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Lanxess sees 2020 core profit at lower end of forecast,…

By Milla Nissi

Aug 13 – German specialty chemicals maker Lanxess said on Thursday its full-year core profit was likely to come at the lower end of its outlook, predicting some headwinds in the third quarter and improvement only later in the year.

Chief Executive Matthias Zachert said raw material prices, which were expected to stop falling, planned maintenance shutdowns and possible negative currency effects, could all weigh on the group’s core profit in the current quarter.

“We’re not going to be back to happy times,” Zachert said when asked about the third quarter, but added he saw the relative decline compared to the previous year softening in the fourth.

Lanxess’ shares were down 4.2% at 1310 GMT, among worst performers on the German mid-cap index.

The group’s second-quarter earnings before interest, tax, depreciation and amortization before exceptional items (EBITDA) fell by a fifth to 224 million euros, still ahead of a consensus estimate of 217 million euros, and it reiterated its full-year forecast of between 800 million and 900 million euros.

The Cologne-based company also said it had agreed to sell its organic leather chemicals business in a deal worth up to 195 million euros ($230 million) in its push to reduce its reliance on the auto industry.

Zachert said that with the sale, Lanxess was becoming “somewhat more independent from the automotive industry, a key target industry for leather products.”

Lanxess said weak demand from the auto sector, which makes up 20% of its sales, weighed on its results and Zachert said he expected it to take a few more years to reach “acceptable” levels again.

The deal, expected to close around mid-2021, will mark Lanxess’s complete withdrawal from leather chemicals business after it sold off its chrome leather chemicals segment last year. ($1 = 0.8472 euros) (Reporting by Milla Nissi in Gdansk Additional reporting by Anna Rzhevkina Editing by Tomasz Janowski and David Evans)

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