Specialty chemicals company Lanxess intends to accelerate measures for profitable growth. The company plans to further improve its stability and profitability over the next years and has set new medium-term financial targets. From 2021, the operating margin – measured in terms of EBITDA pre exceptionals – is expected to be between 14 and 18 percent. In fiscal 2016 the margin was at 12.9 per cent. In terms of volume, the company intends to consistently grow above global gross domestic product.
“Lanxess is back on solid footing and has embarked on a profitable growth path. In the coming years, we intend to reach our full potential and transform Lanxess into an even stronger company with a highly balanced and stable platform, increased profitability and, last but not least, a company team-culture based on dedication and motivation,” says Matthias Zachert, CEO, Lanxess.
To achieve these targets, Lanxess plans organic investments – around EUR 400 million between 2016 and 2020 – involve projects that generate an average return on capital employed (ROCE) of 20 per cent on average. In comparison, Group ROCE was 6.9 percent for fiscal 2016. In addition, Lanxess is pursuing even greater regional and industry-based balancing to further reduce the effects of market volatilities. This includes an increased share of sales in growth markets such as Asia and North America and an expanded presence in attractive customer industries such as electrical/electronics or energy with innovative product applications.
“The company expects about EUR 100 million in annual cost savings by 2020. Cost savings for fiscal 2017 are already expected to amount to approx. EUR 25 million. An estimated EUR 140 million in associated one-time costs will be incurred for this. Altogether some 40 projects have been initiated to standardise administration in North America. A further 20 per cent of the synergies are expected to come from streamlining global marketing and sales structures,” a statement from the company said.
The company is promoting its growth with a group-wide digitalisation initiative and has established a department with an initial 30 experts in this area, it further said.