# Lanxess slashes profit outlook as demand recovery lags Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-06-20 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Lanxess slashes profit outlook due to lagging demand Meta Description: German speciality chemicals maker Lanxess cuts profit forecasts due to weak demand, ongoing customer destocking, and adverse market conditions. URL: https://financedigest.com/lanxess-slashes-profit-outlook-as-demand-recovery-lagshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-06-20t061331z1lynxmpej5j04xrtroptp4lanxess-outlook-1736813857847-compressed.jpg) # Lanxess slashes profit outlook as demand recovery lags (Reuters) – German speciality chemicals maker Lanxess on Monday evening cut its second-quarter and annual core profit forecasts, saying it saw no demand recovery in June as customers continued to destock. It said “very weak” demand, especially in the construction and electronics industries and from consumer related products, along with effects from customers destocking had spilled into the second quarter from the first and were ongoing. The company, which makes high-end speciality chemicals such as additives, lubricants, flame retardants and plastics, expects its earnings before interest, taxation, depreciation and amortisation (EBITDA) pre-exceptionals to be around 100 million euros ($109 million) in the second quarter. It had previously targeted profit “roughly at the level” of the first-quarter figure of 189 [million euros](https://www.financedigest.com/spains-king-felipe-reveals-2-6-million-euros-in-wealth-in-bid-to-make-royal-house-more-transparent.html "Spain’s King Felipe reveals 2.6 million euros in wealth in bid to make Royal House more transparent"). For 2023, Lanxess sees EBITDA pre-exceptionals between 600 million and 650 million euros, [versus prior forecast of 850 million to 950 million euros](https://www.financedigest.com/sterling-falls-1-versus-dollar-rises-against-euro.html "Sterling falls 1% versus dollar, rises against euro"). The demand recovery we originally expected in the second half is not yet visible – neither in [China nor in other meaningful end markets,”](https://www.financedigest.com/world-shares-rally-as-china-offers-markets-a-hand.html "World shares rally as China offers markets a hand") CEO Matthias Zachert said in a statement. Zachert also said business was “massively impacted” by disadvantageous conditions in Germany, such as high [energy prices](https://www.financedigest.com/italy-cpi-rises-again-in-april-amid-energy-prices-volatility.html "Italy CPI rises again in April amid energy prices volatility") and bureaucracy. Jefferies analysts said that “investors should rightly wonder whether … a warning of this magnitude calls into question the success of (Lanxess’s) strategy to date”, after the company used more than 2 [billion euros in acquisitions over the past three years](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)") to upgrade portfolio mix and business resilience. The Lanxess shares were down 6.8% in early Frankfurt trade. ($1 = 0.9165 euros) (Reporting by Linda Pasquini in Gdansk; Editing by Milla Nissi) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---