LANXESS Increases Earnings in Third Quarter of 2024
Specialty chemicals company LANXESS achieved significant earnings growth in the third quarter of 2024: adjusted EBITDA rose 45.4% to EUR 173 million, compared to EUR 119 million in the same quarter of the previous year.
This increase was largely driven by higher volumes, improved capacity utilization and cost savings from the "FORWARD!" action plan.
Matthias Zachert, Chairman of the Board of Management of LANXESS AG, said: "Despite the continued challenging competitive environment for the chemicals sector, we are maintaining our course. The timely actions we took to address weak global demand are paying off. Our facilities are operating at higher capacity and our 'FORWARD!' action plan has significantly improved our cost position. While a broad-based recovery is not yet on the horizon, we are maintaining our year-end targets."
Group sales remained nearly flat at EUR 1.598 billion, compared to EUR 1.601 billion in the prior year. While sales volumes increased in nearly all business units, selling prices fell, particularly due to lower raw material and energy costs.
Adjusted EBITDA margin reached 10.8%, compared to 7.4% in the prior year. Net income was EUR 1 million, entirely from continuing operations. In the same period of the previous year, net income from continuing operations was recorded at minus EUR 131 million. LANXESS confirmed its targets for the 2024 financial year and expects earnings growth of between 10% and 20% compared to EUR 512 million in the prior year. For the fourth quarter, the company is forecasting lower performance due to the normal seasonal nature of the business.
Sale of Urethane Systems Business
In early October, LANXESS signed an agreement to sell its Urethane Systems business to Japan's UBE Corporation. The business unit was valued at EUR 460 million and LANXESS expects to receive approximately EUR 500 million from the sale. Zachert stated: "We also made strategic progress this quarter. With the sale agreement for our Urethane Systems business unit, we have divested our last polymer business and completed our process of transforming the group into a specialty chemicals company." LANXESS plans to use proceeds from the sale to reduce debt. The transaction is subject to approval by relevant authorities and is expected to be completed in the first half of 2025.
Business Performance by Segment
The Consumer Protection segment achieved sales of EUR 521 million in the third quarter, a decline of 10.3% compared to EUR 581 million in the same quarter of the previous year. Adjusted EBITDA fell 15.5% to EUR 71 million from EUR 84 million in the same period of the previous year. Earnings were negatively impacted, particularly by very weak demand from agrochemicals customers. By contrast, business with customers in other sectors progressed positively. Adjusted EBITDA margin showed a slight decline to 13.6%, compared to 14.5% in the prior year.
In the third quarter, the Advanced Additives segment achieved sales of EUR 550 million, at the same level as EUR 549 million in the same quarter of the previous year. Adjusted EBITDA increased 84.8% to EUR 61 million from EUR 33 million in the same quarter of the previous year. Higher capacity utilization and cost savings from the "FORWARD!" action plan had a positive impact on earnings. Adjusted EBITDA margin increased to 11.1%, compared to 6.0% in the prior year.
In the Advanced Intermediates segment, sales increased 12.9% to EUR 455 million in the third quarter of 2024, compared to EUR 403 million in the third quarter of 2023. Adjusted EBITDA rose 126.7% to EUR 68 million from EUR 30 million in the same quarter of the previous year. Higher capacity utilization resulting from volume growth and cost savings from the "FORWARD!" action plan positively impacted earnings and margins. Adjusted EBITDA margin increased to 14.9%, compared to 7.4% in the same quarter of the previous year.
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