Specialty chemicals company LANXESS expects earnings for the current fiscal year to increase between 10 and 20 per cent, even though the results for the first quarter were still impacted by the weak global economic environment in the chemical industry. 

In the first quarter, sales fell by 15.4 percent and reached € 1.607 billion compared to the comparatively strong same quarter of the previous year with € 1.899 billion. EBITDA pre exceptionals was at € 101 million and therefore 46.6 percent below the previous year's figure of € 189 million. The main reasons for the decline in earnings were lower sales prices and continued weak demand in numerous customer industries.

However, compared to the fourth quarter of 2023, there are signs of a slight upward trend – mainly due to an increase in volumes sold. Compared to the previous quarter, sales rose by 11.9 per cent from € 1.436 billion to € 1.607 billion, while EBITDA pre exceptionals increased by 4.1 per cent to € 101 million compared to € 97 million in the fourth quarter of 2023. The Advanced Intermediates (+54%) and Specialty Additives (+17%) segments recorded particularly strong growth in EBITDA pre exceptionals.

“It seems that we have touched the economic bottom in the chemical industry. At the same time, our FORWARD! action plan is having a positive impact with initial structural savings,” said Matthias Zachert, CEO, LANXESS AG. “We expect the positive trend to continue in the second quarter and that we will achieve better results for the year as a whole than in 2023. However, it is clearly too early to sound the all-clear. Global demand has not yet returned to normal levels and therefore 2024 will certainly remain a tense year for the chemical industry.”

Despite an economic environment that continues to be characterized by many uncertainties, LANXESS anticipates a slight upturn in demand over the remainder of the year. The Group also expects higher capacity utilization and an improved cost base as a result of the structural measures in its FORWARD! action plan. For the full year 2024, the Group is therefore expecting an increase in EBITDA pre exceptionals of 10 to 20 percent compared to the previous year's figure of € 512 million. LANXESS expects a sequential increase in EBITDA pre exceptionals for the second and third quarter of 2024 and a more subdued development in the fourth quarter due to the normal seasonal pattern.

Business development in the segments

The Consumer Protection segment generated sales of € 509 million in the first quarter of 2024, which corresponds to a decrease of 21.3 per cent compared to the figure of € 647 million in the same quarter of the previous year. EBITDA pre exceptionals reached € 49 million and fell by 47.9 per cent from € 94 million in the same period of the previous year. This was mainly due to lower volumes resulting from intensive destocking by customers in the agrochemicals sector and lower capacity utilization. The EBITDA margin pre exceptionals was 9.6 per cent, against 14.5 per cent in the previous year.

In the first quarter of 2024, the Specialty Additives segment recorded sales of € 566 million, which was 14.8 per cent below the first quarter of 2023 with sales of € 664 million. EBITDA pre exceptionals fell by 51.0 per cent to € 48 million from € 98 million in the same quarter of the previous year. Lower sales prices and lower volumes due to weaker demand had a negative impact on earnings and the margin. The EBITDA margin pre exceptionals amounted to 8.5 percent, compared to 14.8 per cent in the previous year. 

The Advanced Intermediates segment generated sales of € 465 million in the first quarter of 2024. Compared to the figure of € 516 million in the same quarter of the previous year, sales fell by 9.9 per cent. EBITDA pre exceptionals amounted to € 37 million, which was 15.9 per cent down from € 44 million in the previous year. Lower purchase prices for raw materials and energy led to lower sales prices. However, the segment's volumes have developed positively. The EBITDA margin pre exceptionals was 8 per cent and therefore only slightly below the previous year's margin of 8.5 per cent.