Lanxess, the chemicals and polymers unit spun out of Germany’s Bayer at the

beginning of the year [[11/01/05f]], has reported an 11% increase in

second-quarter sales to 1.86 billion euros and a 42% rise in earnings before

interest, tax, depreciation and amortisation and special items to163 million


The results were better than analysts expected but the firm’s latest

restructuring plans caught the eye the most. Lanxess announced a second

cost-cutting package designed to achieve annual savings of 60 million euros

from 2008, while some 450 jobs will be cut, resulting in total one-time

charges of 100 million euros. This is on top of previously-announced

proposals to cut over 950 posts and save another 100 million euros a year.

Lanxess chairman Axel Heitmann said the restructuring measures already

initiated “and the consistent pursuit of our price-before-volume strategy

have had a positive effect on earnings, however, we continue to suffer from

structural disadvantages.” He added that the realignment of the group “will

therefore remain our top priority so that we can catch up with the

competition in terms of earnings.”

His words failed to convince James Knight at Merrill Lynch who is sceptical

as to whether Lanxess can deliver radically improved margins. The analyst

said that the new restructuring plans are only “small scale” and put a

‘sell’ rating on the stock.