Lanxess Ag · XETR:LXS
Lanxess — Lanxess Ag Ord — Q3 2023 Earnings Presentation
29 slides from Lanxess's earnings presentation, Nov 8, 2023
Slide 1: LANXESS – Q3 2023 results
LANXESS – Q3 2023 results Focus on generating cash and net debt reduction Matthias Zachert, CEO Oliver Stratmann, CFO
Slide 2: Safe harbor statement
Safe harbor statement The information included in this presentation is being provided for informational purposes only and does not constitute an offer to sell, or a solicitation of an offer to purchase, securities of LANXESS AG. No public market exists for the securities of LANXESS AG in the United
Slide 3: Agenda
Agenda 1 Review Q3 2023 and outlook 2 Financial and business details Q3 2023 3 Appendix 3
Slide 4: Quarter of strong cash generation despite continued low demand
Quarter of strong cash generation despite continued low demand Q3 2023 strategic and financial highlights ▪ Q3 EBITDA pre of €119 m slightly ahead of Q2 2023 ▪ Earnings and margin remain burdened by weak demand and resulting low sales volumes; utilization remains on historically low levels ▪ Clear f
Slide 5: FORWARD! on track, additional measures in execution
FORWARD! on track, additional measures in execution Structural measures initiated Additional measures Total Savings ➢ Divestment process of BU Urethane Systems started ~ €150 m ➢ Management recommends to 2024 2025 reduce dividend to €0.10 per Savings ~€90 m ~€60 m share Cash-outs ~€50 m ~€30 m FTEs
Slide 6: LANXESS Group: Balancing EBITDA pre generation and cash flow focus
LANXESS Group: Balancing EBITDA pre generation and cash flow focus [€ m] Q3/2022 Q3/2023 Δ 9M 2022 9M 2023 Δ Sharp earnings Sales 2,185 1,601 -27% 6,115 5,278 -14% EBITDA pre 240 119 -50% 755 415 -45% decline on weak Margin 11.0% 7.4% 12.3% 7.9% demand CAPEX 98 68 -31% 249 194 -22% ▪ Sales decrease
Slide 7: Comparably stable performance in Consumer Protection
Comparably stable performance in Consumer Protection Consumer Protection Specialty Additives Advanced Intermediates gdfg ▪▪ Earnings comparably Comparable less stable earnings ▪▪ Comparing Comparisontotostrong prior prior very strong year; all ▪▪ Substantial volume decline Substantial volume decline
Slide 8: Net financial debt reduction due to working capital improvement
Net financial debt reduction due to working capital improvement Successful net financial debt reduction Net working capital in €m ▪ Q3 2023 with strong cash ~25%* ~25%* Net working capital relief generation ~24%* Q3: €260 m ~ 20% price ▪ Lower net working capital as ~22%* 9M: €403 m ~ 80% volume lev
Slide 9: FY 2023 guidance: EBITDA pre expected ~€500-550 m
FY 2023 guidance: EBITDA pre expected ~€500-550 m Our view on economic environment ▪ Underlying demand in Q4 2023 even lower than estimated LANXESS outlook ▪ FY guidance: EBITDA pre expected ~€500-550 m ▪ Force Majeure on supply of Chlorine for BU Flavors & Fragrances until end of November; Q4 addit
Slide 10: Agenda
Agenda 1 Review Q3 2023 and outlook 2 Financial and business details Q3 2023 3 Appendix 10
Slide 11: Consumer Protection: Comparably less impacted
§ Consumer Protection: Comparably less impacted [€ m] Q3/2022 Q3/2023 Δ 9M 2022 9M 2023 Δ Sales 662 581 -12% 1,726 1,832 6% Weak demand EBITDA pre 110 84 -24% 286 260 -9% environment Margin 16.6% 14.5% 16.6% 14.2% Capex 27 17 -37% 86 53 -38% ▪ Sales decrease driven by lower demand and destocking, re
Slide 12: Specialty Additives: Ongoing inventory management and weak demand burden results
Specialty Additives: Ongoing inventory management and weak demand burden results [€ m] Q3/2022 Q3/2023 Δ 9M 2022 9M 2023 Δ Sales 792 549 -31% 2,286 1,833 -20% Weakness in EBITDA pre 121 33 -73% 391 168 -57% Construction and Margin 15.3% 6.0% 17.1% 9.2% E&E continues Capex 34 29 -15% 71 77 8% ▪ Sales
Slide 13: Advanced Intermediates: Weak demand
Advanced Intermediates: Weak demand [€ m] Q3/2022 Q3/2023 Δ 9M 2022 9M 2023 Δ Sales 642 403 -37% 1,842 1,403 -24% Utilization remains EBITDA pre 65 30 -54% 226 97 -57% on historically low Margin 10.1% 7.4% 12.3% 6.9% levels Capex 23 18 -22% 60 51 -15% ▪ Sales decrease driven by volume and price decl
Slide 14: Earnings remain well below prior year in a challenging demand environment
Earnings remain well below prior year in a challenging demand environment P&L [€ m] Q3/2022 Q3/2023 yoy in % ▪ Sales below prior year; lower prices and volumes, FX with Sales 2,185 (100%) 1,601 (100%) -27% additional negative impact Cost of sales -1,658 (-76%) -1,312 (-82%) -21% ▪ COGS reflect decli
Slide 15: Effective working capital measures lead to strong free cash flow in Q3 2023
Effective working capital measures lead to strong free cash flow in Q3 2023 Cash flow [€ m]* Q3/2022 Q3/2023 Δ ▪ Lower profit before tax due to Profit before tax weak operational and at equity result 120 -142 -262 Income from investments accounted ▪ However, significantly positive for using the equi
