Lanxess Ag · XETR:LXS
Lanxess — Lanxess Ag Ord — Q1 2023 Earnings Presentation
26 slides from Lanxess's earnings presentation, May 10, 2023
Slide 1: LANXESS – Q1 2023 results
LANXESS – Q1 2023 results Cash flow improved in challenging environment Matthias Zachert, CEO Michael Pontzen, 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 Q1 2023 and outlook 2 Financial and business details Q1 2023 3 Appendix 3
Slide 4: We are continuously working on our weak spots: cash flow improved
We are continuously working on our weak spots: cash flow improved Sales EBITDA pre FCF1 NWC² to sales (%) 2023 priority Moving towards Almost stable Weak utilization Improved due to target of low Focus on cash despite low leads to reduced working capital generation twenties demand earnings managemen
Slide 5: Cash-in of €1.27 bn from HPM transaction, cash flow improved
Cash-in of €1.27 bn from HPM transaction, cash flow improved Q1 2023 strategic and financial highlights ▪ ~€1.27 bn payment from Advent already received ▪ Free cash flow well above prior year at €112 m ▪ Stable working capital despite seasonal increase pattern ▪ Q1 EBITDA pre of €189 m below prior y
Slide 6: LANXESS Group: Q1 EBITDA pre below prior year due to weak demand environment
LANXESS Group: Q1 EBITDA pre below prior year due to weak demand environment [€ m] Q1/2022 Q1/2023 Δ Q1 2022 Q1 2023 Δ Low volumes Sales 1,931 1,899 -2% 1,931 1,899 -2% EBITDA pre 262 189 -28% 262 1189 -28% offset positive Margin 13.6% 10.0% 13.6% 10.0% pricing CAPEX 59 59 0% 59 59 0% ▪ Sales remain
Slide 7: Free cash flow expected to recover strongly
Free cash flow expected to recover strongly NWC inflation FCF and NWC changes in € m 2015 2016 2017 2018 2019 2020 2021 2022 2023 Pro forma1 550 350 Pandemic, Ukraine war, logistical 150 constraints -50 -250 -450 FCF Changes in NWC Improved business set-up as solid base for future free cash flow FCF
Slide 8: Deleveraging milestone achieved – substantial reduction of net financial debt
Deleveraging milestone achieved – substantial reduction of net financial debt Pro forma net financial debt significantly below reported Q1 2023 in € bn ▪ €1.27 bn² cash in from formation of Envalior (Engineering Materials JV) with Advent ~1.27 ▪ Cash proceeds are being utilized for: ~0.05 ▪ Loan of
Slide 9: FY 2023 guidance: EBITDA pre expected ~€850-950 m
FY 2023 guidance: EBITDA pre expected ~€850-950 m Our view on economic environment ▪ Weak environment expected for H1 2023 ▪ Positive impetus from China expected in H2 2023 ▪ Global economy expected to pick up in H2 2023 ▪ Force Majeure on supply of Chlorine continues LANXESS outlook ▪ FY guidance:
Slide 10: Agenda
Agenda 1 Review Q1 2023 and outlook 2 Financial and business details Q1 2023 3 Appendix 10
Slide 11: Consumer Protection: Portfolio and pricing drive earnings
§ Consumer Protection: Portfolio and pricing drive earnings [€ m] Q1/2022 Q1/2023 Δ Q1 2022 Q1 2023 Δ Sales 506 647 28% 613 516 -16% Volumes held back EBITDA pre 86 94 9% 87 § 44 -49% by Force Majeure Margin 17.0% 14.5% 14.2% 8.5% CAPEX 23 17 -26% 18 16 -11% ▪ Positive contribution of acquired IFF M
Slide 12: Specialty Additives: Earnings below very strong previous year
Specialty Additives: Earnings below very strong previous year [€ m] Q1/2022 Q1/2023 Δ Q1 2022 Q1 2023 Δ Weak construction Sales 730 664 -9% 730 664 -9% EBITDA pre 136 98 -28% 136 98 -28% market hits tough Margin 18.6% 14.8% 18.6% 14.8% comparable base CAPEX 13 23 77% 13 23 77% ▪ Sales decline as con
Slide 13: Advanced Intermediates: Earnings suffered from low demand and utilization
Advanced Intermediates: Earnings suffered from low demand and utilization [€ m] Q1/2022 Q1/2023 Δ Q1 2022 Q1 2023 Δ Volume Sales 613 516 -16% 506 647 28% significantly EBITDA pre 87 44 -49% 86 94 9% impacted by Margin 14.2% 8.5% 17.0% 14.5% weak demand CAPEX 18 16 -11% 23 17 -26% ▪ Sales decline as
Slide 14: P&L Q1: Earnings below prior year as expected in a challenging demand environment
