EBITDA pre exceptionals rose by 0.5% to €220 million (Q1 2007: €219 million), with selling price and volume increases more than offsetting adverse raw material price and currency developments. The prior-year figure contained earnings of roughly E10 million from the since-divested Lustran Polymers activities.
The EBITDA margin before special items rose by a substantial 1.5 percentage points to 14.3%. Net income improved significantly, moving ahead 13.2% to €103 million (Q1 2007: €91 million).
Through our strict alignment toward premium products with leading market
positions, we once again achieved above-average corporate success in a
challenging market environment’, commented Axel C Heitmann, chairman of
the LANXESS board of management. He said group sales benefited from 3.8% higher prices and 4.3% volume growth. ‘We succeeded in passing on the increase in raw material costs in all segments’, Heitmann added.
LANXESS increased sales in all regions on a portfolio and currency-adjusted basis.
There was an encouraging increase in sales in Asia-Pacific, supported by
ongoing market growth in the region. Adjusted sales climbed by 25%, while the reported sales figure was down 6.3% year on year at €281 million. This region’s share of LANXESS’s global sales increased from 17.5% to 18.3%. Double-digit growth rates were recorded in India, Japan and China.
In a positive economic environment, adjusted sales in Germany rose by 1.8%. The reported figure declined by 9.2% to €373 million (Q1 2007: €411 million). Germany’s share of group sales edged upward from 24-24.3%.
In the EMEA region (Europe, Middle East and Africa, excluding Germany),
LANXESS saw sales grow by 5.9% after adjusting for portfolio and currency effects. Growth was driven particularly by the western European markets, with sales rising by a double-digit percentage in Belgium and single-digit figures in France and Italy. Sales also increased in eastern Europe. Reported sales receded by 6.4% to €552 million (Q1 2007: E590 million). The EMEA region’s share of total sales rose from 34.5% in the first quarter of 2007 to 36% in the first three months of 2008.
Adjusted sales in the Americas region grew by 5.4%, with both North and Latin America posting single-digit growth rates. Reported sales fell by 19.8% to €329 million (Q1 2007: €410 million). The region’s share of group sales moved back from 24-21.4%.
LANXESS assumes that global economic growth will continue to slow during
2008. The chemical economy, however, should remain stable overall, bolstered by robust demand in Asia-Pacific, Latin America and central and eastern Europe. Prospects for the chemical industry in North America, however, are increasingly gloomy. This applies particularly to precursors for the construction and automotive sectors. However, customer industries specific to LANXESS – such as tyres and agrochemicals – are expected to experience robust demand.
Further increases in raw material and energy costs need to be offset at global level. Prices for petrochemical raw materials are likely to remain high and volatile. The strength of the euro against other currencies, especially the US dollar, will also affect business trends. LANXESS believe the euro is unlikely to depreciate against the dollar before the second half of this year at the earliest.
Based on these assumptions, the speciality chemicals group anticipates operational sales growth for the full year 2008, with EBITDA pre exceptionals expected to come in at over €700 million. The acquisition of the Petroflex group, Brazil, should prove accretive to EBITDA pre exceptionals right from the second quarter.
The €719 million EBITDA pre exceptionals reported for the full year 2007 included €20 million in earnings from the Lustran Polymers activities prior to their divestment at the end of September 2007. ‘In light of our sound structures, heightened competitiveness and clear focus on a speciality chemicals portfolio, and given the robust demand we expect to see in Asia-Pacific, in parts of Europe and in Latin America, we’re optimistic for the full year 2008’, said Heitmann.
LANXESS are adhering to their target for 2008 of achieving an EBITDA margin in
line with the industry average, having no business unit with an EBITDA margin below 5%, and maintaining their investment-grade rating.
