By Linda Pasquini and Antonis Pothitos
(Reuters) – Chemicals group Lanxess set out plans to cut costs on Friday and called on German politicians to support the struggling industry after its quarterly profit more than halved.
Lanxess, which until recently had managed to pass rising raw material and power costs onto customers, was one of several German chemical firms that have trimmed their forecasts in the past weeks due to still high energy prices and weak demand.
“We urgently need sustainable framework conditions – above all an internationally competitive electricity tariff for the industry,” CEO Matthias Zachert said in a statement.
Shares in Lanxess opened 4.5% lower in Frankfurt.
Lanxess, which makes high-end speciality chemicals such as additives, lubricants, flame retardants and plastics, said it would save 100 million euros ($110 million) this year through strict cost discipline and a Europe-wide hiring freeze.
Further measures focusing on energy-intensive operations and administrative structures would result in annual savings of around 150 million from 2025, Lanxess said. It expected one-off costs of around 100 million from implementing these measures.
The Cologne-based group plans to shut down the hexane oxidation facility at its Krefeld-Uerdingen site in Germany by 2026. The chromium oxide production facility at the same location would be sold or shut down.
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Lanxess also aims to further refine its business model to realize the full potential of recent acquisitions.
“But that is not enough. Politicians need to finally wake up,” said Zachert, calling for reduced bureaucracy and faster approval procedures to make Germany more competitive.
The group’s second quarter core earnings (EBITDA) pre-exceptionals fell 57.7% to 107 million euros, in line with its forecast from June.
In a separate statement, Lanxess said its finance chief Michael Pontzen would leave by the end of August.
($1 = 0.9132 euros)
(Reporting by Linda Pasquini and Antonis Pothitos in Gdansk; Editing by Milla Nissi and Alexander Smith)
