Front Cover Feature CEO Matthias Zachert explains, “LANXESS is pursuing even greater regional and industrybased balancing to further reduce the effects of market volatilities. This includes an increased share of sales in growth markets such as Asia and North America and an expanded presence in attractive customer industries, such as electrical/ electronic or energy, LANXESS CEO Matthias Zachert says the firm is with innovative product looking at increasing its applications.” share of sales in growth The company has markets such as Asia and consolidated its business North America portfolio, especially in high value-added speciality chemicals, with the acquisition of US chemical firm Chemours’s Clean & Disinfect business in 2016. In the same year, too, LANXESS joined forces with Saudi Aramco to form Arlanxeo, a synthetic rubber company that is headquartered in the Netherlands. Meanwhile, the EUR2.4 billion merger with US-based additives supplier Chemtura in 2017, said to be the largest acquisition in LANXESS’s history, has set off the latter to becoming one of the world’s leading additives supplier. The company expects an estimated EUR25 million cost savings for 2017; and EUR100 million in annual cost savings by 2020. The acquisition is expected to add on to LANXESS’s additives footprint in the North American region where it has 24 production sites. The region also accounts for 21% of the company’s global sales, up from 17%. Chemtura’s flame retardant and lubricant additives portfolio has been integrated with LANXESS's Rhein Chemie Additives business unit to form a new segment called “Specialty Additives”. As well, its urethanes and organometallics businesses will also be integrated with LANXESS’s Advanced Industrial Intermediates and Engineering Materials business units, respectively. LANXESS is also set to acquire Belgian chemical company Solvay's US-sited phosphorus additives business to broaden its clout in the North American and Asian additives markets. The deal is expected to be completed in the first half of 2018. The above acquisitions are what Zachert refers to as a “more balanced portfolio” for LANXESS, thus making the Cologne-based company “more stable and profitable”. He also regards the acquisitions and other strategic moves as a basis to further enhancing the company’s operational strength. Right positioning, stronger sales LANXESS had forecast an uptrend and registered positive sales across all segments in 2017. The company posted positive earnings during the first three quarters, with sales up by 25% to EUR2.4 billion in Q1;
by nearly 30% to EUR2.5 billion in Q2; and up by 25% to EUR2.4 billion in Q3. Overall, net income improved by 47% to EUR78 million. As well, its main segments namely Advanced Intermediates, Performance Chemicals and High Performance Materials have demonstrated strong performance over the reported periods. More and above, the integration of Chemtura’s additives business has contributed significantly. “Chemtura businesses are already making a significant earnings contribution, and the other areas of our speciality chemicals portfolio are also developing positively,” said Zachert.
LANXESS forecast an uptrend and registered positive sales across all segments in 2017
Plus, the Synthetic Rubber business, Arlanxeo, has raked in a robust performance each quarter. Sales in Q1 rose by 48% to EUR948 million from EUR640 million a year earlier. In Q2, sales were at EUR835 million, up by 24.6% from the previous year’s EUR670 million; while in Q3, sales rose by 6% or EUR42 million to EUR717 million, against EUR675 million from a year ago. Zachert summed up the company’s performance, “In the coming years, we intend to reach our full potential and transform LANXESS into an even stronger company with a highly balanced and stable platform, increased profitability and, last but not least, a company team-culture based on dedication and motivation.” Transforming with digitalisation Smart manufacturing and digitalisation may be taking over conventional manufacturing ecosystems in the near term. Global management consulting firm McKinsey & Co, in a 2015 report, placed the potential value that can be churned out from digitalised factory settings at US$3.7 trillion by 2025. These disruptive approaches are predicted to be among important game changers this year for a number of vital industries, including chemicals. Taking this cue, LANXESS has adopted an initiative towards group-wide digitalisation, setting up a department with 30 experts, for a start, in this area. JANUARY / FEBRUARY 2018
17