# Germany’s Lanxess calls on government to help chemicals industry Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-08-04 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Lanxess Urges Government Support for Ailing Chemical Meta Description: Lanxess seeks government support to tackle cost-cutting struggles in the chemicals sector. Call for competitive electricity tariffs and reduced bureaucracy. URL: https://financedigest.com/germanys-lanxess-calls-on-government-to-help-chemicals-industryhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-08-04t071425z1lynxmpej73085rtroptp4lanxess-results-1736813696242-compressed.jpg) 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](https://www.financedigest.com/eu-electric-vehicles-risk-4-3-billion-euro-post-brexit-tariff-cost-auto-body.html "EU electric vehicles risk 4.3 billion euro post-Brexit tariff cost – auto body") for the industry,” CEO Matthias Zachert said in a statement. [Shares in Lanxess opened 4.5% lower](https://www.financedigest.com/sweden-uk-lead-european-shares-lower-on-rate-hike-fears.html "Sweden, UK lead European shares lower on rate-hike fears") 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](https://www.financedigest.com/complaints-from-cost-centre-to-marketing-discipline.html "Complaints: From Cost-centre to Marketing 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](https://www.financedigest.com/supercapacitor-market-size-to-worth-around-usd-5979-67-million-by-2026-tmr.html "Supercapacitor Market Size to Worth around USD 5,979.67 Million by 2026 – TMR") from 2025, Lanxess said. It [expected one-off costs of around 100 million from implementing](https://www.financedigest.com/naturgys-profit-rises-on-lng-gains-soothing-shareholders-by-pietro-lombardi-madrid-reuters-spanish-power-utility-naturgy-reported-on-monday-an-88-jump-in-profit-for-the-first-six-months-of.html "Naturgy’s profit rises on LNG gains, soothing shareholders By Pietro Lombardi MADRID (Reuters) – Spanish power utility Naturgy reported on Monday an 88% jump in profit for the first six months of the year, boosted by strong earnings at its liquefied natural gas (LNG) business, which could help it to win over restive investors. Earlier this month, the company said it would increase its dividend floor through 2025 while trimming expected investment, as it sought to make rewarding shareholders a priority. Pleasing them has become a focus as Naturgy considers changes that could reshape the company and after arguments over the potential appointment of a chief executive. Naturgy’s first-half net profit jumped to 1.05 billion euros (.16 billion), boosted by its liquefied natural gas (LNG) business. Shares were down 0.2% in mid-morning trading, bucking deeper declines, in particular for Spain’s blue-chip banks and utilities after a general election on Sunday produced no clear winner. Renta 4 Banco analyst Angel Perez Llamazares said Naturgy performed better than expected, adding “cash flows also beat our expectation,” and debt fell more than expected. After natural gas prices hit record levels last year, Naturgy said a fall in procurement costs this year and hedging gains had boosed profits. In the first half of the year, the company “exceeded the objectives of operating efficiency, cash generation, investment materialisation and debt reduction,” Executive Chairman and CEO Francisco Reynes said. After rival Iberdrola named a separate CEO last year, Naturgy is the only large energy company in Spain to combine the roles of executive chairman and CEO. Earlier this month, the company raised the dividend floor to 1.40 euros a share, from 1.20 euros. Operating profit (earnings before interest, tax, depreciation and amortisation) is expected to reach 5.1 billion euros, compared with a previous guidance of 4.8 billion euros. It said it was targeting net profit of 1.8 billion euros in 2025. Naturgy also relaunched its plan to split regulated infrastructure operations and liberalised energy businesses into two listed companies. The project had been suspended after the Ukraine war disrupted energy markets and analysts are still sceptical. “We believe it is unlikely that Naturgy will be able to implement its asset split in the short term and it is also unlikely that a big change in the shareholding of the company would occur,” said RBC analyst Fernando Garcia. ( = 0.8986 euros) (Reporting by Pietro Lombardi, editing by Inti Landauro and Barbara Lewis)") 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. Lanxess also aims to further refine its business [model to realize the full potential of recent](https://www.financedigest.com/leno-bags-market-witness-a-spike-in-growth-pace-recent-improvements-in-pricing-models-fmi.html "Leno Bags Market Witness a Spike in Growth Pace Recent Improvements in Pricing Models: FMI") 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](https://www.financedigest.com/dollar-pares-gains-as-us-growth-contracts-for-second-quarter.html "Dollar pares gains as US growth contracts for 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](https://www.financedigest.com/boohoo-says-exposure-to-sterling-plunge-is-limited-finance-chief.html "Boohoo says exposure to sterling plunge is limited – 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) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---