LANXESS Posts Record Earnings for 2017
Company’s sales were up 25.5% to EUR 9.66 billion in the fiscal year 2017, with a strong volume increase in all segments, as per company statement.
The specialty chemicals company LANXESS has ended fiscal year 2017 with record earnings. LANXESS has also made a good start to the new year according to its latest official statement.
EBITDA pre exceptionals rose by 29.6% in fiscal year 2017 to EUR 1.29 billion, the highest result in the company’s history. In the previous year, EBITDA pre exceptionals amounted to EUR 995 million. The operating result was therefore at the top end of the forecast range of EUR 1.25 billion to EUR 1.3 billion.
The main drivers of the strong rise in earnings were higher volumes in all segments as well as the strong contribution of the Chemtura businesses acquired in the previous year. The EBITDA margin pre exceptionals increased from 12.9% to 13.3%, moving another step closer to the mid-term margin target. From 2021, the average margin is expected to be between 14% and 18%. Group revenue also rose substantially by 25.5% to EUR 9.66 billion in the last fiscal year compared with EUR 7.7 billion the year before.
Net income totaled EUR 87 million, after EUR 192 million in the previous year. This decline was due to significant one-time exceptional expenses, particularly for the integration of the Chemtura businesses and consolidation of production networks and value chains as well as a one-time charge arising from the U.S. tax reform. Adjusted for these exceptional items as well as amortization of intangible assets, net income was up by 53.9% from EUR 246 million to EUR 379 million.
The reported key financial ratios are in line with current market expectations.
Higher Dividend Proposed for 2017
The strong business performance in 2017 should be reflected in a further increased dividend. The Board of Management and Supervisory Board will therefore propose a 14% higher dividend of EUR 0.80 per share to the Annual Stockholders’ Meeting on May 15, 2018. This would correspond to a total dividend payout of around EUR 73.2 million.
German Sites Strengthened, Growth Regions Expanded
Along with its acquisitions, LANXESS also accelerated its organic growth in 2017. The group invested around EUR 550 million in its global plant network, including around EUR 235 million in the German sites. LANXESS continued to expand its presence and its sales in the growth regions of North America and Asia. North America increased its share of global sales from 17% to 19%, while that of Asia-Pacific rose from 26% to 28%. This means that the group now generates almost half its sales in these two market regions.
Sales and Earnings Up in Performance Chemicals
LANXESS’ Liquid Purification Technologies business unit belongs to the Performance Chemicals segment. Sales in this segment rose by 10.5% from EUR 1.30 billion to EUR 1.44 billion. EBITDA pre exceptionals amounted to EUR 252 million, up 13.0% on the prior-year level of EUR 223 million. The improvement in earnings was mainly attributable to the strong volume growth. The Clean and Disinfect business that LANXESS acquired from Chemours in 2016 also made a substantial contribution to earnings. Accordingly, the EBITDA margin pre exceptionals rose to 17.5% from 17.1% in the previous year.
Outlook for 2018
For 2018, there will be an accounting change at LANXESS: The rubber joint venture ARLANXEO will be reported as a discontinued operation from the second quarter of 2018. In the other four segments combined under the name “New LANXESS” – Advanced Intermediates, Specialty Additives, Performance Chemicals and Engineering Materials – the group is expecting a slight overall rise in EBITDA pre exceptionals. Excluding ARLANXEO, this key ratio was EUR 925 million in 2017.
“We achieved a lot strategically and operationally in the last fiscal year, laying firm foundations for the future. With Chemtura, we successfully completed our biggest acquisition to date, and also significantly improved the quality of our portfolio even more. In this set-up, we achieved the best earnings in LANXESS’s history so far while further enhancing the Group’s profitability.”
– Matthias Zachert, Chairman, LANXESS Board of Management
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