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UPDATE 1-Germany's Lanxess targets 100 mln euros of cost cuts
September 17, 2013 / 8:21 PM / in 4 years

UPDATE 1-Germany's Lanxess targets 100 mln euros of cost cuts

* To cut about 1,000 jobs through severance packages

* Confirms 2013 outlook for 700-800 mln eur in adj EBITDA

* Aims to diversify business in longer term

FRANKFURT, Sept 17 (Reuters) - Germany’s Lanxess, the world’s largest maker of synthetic rubber for tyres, said late on Tuesday it aimed to cut costs by 100 million euros ($133 million) per year from 2015 to counter weak demand from the automotive industry.

As part of a restructuring programme, the group plans to cut about 1,000 jobs and divest non-core assets accounting for about 500 million euros in annual sales, it said in a statement.

“It is foremost the synthetic rubber activities that are experiencing a temporary weakness in demand, increased competition in the market and volatile raw materials prices,” it said.

Lanxess warned last month of a bigger-than-expected drop in 2013 earnings as car markets showed no sign of recovery and growth in China slowed.

It said the planned job cuts would result from a voluntary redundancy programme, which includes early retirement packages and severance pay.

It expects to book a total of about 150 million euros in one-off charges over this year and next due to the restructuring programme.

In the medium to long term, the maker of chemicals for drugs, insecticides and for the treatment of leather also aims to buy businesses to diversify away from its main rubber activities, it said.

Lanxess, which competes with Exxon Mobil in synthetic rubber for tyres, tubes and window seals, derives more than 40 percent of sales from the automotive sector.

It confirmed its outlook for 2013 earnings before interest, taxes, depreciation and amortisation (EBITDA), adjusted for one-offs and potential inventory devaluations, of 700-800 million euros.

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