LANXESS striding ahead in 2011

Specialty chemicals group LANXESS got off to a successful start in 2011 and is also experiencing a strong second quarter so far, laying the foundation for a significant improvement in its operating result compared with last year.
LANXESS confirms its forecast for the full year 2011. EBITDA pre exceptionals is expected to increase by 10 to 15 percent, exceeding EUR 1 billion for the first time.
“We are well positioned, and our growth strategy puts us right on track for continued success in the future,” said Axel C. Heitmann, Chairman of the LANXESS Board of Management, on Wednesday at the company’s Annual Stockholders’ Meeting in Cologne.
LANXESS posted a significant jump in earnings in the first quarter. Earnings rose even faster than sales. EBITDA pre exceptionals climbed by nearly 40 percent to EUR 322 million. Net income rose to EUR 166 million, more than 60 percent above the same period of 2010. Group sales advanced by 29 percent to EUR 2.1 billion.
Heitmann underlined the role of Germany in LANXESS’ growth story. Here alone, first-quarter sales rose by 29 percent against the prior-year period to EUR 398 million and accounted for nearly one fifth of total Group sales. “Our domestic sites form the basis of our innovative capability, the basis of our technological expertise and therefore the basis of our competitiveness.”
GOFOR 1.4 initiative
To achieve its medium-term EBITDA pre exceptionals target of around EUR 1.4 billion, LANXESS will continue to pursue its dual strategy of growing organically and making acquisitions, when opportunities arise. The Group will actively participate in the consolidation currently taking place in its sector. LANXESS’ good financial health now puts it in a position to consider larger acquisitions.
“I don’t mean projects of a transformational nature, but acquisitions that could add more than EUR 500 million or even up to EUR 1 billion in sales,” said Heitmann.
LANXESS’ medium-term growth strategy is partly supported by the recent placement of a euro benchmark bond on the European capital market. The issue, which was nine times oversubscribed, has a volume of EUR 500 million and a seven-year term. The bond has a 4.125 percent coupon.
Capital expenditures
LANXESS’ increased room to maneuver is based on having the right products at the right time, the best technologies in each field and exercising rigorous cost discipline. These three factors now enable the company to boost capital investment. “I expect our capital expenditures to reach an all-time high of between EUR 550 million and EUR 600 million in 2011,” said Heitmann. Of this amount, Germany will account for about EUR 160 million.
For example, the specialty chemicals group is expanding its activities at the site in Krefeld-Uerdingen with a EUR 40 million investment in two large-scale projects for the Advanced Industrial Intermediates business unit: a new plant to produce formalin and the expansion of the existing menthol facility.
Having declared 2011 the “Year of High-Tech Plastics,” LANXESS together with U.S. chemical company DuPont is doubling the capacity of the joint compounding facility for high-tech plastics in Hamm-Uentrop, Germany. The company will also start the construction of its first U.S. production facility for high-tech plastics in Gastonia, North Carolina, in the second quarter of 2011. More than EUR 10 million is to be invested in the plant, which will have an annual capacity of 20,000 metric tons starting in 2012.
In January 2011, ground was broken on a new plastics facility at the site in Jhagadia, India, that is due on stream at the beginning of 2012. It too will have an initial capacity of 20,000 metric tons per year. The investment volume again exceeds EUR 10 million.  The company is also investing Euro 10 million to increase the annual capacity of its high-tech plastics facility in Wuxi, China, to approximately 60,000 metric tons per year by mid-2011.  
LANXESS is also benefiting from its focus on innovation and the intensive research and development work that gives rise to the Group’s premium products. In 2010, LANXESS increased its expenditures in this area by 15 percent against the prior year to EUR 116 million. A further 15 percent increase to more than EUR 130 million is planned for 2011.
Heitmann said the innovative capability of LANXESS is also enabling the company to achieve substantial progress in the areas of energy efficiency and resource conservation. As an example he cited the collaboration with U.S. renewable chemicals and advanced biofuels company Gevo. This enabled LANXESS to present a world first at the Annual Stockholders’ meeting. The LANXESS Chairman showed his audience a ball made from the first butyl rubber to be made entirely from renewable raw materials instead of petroleum.  “This is an invention that one day could put the business of LANXESS on a completely new foundation,” said Heitmann.
Relocation to Cologne
LANXESS will transfer its corporate headquarters from Leverkusen to Cologne in the second half of 2013.  More than 1,000 employees will move to their new offices in 2013. “The building is currently being completely modernized. It will then become one of the most energy-efficient buildings in Germany,” stated Heitmann. The new company headquarters will bring almost all management functions under one roof. The 22-storey office building has a leased area of around 38,000 square meters.

LANXESS is a leading specialty chemicals company with sales of EUR 7.1 billion in 2010 and currently around 15,500 employees in 30 countries. The company is at present represented at 46 production sites worldwide. The core business of LANXESS is the development, manufacturing and marketing of plastics, rubber, intermediates and specialty chemicals.

Forward-Looking Statements
This news release may contain forward-looking statements based on current assumptions and forecasts made by LANXESS AG management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.

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The Board of Management and Chairman of the Supervisory Board of LANXESS AG at the Annual Stockholders’ Meeting 2010 in the LANXESS arena in Cologne. (From left to right: Rolf Stomberg, Chairman of the Supervisory Board; Werner Breuers, Member of the Board; Axel C. Heitmann, CEO; Rainier van Roessel, Member of the Board; Bernhard Düttmann, CFO)

Annual Stockholders’ Meeting 2011 [JPG, 702 KB]

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