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UPDATE 1-Lanxess Q4 core profit up as business restructure pays off
March 15, 2017 / 4:28 PM / 9 months ago

UPDATE 1-Lanxess Q4 core profit up as business restructure pays off

* Reduced reliance on rubber business pays off

* CEO says “we will change this company further”

* Q4 EBITDA comes in just ahead of consensus (Releads, adds CEO comment, details on business performance, shares)

By Ludwig Burger

FRANKFURT, March 15 (Reuters) - Quarterly earnings at Lanxess rose faster than expected on strong sales of specialty chemicals and engineering plastics, vindicating its decision to reduce its reliance on its synthetic rubber business.

It has branched out with the purchase of Chemours’ hygiene product ingredients business and an agreement to buy Chemtura, a U.S. maker of additives for lubricants and flame retardants.

The German group last year concluded the sale of 50 percent of its struggling synthetic rubber business to Saudi Aramco to reduce its exposure to harsh competition in the sector.

Chief Executive Matthias Zachert vowed in an analysts call the transformation would continue: “We will change this company further, we will not stop in 2017.”

He was speaking after the company said adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for the fourth quarter rose 21 percent to 183 million euros ($195 million), beating average analyst expectations for 178 million in a Reuters poll.

Margins and earnings were on the rise in engineering plastics and at its Performance Chemicals unit, a maker of leather-tanning and water treatment chemicals as well as colour pigments for roofing tiles.

The rubber joint venture, however, saw margins and profit decline, with EPDM rubber - used in windscreen wipers, brake hoses and transmission belts - suffering in particular from strong competition.

Lanxess also said adjusted EBITDA would increase slightly this year, not yet taking into account the planned takeover of Chemtura, which it plans to wrap up by mid-2017.

Zachert said the company would for now manage to pass along higher petrochemical raw material costs to customers.

The shares advanced 3.4 percent to 65.47 euros, outperforming the STOXX Europe 600 Chemicals index’s 0.3 percent gain.

$1 = 0.9406 euros Reporting by Ludwig Burger; Editing by Maria Sheahan and Keith Weir

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