‘Wake up’, Zachert tells German politicians
“Politicians need to finally wake up,” said Lanxess board chariman Matthias Zachert. “In the current phase of economic weakness, the location Germany is not competitive internationally. We urgently need sustainable framework conditions – above all an internationally competitive electricity tariff for the industry, the reduction of excessive bureaucracy and faster approval procedures.”
Zachert was speaking during the company’s Q2 results presentation, during which it also announced the ‘Forward!’ plan to counteract the current phase of weak economic development. The plan seeks to stabilise earnings in the short term, lower costs in the long term and refine structures and processes.
In the first stage, Lanxess has imposed a Europe-wide hiring freeze and reduced investments. This will lead to one-time savings of €100 million, half of which from cost reductions and half from lower investments.
In the longer term the company will seek to reduce costs by €150 million/year from 2025, with the focus on energy-intensive operations. The hexane oxidation facility at Krefeld-Uerdingen site will be shut down by 2026, while the chromium oxide facility will be sold if possible, or failing that, shut down as well. In the third phase, Lanxess will continue to reorient its portfolio toward speciality chemicals and further expand its range of sustainable products.
“The chemical industry and Lanxess are in a difficult situation right now,” Zachert said. There is currently no sign of a recovery in demand anticipated for the second half of the year. When the economy picks up again, we want to get back on track quickly” Zachert said. However this alone will not be enough and more government action is needed.
Q2 sales were 11.1% down year-on-year to €1778 million, due mainly to weak demand in many customer industries, ongoing inventory reduction among customers, and lower selling prices. EBITDA before exceptionals decreased by 57.7% to €107 million. Only the Consumer Protection segment achieved growth in sales.