Specialty chemicals company LANXESS has followed up its successful fiscal year 2017 by posting the best quarterly result in its history, and has raised its earnings guidance for 2018.
In the opening quarter, global sales rose by almost 7 per cent to EUR 2.565 billion, compared with EUR 2.401 billion in the previous year. EBITDA pre exceptionals improved significantly by 14 per cent to EUR 375 million, compared with EUR 328 million in the prior-year quarter. Key factors in this positive performance chiefly included the contributions of the Chemtura businesses acquired in 2017. In addition, the phosphorus chemicals business purchased from Solvay in February 2018 made its first contribution. Negative currency effects curbed the positive EBITDA performance. The EBITDA margin pre exceptionals was up by almost one percentage point on the previous year at 14.6 per cent. Net income improved significantly by 23 per cent to EUR 96 million, compared with EUR 78 million the year before.

“LANXESS remains firmly on the track. We have made a dynamic start to the new fiscal year and improved our profitability again. This shows that our efforts to move the company forwards are increasingly paying off,” said Matthias Zachert, Chairman of the LANXESS Board of Management.

The Group has raised its guidance for fiscal year 2018, and now expects EBITDA pre exceptionals to increase by between 5 per cent and 10 per cent for the “New LANXESS” segments (Advanced Intermediates, Specialty Additives, Performance Chemicals and Engineering Materials). In the previous year, comparable EBITDA pre exceptionals stood at around EUR 925 million. At the annual press conference in March, Zachert envisaged only a slight increase for the year as a whole. The ARLANXEO segment, a joint venture between LANXESS and Saudi Aramco for synthetic rubber, is not included in the guidance for 2018, and will be reported separately from the second quarter onwards.

Sound business development in the segments

Sales of the Advanced Intermediates segment came to EUR 563 million in the first quarter of 2018, 8.7 per cent above the prior-year figure of EUR 518 million. EBITDA pre exceptionals increased by 12.1 per cent to EUR 102 million compared with EUR 91 million a year earlier, largely as a result of adjusted selling prices. The EBITDA margin pre exceptionals amounted to 18.1 per cent, against 17.6 per cent in the previous year.

In the Specialty Additives segment, sales totalled EUR 496 million, more than double the EUR 239 million generated in the same quarter of the previous year. EBITDA pre exceptionals amounted to EUR 81 million, up 84.1 per cent on the prior-year level of EUR 44 million. This strong earnings performance chiefly results from the integration of the purchased Chemtura businesses. The EBITDA margin pre exceptionals was 16.3 per cent, below the 18.4 per cent recorded in the previous year.

In the Performance Chemicals segment, sales fell by 8.7 per cent to EUR 336 million in the first quarter of 2018, against EUR 368 million in the previous year. EBITDA pre exceptionals amounted to EUR 52 million, down 11.9 per cent on the prior-year level of EUR 59 million. In particular, negative currency effects and the divestment of the chlorine dioxide business reduced sales and earnings. The EBITDA margin pre exceptionals amounted to 15.5 per cent, against 16.0 per cent in the same period of the previous year.

Sales in the Engineering Materials segment rose by a considerable 24.8 per cent to EUR 393 million, compared with EUR 315 million in the same quarter of the previous year. EBITDA pre exceptionals increased even stronger – by more than 50 per cent to EUR 73 million, compared with EUR 48 million. The improvement in earnings resulted from higher selling prices, the contribution from the urethanes business acquired in the previous year, and higher capacity utilization. The EBITDA margin pre exceptionals of 18.6 per cent was well above the figure of 15.2 per cent attained in the same quarter of the previous year.

At EUR 757 million, sales in the ARLANXEO segment were 20.1 per cent down on the very strong figure of EUR 948 million for the same quarter of the previous year. EBITDA pre exceptionals fell by 22.9 per cent to EUR 111 million compared with EUR 144 million in the previous year, largely as a result of adverse currency effects. The EBITDA margin pre exceptionals amounted to 14.7 per cent, against 15.2 per cent a year earlier.

Q1 2018 key financial data

(Figures in EUR million)
Q1 2017
Q1 2018
Change in percent
Sales
2,401
2,565
6.8
EBITDA pre exceptionals
328
375
14.3
EBITDA margin pre exceptionals (in percent)
13.7
14.6
Net income
78
96
23.1
Earnings per share in EUR
0.85
1.05
23.1