LANXESS: Butyl rubber production in Sarnia cut back due to feedstock supply problems
LANXESS has had to cut back the production of butyl rubber at its Sarnia, Canada, site since the end of December 2005 in the continuing absence of deliveries from its major raw material supplier Nova Chemicals (Canada) Ltd. As a result, LANXESS is now issuing force majeure notices to its customers in the United States, Canada, Mexico, Asia and South America. This situation will continue until Nova Chemicals is able to supply sufficient raw material volumes. Based on current information from Nova Chemicals, LANXESS expects to operate in this mode until the second half of January.
Nova Chemicals issued a force majeure notice to LANXESS in October 2005 regarding the supply of raw materials after problems arose in connection with maintenance and modernization work at their Corunna, Canada plant, and has extended this notice several times. LANXESS' raw material inventories were used up at the end of December 2005. The company has since been maintaining limited production by using raw material from its other supplier and buying available raw material quantities in the market.
LANXESS currently estimates that this force majeure will reduce EBITDA pre exceptionals by less than EUR 10 million. The company is adhering to its target of a 9 to 10 percent EBITDA margin pre exceptionals for 2006 based on 2004 sales levels.
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