Slide 16: Reduction of net financial debt on track, already reduced by one third
Reduction of net financial debt on track, already reduced by one third Balance sheet [€ m] 31.12.2022 30.09.2023 ▪ Lower total assets mainly due to debt reduction following closing of the Total assets 11,287 10,576 Envalior transaction Equity 4,427 5,630 ▪ Higher equity reflects gain from sale of BU
Slide 17: Q3 2023: Sales and EBITDA pre in all segments down
Q3 2023: Sales and EBITDA pre in all segments down Sales [€ m] EBITDA pre [€ m] Consumer Specialty -27% Protection Additives -50% 2,185* LPT SGO RCH LAB 240 662 CP 1,601* CP -12% MPP 110 F&F PLA 581 -24% 119 792 SA SA -31% Advanced 121 549 Intermediates 84 -73% IPG AI 642 -37% AI 33 403 AII 65 -54%
Slide 18: Q3 2023: Weak development in all regions
Q3 2023: Weak development in all regions Q3 2023 sales by region [%] Regional development of sales [€ m] 2,185 Operational development* Asia/ 448 Americas Pacific Asia/Pacific -32% -26% 1,601 19 306 761 -21% -15% 37 Americas 16 600 EMEA -28% (excl. Germany) 621 -29% Germany 443 28 EMEA (excl. German
Slide 19: 9M 2023 exceptional items (on EBIT) above previous year level
9M 2023 exceptional items (on EBIT) above previous year level [€ m] Q3/2022 Q3/2023 9M 2022 9M 2023 Thereof Thereof Thereof Thereof Excep. Excep. Excep. Excep. Comments D&A D&A D&A D&A Strategic Realignment & 2022: incl.Emerald Kalama Chem. (EKC) integration -13 0 -15 -5 -14 0 -19 -5 Restructuring 2
Slide 20: LANXESS maturity profile actively managed and well balanced
LANXESS maturity profile actively managed and well balanced Long-term financing secured Liquidity and maturity profile as per September 2023 ▪ Diversified financing sources [€ m] ▪ ▪ Average interest rate of financial 1500 Bond Bond Bond Bond Bond liabilities ~1.0% 1000 2025 2026 2027 2028 2029 1.12
Slide 21: Agenda
Agenda 1 Review Q3 2023 and outlook 2 Financial and business details Q3 2023 3 Appendix 21
Slide 22: Housekeeping items 2023
Housekeeping items 2023 Capex ~€350 m (prev. ~€400 m) Operational D&A ~€550 m (thereof ~€150 m of intangible amortization effects) All other segments ~€150 m (prev. ~€170 m) Underlying tax rate ~27% distorted due to Envalior result Exceptionals ~€80 m based on current initiatives + ~€100 m in relati
Slide 23: 9M 2023: Sales and earnings still burdened by low demand
9M 2023: Sales and earnings still burdened by low demand P&L [€ m]* 9M/2022 9M/2023 yoy in % ▪ Decline in sales due to low demand and customer Sales 6,115 (100%) 5,278 (100%) -14% destocking, mitigated by portfolio Cost of sales -4,632 (-76%) -4,242 (-80%) -8% ▪ Lower selling costs due to weak Selli
Slide 24: 9M 2023: Significantly improved free cash flow due to effective working capital management and lower capex
9M 2023: Significantly improved free cash flow due to effective working capital management and lower capex Cash Flow [€ m]* 9M/2022 9M/2023 Δ ▪ Lower profit before tax due to weak operational and at equity Profit before tax 278 -286 -564 result Income from investments accounted ▪ Non-cash at equity
Slide 25: 9M 2023: Consumer Protection reports increased sales; EBITDA pre decreased in all segments
9M 2023: Consumer Protection reports increased sales; EBITDA pre decreased in all segments Sales [€ m] Consumer Specialty EBITDA pre [€ m] -14% Protection Additives -45% LPT 6,115* RCH LAB 755 SGO 5,278* MPP CP CP 1,726 +6% 286 PLA 1,832 F&F -9% 415 SA 2,286 -20% SA Advanced 391 1,833 260 Intermedia
Slide 26: 9M 2023: Americas with comparably lowest decrease
9M 2023: Americas with comparably lowest decrease 9M 2023 sales by region [%] Regional development of sales [€ m] 6,115 Operational 5,278 development* Asia/ 1,288 Americas Asia/Pacific -22% Pacific -22% 999 19 34 1,998 Americas -8% -13% 1,837 17 -13% -15% EMEA 1,801 (excl. Germany) 1,563 Germany 30
Slide 27: Contact details Investor Relations
Contact details Investor Relations Ulrike Rockel Eva Frerker Markus Sieben Mirjam Reetz Doreen Pickartz Head of Treasury & Investor Head of Investor Relations Institutional Investors / Analysts ESG & Retail Investors Investor Relations Assistant Relations Tel.: +49 221 8885 5249 Tel.: +49 221 8885 7
Slide 28: Abbreviations
Abbreviations § Consumer Protection Specialty Additives MPP Material Protection Products PLA Polymer Additives F&F Flavors & Fragrances LAB Lubricant Additives Business SGO Saltigo RCH Rhein Chemie LPT Liquid Purification Technologies Advanced Intermediates AII Advanced Industrial Intermediates IPG
Slide 29: Upcoming events 2023/2024 - Proactive capital market communication
Upcoming events 2023/ 2024 - Proactive capital market communication Nov Apr Dec Jan 08 Q3 2023 Results 04 Analyst Roundtable, 09 Commerzbank & ODDO BHF London German Investment Seminar, New York 15 MS Global Chemicals Conference, 05 Berenberg European Conference, Boston Pennyhill 11 ODDO BHF Forum,