LANXESS expects earnings growth of 10 to 20 percent for the full year 2024
"It seems that we have touched the economic bottom in the chemical industry"
Specialty chemicals company LANXESS expects earnings for the current fiscal year to increase between 10 and 20 percent – even though the results for the first quarter were still impacted by the weak global economic environment in the chemical industry.
In the first quarter, sales fell by 15.4 percent and reached EUR 1.607 billion compared to the comparatively strong same quarter of the previous year with EUR 1.899 billion. EBITDA pre exceptionals was at EUR 101 million and therefore 46.6 percent below the previous year's figure of EUR 189 million. The main reasons for the decline in earnings were lower sales prices and continued weak demand in numerous customer industries.
However, compared to the fourth quarter of 2023, there are signs of a slight upward trend – mainly due to an increase in volumes sold. Compared to the previous quarter, sales rose by 11.9 percent from EUR 1.436 billion to EUR 1.607 billion, while EBITDA pre exceptionals increased by 4.1 percent to EUR 101 million compared to EUR 97 million in the fourth quarter of 2023. The Advanced Intermediates (+54%) and Specialty Additives (+17%) segments recorded particularly strong growth in EBITDA pre exceptionals.
“It seems that we have touched the economic bottom in the chemical industry. At the same time, our FORWARD! action plan is having a positive impact with initial structural savings,” said Matthias Zachert, CEO of LANXESS AG. “We expect the positive trend to continue in the second quarter and that we will achieve better results for the year as a whole than in 2023. However, it is clearly too early to sound the all-clear. Global demand has not yet returned to normal levels and therefore 2024 will certainly remain a tense year for the chemical industry.”
Despite an economic environment that continues to be characterized by many uncertainties, LANXESS anticipates a slight upturn in demand over the remainder of the year. The Group also expects higher capacity utilization and an improved cost base as a result of the structural measures in its FORWARD! action plan. For the full year 2024, the Group is therefore expecting an increase in EBITDA pre exceptionals of 10 to 20 percent compared to the previous year's figure of EUR 512 million. LANXESS expects a sequential increase in EBITDA pre exceptionals for the second and third quarter of 2024 and a more subdued development in the fourth quarter due to the normal seasonal pattern.
Business development in the segments
The Consumer Protection segment generated sales of EUR 509 million in the first quarter of 2024, which corresponds to a decrease of 21.3 percent compared to the figure of EUR 647 million in the same quarter of the previous year. EBITDA pre exceptionals reached EUR 49 million and fell by 47.9 percent from EUR 94 million in the same period of the previous year. This was mainly due to lower volumes resulting from intensive destocking by customers in the agrochemicals sector and lower capacity utilization. The EBITDA margin pre exceptionals was 9.6 percent, against 14.5 percent in the previous year.
In the first quarter of 2024, the Specialty Additives segment recorded sales of EUR 566 million, which was 14.8 percent below the first quarter of 2023 with sales of EUR 664 million. EBITDA pre exceptionals fell by 51.0 percent to EUR 48 million from EUR 98 million in the same quarter of the previous year. Lower sales prices and lower volumes due to weaker demand had a negative impact on earnings and the margin. The EBITDA margin pre exceptionals amounted to 8.5 percent, compared to 14.8 percent in the previous year.
The Advanced Intermediates segment generated sales of EUR 465 million in the first quarter of 2024. Compared to the figure of EUR 516 million in the same quarter of the previous year, sales fell by 9.9 percent. EBITDA pre exceptionals amounted to EUR 37 million, which was 15.9 percent down from EUR 44 million in the previous year. Lower purchase prices for raw materials and energy led to lower sales prices. However, the segment's volumes have developed positively. The EBITDA margin pre exceptionals was 8.0 percent and therefore only slightly below the previous year's margin of 8.5 percent.
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