Lanxess net income up tenfold in 2010
Demand for synthetic rubbers from tyre industry customers proved a strong driver of growth for Lanxess last year. The German specialty chemicals company describes its 2010 results as “outstanding” and believes its performance was aided by the company’s strategic set-up and a general business recovery. Announcing the firm’s annual results at its annual press conference on March 17, Lanxess chief executive officer Axel C. Heitmann said the company’s “growth story is set to continue” following last year and an “excellent” start to 2011.
Sales in 2010 amounted to 7.12 billion euros, a 40.8 per cent year-on-year increase. At 918 million euros, EBITDA pre-exceptionals were up 97.4 per cent on 2009 (Lanxess had forecast EBITDA pre exceptionals of approximately 900 million euros for 2010), and EBITDA margin pre-exceptionals for the full year was 12.9 per cent compared to 9.2 per cent in 2009. Net income came to 379 million euros – an impressive 848 per cent higher than the 40 million euros reported a year earlier. Based on these results, Lanxess has proposed a 70 euro cent per share dividend, a 40 per cent year-on-year increase.
Lanxess was able to lift sales and earnings in the fourth quarter of 2010 even in comparison to what it calls a “very strong quarter” a year earlier. Sales rose 31.6 per cent year-on-year to 1.83 billion euros as all three of the company’s business segments benefited from higher volumes, pricing and currency effects. The synthetic rubber activities of the Performance Polymers segment benefited from legislation in Germany on the mandatory use of winter or all-season tyres at particular times of the year. Group EBITDA pre exceptionals rose 19 per cent year-on-year to 172 million euros during the quarter, while the EBITDA margin pre exceptionals declined year-on-year from 10.3 per cent to 9.4 per cent due to planned maintenance turnarounds in the synthetic rubber businesses and one-off payments made to employees. Net income in the fourth quarter rose 86 per cent year-on-year to 26 million euros.
Performance Polymers was the company’s largest segment in 2010, with sales rising 58 per cent year-on-year to 3.8 billion euros. Top-line growth was driven by volume and price increases. The segment’s EBITDA pre exceptionals more than doubled to 585 million euros. Within the segment, the Butyl Rubber and Performance Butadiene Rubbers businesses benefited from the recovery witnessed in the OEM and replacement tyre markets.
Strong growth in emerging markets
Latin America was the synthetic chemicals company’s strongest growth region in 2010, with sales rising 85 per cent year-on-year to 955 million euros – 13 per cent of group sales. The main growth driver was the Performance Polymers segment in Brazil. Sales in the Asia/Pacific region rose 43 per cent year-on-year to 1.6 billion euros, accounting for 23 per cent of group sales. The EMEA region (excluding Germany) remained the group’s largest region; sales there rose 31 per cent year-on-year to 2.0 billion euros and accounted for 29 per cent of the group total. The most significant growth driver within the EMEA region was the Performance Polymers segment. Sales in the four BRIC countries rose 60 per cent year-on-year to 1.6 billion euros and represented 23 per cent of group sales, up from 20 per cent in 2009. North America saw sales rise 50 per cent year-on-year to 1.2 billion euros in 2010, accounting for 16 per cent of group sales. Performance Polymers segment sales in the region increased by more than 50 per cent. Sales in Germany rose by 24 per cent year-on-year to 1.3 billion euros, accounting for 19 per cent of group sales. Performance Polymers and Performance Chemicals recorded double-digit sales growth.
In September 2010, Lanxess set itself the goal of increasing EBITDA pre exceptionals to roughly 1.4 billion euros in 2015 through a dual-track strategy of organic and external growth. The ‘GOFOR1.4’ initiative comprises a large number of projects, including the expansion of high-performance synthetic rubber plants in Germany, the USA and Brazil plus the acquisition of Argentina-based Darmex – a leading manufacturer of release agents and curing bladders for the tyre industry. “As you can see, we are clearly on track to achieve our ambitious mid-term earnings target,” Heitmann commented.
Lanxess says it is “confident” about its prospects for 2011 and expects sales and EBITDA pre-exceptionals to be higher than in 2010. The company anticipates growth in the global economy and chemical industry will continue, albeit at a slower rate than last year, with emerging markets in Asia/Pacific and Latin America showing the strongest growth rates. The company’s Performance Polymers segment will grow due to positive demand for tyres and high-tech plastics, and Lanxess will bring additional capacity on stream during 2011. Higher energy and raw material costs are expected during the year, and Lanxess cautions that the potential for setbacks remains in the form of geopolitical unrest and the high levels of national debt existing in many countries.