Lanxess positive on trading, despite weak economic trends

Lanxess, the German chemical group, said while it was optimistic about its overal prospects it expected earnings in the second half of 2012 to slow as what it called “increasing economic challenges” hit the business.

Currency variations and price hikes helped Lanxess post second quarter revenues of €2.42bn (£1.92bn), up 6.8%, while earnings before interest, tax, depreciation and amortisation (Ebitda) rose by 6.8% to €362m (£288m).

But Axel Heitmann, Lanxness’ chief executive, said he did not expect to see any further earnings momentum in the second half the year. “We therefore expect the operating result in the second half of 2012 to be approximately at the prior-year level,” he said.

The group expected economic trends to be weak, thanks to the euro debt crisis, he added. Heitmann anticipated moderate economic growth in Asia and Latin America, while the US economy “will probably continue to expand, though possibly at a slower pace”.

Heitmann said he expected raw material and energy costs “to remain volatile in the second half of the year. [We] will strictly adhere to our price-before-volume strategy”, he added.

He said that raw material cost rises had been fully passed on to customers in the second quarter.

The group’s strongest trading presence remained Europe (excluding Germany), the Middle East and Africa, contributing 27% of Lanxess’ second quarter sales, although these dipped 2% to €650m (£516m).

Sales in the Asia-Pacific region rose by nearly 24% to €608m (£483m), boosted by a 31% increase in China and contributing to 25% of the group’s total revenues, while in North America sales rose 19% to €439m (£349m).

The ‘Bric’ countries saw sales rise more than 14% year-on-year to €597m (£474m), while in Latin America sales were up 8% at €331m (£263m).

Lanxess’ performance polymers division posted sales up more than 11%, driven by the Keltan EPDM acquisition and “favourable currency effects”.

Its advanced chemicals operation was helped by strong demand from the agrochemical sector, although weakness in the construction and coatings sectors meant sales across the division rose only 1% to €399m (£317m).

Despite weakness in some areas Heitmann said: “Our performance is reflected against a very strong previous year and we are on the way to achieving an even better result in 2012 after our strong second quarter."

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