In This Article:
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EBITDA Increase: Up by approximately 32% compared to Q1 2024.
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Working Capital: Increased at a lower rate than Q1 2024, driven by sales pickups and receivables.
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Net Debt: Increased due to the rise in working capital.
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Urethanes Business Divestiture: Closed earlier than anticipated, with proceeds to strengthen the balance sheet.
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Guidance: Reiterated at EUR600 million to EUR650 million, with a sequential improvement expected in Q2.
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Urethane Contribution Impact: EUR15 million reduction expected in Q2 due to the lack of urethanes.
Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Lanxess AG (LNXSF) reported a 32% increase in EBITDA compared to Q1 2024, indicating a significant improvement in profitability.
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The Consumer Protection segment saw a sharp increase in performance, driven by a recovery in agro orders.
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The divestiture of the Urethanes business was completed faster than anticipated, strengthening the company's balance sheet.
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Lanxess AG (LNXSF) has a strategic hedging plan in place, protecting against currency fluctuations and minimizing financial risk.
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The company expects a sequential improvement in Q2, with a focus on leveraging tariff advantages in the US market.
Negative Points
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Working capital increased due to seasonal sales pickups, leading to higher net debt compared to Q4.
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Macroeconomic uncertainty has increased, with clients reducing order patterns to a one-to-two-week basis due to tariff-related volatility.
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The lack of urethanes contribution will result in a EUR15 million reduction in operational EBITDA for Q2.
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Energy costs have been a burden for the Advanced Intermediates segment, impacting profitability.
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The overall industry momentum remains weak, with the chemical industry operating at around 70% utilization, indicating a challenging trading environment.
Q & A Highlights
Q: Have you considered FX impacts in your guidance, and are there any indirect impacts included? Also, how do you see competition from Chinese exports affecting your markets? A: We have a strategic hedging approach and are fully protected against currency fluctuations for 2025 and largely for 2026. Direct impacts from tariffs are included in our numbers, but indirect impacts are difficult to quantify. We see competition from Chinese exports mainly in intermediates and pigments, but less so in consumer protection due to client proximity.
Q: Can you provide insights into the demand momentum, especially the exit rate at the end of Q1? Also, what is your energy cost budget for this year? A: March 2025 was operationally better than January and February, but weaker than March 2024. The industry is still in a tough trading environment with low utilization rates. Regarding energy costs, we pass them through where they matter, and while there may be quarterly burdens, we avoid giving specific budget numbers due to volatility.