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German chemicals group Lanxess sees M&A-driven growth in 2021

Mar 11, 2021

By Milla Nissi

(Reuters) – German speciality chemicals maker Lanxess aims for further growth in its consumer protection business during 2021, it said on Thursday, as it forecast a rise in its full-year core profit.

The Cologne-based group, which began the year with three acquisitions including a $1.1 billion deal to buy U.S.-based rival Emerald Kalama Chemical, said it would continue its portfolio restructuring to tap high-margin markets, such as food industry and animal hygiene.

“We want to grow in this area and have got down to it right from the very start of the year,” Chief Executive Matthias Zachert said in a statement.

The consumer protection segment, which also produces ingredients used in surface disinfectants, hand sanitisers and soaps, generated about a fifth of the group’s revenues in 2020.

Lanxess, which competes with Germany’s BASF and Dutch-based Akzo Nobel, has shown resilience through the pandemic as strong demand for disinfectant ingredients helped offset a slump in the auto industry, which makes up about 20% of its sales.

The group expects to see a recovery in its end markets from the COVID-19 crisis during the year.

It estimated full-year adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) in the range of 900 million euros to 1 billion euros ($1.1 billion to $1.2 billion), compared with 862 million euros in 2020.

For the first three months of the year, the group sees adjusted EBITDA between 200 million euros and 250 million euros, but flagged a 10 million euro impact from U.S. plant shutdowns and a further hit from the weak dollar.

The company said in January that a rebound in demand for engineering plastics and resins from carmakers late last year had boosted its fourth-quarter adjusted earnings, helping it beat market expectations.

(Reporting by Milla Nissi in Gdansk; Additional reporting by Linda Pasquini; Editing by Aditya Soni and Edmund Blair)