Lanxess Realignment Progressing Rapidly, CEO Says

The three-phase realignment program initiated by German chemical producer Lanxess in 2014, following the return of former chief financial officer Matthias Zachert to the Cologne-based company as chief executive, "continues to progress rapidly," Zachert said in a conference call to present first-quarter 2015 results.

Cost savings projected for the quarter materialized, especially as regards the reduction of administrative and selling cost reductions outlined in the first phase of the program, the CEO said.

Lanxess is now well into the second phase, which is aimed at improving operational competitiveness. Under the plan, it is realigning its production networks for ethylene propylene diene monomer (EPDM) rubber and neodymium-based performance butadiene rubber (Nd-PBR).

In a third phase, the rubber specialist will focus on improving the competitiveness of its business portfolio, especially through cooperations in the rubber business, as announced last year. Zachert confirmed that the company is currently in talks with potential partners and "will report on further steps in the second half of 2015."

Lanxess' figures for the first quarter show sales "nearly stable" at €2.038 billion (€2.043 billion) and EBITDA pre-exceptionals almost 12% higher at €229 million. The positive results, which Zachert said resulted not only from external effects but from the company's own realignment efforts, "show that we are on the right track."

For 2015 as a whole, management has increased its guidance and now expects EBITDA pre-exceptionals to be in the range of €820-860 million. The CEO said full-year sales for 2015 could be lower than in 2014, however, due to the fall in raw materials prices.

Commenting on the outlook for the workforce, Zachert said it is "not unthinkable" that additional layoffs could be on the agenda as the realignment scheme progresses further. In late 2014, Lanxess said it would slash 1,000 jobs - around 6% of its 16,700-member workforce - up to 2016.