P&L Q1: Earnings below prior year as expected in a challenging demand environment [€ m] Q1/2022 Q1/2023 yoy in % ▪ Sales almost stable, lower volumes balanced by pricing and Sales 1,931 (100%) 1,899 (100%) -2% portfolio Cost of sales -1,459 (-76%) -1,463 (-77%) 0% ▪ Rising selling expenses result Se
Slide 15: Q1 2023: Consumer Protection mitigates sales decline in Specialty Additives and Advanced Intermediates
Q1 2023: Consumer Protection mitigates sales decline in Specialty Additives and Advanced Intermediates Sales [€ m] EBITDA pre [€ m] Consumer Specialty -2% Protection Additives -28% 262 1,931* 1,899* CP 86 +9% CP 506 +28% 189 647 94 SA 730 -9% SA 136 -28% 664 Advanced Intermediates 98 AI 613 -16% 516
Slide 16: Q1 2023: Americas development supported by FX and portfolio effect
Q1 2023: Americas development supported by FX and portfolio effect Q1 2023 sales by region [%] Regional development of sales [€ m] Operational 1,931 1,899 development* Asia/ Americas Pacific Asia/Pacific 408 -12% 358 -17% 19 33 Americas 574 +10% 630 -5% 17 EMEA -7% (excl. Germany) 608 -4% 583 German
Slide 17: First improvement: Free cash flow well above prior year's level
First improvement: Free cash flow well above prior year’s level ▪ Profit before tax decreased due to [€ m]* Q1/2022 Q1/2023 Δ weak operational start to the year Profit before tax 91 13 -78 Depreciation & amortization ▪ Income taxes in 2022 include 125 137 12 reimbursements Income taxes 38 -10 -48 ▪
Slide 18: Net financial debt to decrease significantly after closing of HPM JV
Net financial debt to decrease significantly after closing of HPM JV ▪ Higher total assets mainly due to [€ m] 31.12.2022 31.03.2023 proceeds from HPM transaction and corresponding other current financial Total assets 11,281 12,492 liability of same amount until closing Equity 4,427 4,283 (April 1)
Slide 19: Exceptional items (on EBIT) below previous year level
Exceptional items (on EBIT) below previous year level [€ m] Q1/2022 Q1/2023 Thereof Thereof Excep. Excep. Comments D&A D&A Strategic Realignment & 2022: incl.Emerald Kalama Chem. (EKC) integration -1 0 -1 0 Restructuring 2023: incl. IFF MC integration M&A, Digitalization (incl. 2022: incl. IFF MC ac
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 March 2023 ▪ Diversified financing sources [€ m] ▪ ▪ Average interest rate of financial 1500 Bond Bond Bond Bond Bond liabilities ~1.5% 1000 2025 2026 2027 2028 2029 Bank loa
Slide 21: Agenda
Agenda 1 Review Q1 2023 and outlook 2 Financial and business details Q1 2023 3 Appendix 21
Slide 22: Housekeeping items 2023
Housekeeping items 2023 Capex 2023 ~€400 m Operational D&A ~€550 m (thereof ~€150 m of intangible amortization effects) All other segments 2023 ~€170 m Underlying tax rate ~27% Exceptionals 2023 ~€80 m based on current initiatives FX sensitivity One cent change of USD/EUR resulting in ~€7 m EBITDA p
Slide 23: Value of ~40% equity stake in Envalior should also be considered in valuation of LANXESS
Value of ~40% equity stake in Envalior should also be considered in valuation of LANXESS Balance sheet at closing of transaction Valuation of equity stake ▪ Value of ~40% equity stake in JV initially to be €1.2 bn €1.27* bn cash proceeds ▪ Value will fluctuate as business goes through normal cyclica
Slide 24: Contact details Investor Relations
Contact details Investor Relations Oliver Stratmann Eva Frerker Anja K. Siehler Markus Sieben Mirjam Reetz Head of Treasury & Investor Head of Investor Relations Institutional Investors / Analysts Institutional Investors / Analysts ESG & Retail Investors Relations Tel.: +49 221 8885 5249 Tel.: +49 2
Slide 25: 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 26: Upcoming events 2023 - Proactive capital market communication
Upcoming events 2023 - Proactive capital market communication May Apr Jun Aug 10 Q1 2023 Results 7 Exane CEO Conference Paris 4 Q2 2023 Reporting 11 CFO Frankfurt Roadshow 20 DB German Corporate Conference 16 CFO New York Roadshow Frankfurt 17 CEO London Roadshow 22 Morgan Stanley Cannon Ball Run 24