the previous year’s figure of EUR 184 million. The decline resulted primarily from the development of operating earnings and impairment on goodwill from acquisitions.
LANXESS expects the environment to remain challenging, at least in the first half of 2024. The Group consequently foresees no improvement in the first quarter of 2024 compared with the fourth quarter of 2023 and expects EBITDA pre exceptionals of up to EUR 100 million. Starting in the second quarter, LANXESS anticipates a moderate increase in sales volumes. “We assume that the inventory reduction among our customers is complete, with the exception of the agrochemicals sector. In addition, we expect long-term cost savings from our “FORWARD!” action plan,” says Matthias Zachert. For fiscal year 2024 as a whole, LANXESS expects EBITDA pre exceptionals to be moderately higher than the 2023 figure. “However, earnings will still be significantly below the average level of previous years. In 2024, we will therefore continue to work on our positioning and processes and strengthen our financial base,” says Zachert.
