Cologne – In fiscal 2016, specialty chemicals company LANXESS successfully advanced its transformation, underscoring this with strong performance data. EBITDA pre exceptionals increased by 12.4 percent to EUR 995 million, compared with EUR 885 million a year earlier. The main drivers of this positive development were higher volumes in all segments, the associated increase in capacity utilization and cost savings resulting from the improved competitiveness of plants and processes. The EBITDA pre exceptionals was therefore at the upper end of the recent guidance range of EUR 960 million to EUR 1 billion. The Group’s EBITDA margin pre exceptionals improved from 11.2 percent to 12.9 percent. Net income also increased by a substantial 16.4 percent to EUR 192 million from EUR 165 million. Sales declined slightly, from EUR 7.9 billion in 2015 to EUR 7.7 billion, primarily due to the adjustment in selling prices to reflect lower raw material costs.
Also in 2016, the company made a number of important strategic decisions and realigned its portfolio. ARLANXEO, a joint venture with Saudi Aramco for the synthetic rubber business, started operating on April 1. At the end of August, LANXESS closed the acquisition of the Clean & Disinfect business of U.S. chemical company Chemours. In September, LANXESS announced the acquisition of U.S. specialty chemicals company Chemtura, a leading supplier of flame retardant and lubricant additives. Both acquisitions strengthen LANXESS’s position in high-margin specialty chemicals markets.
“LANXESS is back on track for success. We have achieved key milestones in our reorganization to make LANXESS a more stable and profitable enterprise and we have progressed a good way on our course of growth. This is reflected in our very positive business data for 2016,” said Matthias Zachert, Chairman of the Board of Management of LANXESS AG. “We aim to continue on this growth path, above all through the planned acquisition of Chemtura, and to further increase our operational strength.”
Substantially improved balance sheet
At the end of the past fiscal year, net financial liabilities fell very substantially from EUR 1.2 billion to EUR 269 million. This was mainly due to the proceeds from the joint venture with Saudi Aramco. In 2016, capital expenditures amounted to EUR 439 million, which was more or less level with the prior-year figure of EUR 434 million. The company is planning capital expenditures of some EUR 450 million to EUR 500 million for 2017.
“We again significantly strengthened our balance sheet in 2016 and are continuing along this path of financial stability. We secured the financing for the planned acquisition of Chemtura quickly and at attractive conditions, while at the same time maintaining our investment-grade rating,” explained Michael Pontzen, Chief Financial Officer of LANXESS AG.
The financing for the planned acquisition of Chemtura, which has an enterprise value of approximately EUR 2.4 billion, is provided mainly by two corporate bonds, a hybrid bond and existing liquidity. Already in 2016, LANXESS was able to place all three bonds – each with a volume of EUR 500 million.
Planned acquisition of Chemtura on schedule
The planned acquisition of Chemtura is a crucial step on LANXESS’s growth path and continues to progress on schedule. At the start of March, the authorities in South Korea approved the acquisition as antitrust authorities in the United States and Brazil did before. In early February 2017, Chemtura’s shareholders had voted by a large majority in favor of the planned merger. LANXESS expects to receive all remaining regulatory clearances and to close the transaction by mid-2017.
Higher dividend proposed for 2016
The company’s good business performance in 2016 should be reflected in a higher dividend again. The Board of Management and the Supervisory Board will be proposing to the Annual Stockholders’ Meeting on May 26, 2017, a dividend increase of 17 percent compared with the prior year to EUR 0.70. This would result in a total dividend payout of around EUR 64 million.