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
euros.
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.