Lanxess Q2 Guidance Misses Expectations, FY Outlook Firm
By Ozan Ergenay
(Reuters) -German speciality chemicals maker Lanxess on Thursday reported a 31.7% jump in first quarter core profit, beating market expectations, but said second quarter earnings would drop after the sale of a unit and amid concerns about U.S tariffs.
Lanxess posted earnings before interest, taxes, depreciation and amortisation (EBITDA) pre-exceptionals of 133 million euros ($150.52 million) for January-March, compared to analysts' forecast of 131.6 million euros in a company-provided poll.
While the chemicals company confirmed its full-year guidance, it said it expected a drop in second quarter earnings primarily because it would no longer include earnings from Urethane Systems, which has been sold to Japan's UBE Corporation.
Lanxess said it would use the proceeds from that sale to redeem its 500 million euro benchmark bond due in May 2025 and further reduce its debt.
"The situation around us has continued to escalate since the beginning of the year and the U.S. government's new trade policy has shaken the markets and exacerbated the already high level of uncertainty," Chairman Matthias Zachert said in a statement.
Lanxess shares were down 3% in early trading on Germany's mid-cap index. They have risen 7.4% since the start of the year.
U.S. President Donald Trump's sweeping tariffs and uncertainty over his trade policies and China's retaliation have sent global markets into a tailspin and significantly dampened investors' economic optimism.
The two countries will hold icebreaker trade talks in Geneva on Saturday that could be the first step towards resolving the dispute.
"Q1 earnings broadly in line, as Q2 guide appears to be below consensus," analysts at J.P.Morgan said in a note.
The J.P. Morgan analysts' forecast second quarter EBITDA at or below 160 million euros, accounting for the sale of the urethane business, FX headwinds and possible weakness in demand as a result of the uncertainty over tariffs.
That compares with analysts' expectations of 170 million euros, a poll by LSEG showed.
Lanxess reported EBITDA pre-exceptionals of 181 mln euros in the second quarter of last year.
On Thursday, the chemicals firm confirmed its previous forecast of full year EBITDA pre-exceptionals between 600 million and 650 million euros.
Its quarterly sales remained stable at 1.6 billion euros, as sales volumes in most businesses increased, although lower prices had a negative impact on revenues, the company said.
Germany's chemical industry has suffered through high production costs and weak demand amid accelerating inflation.
($1 = 0.8836 euros)
(Reporting by Ozan Ergenay in Gdansk; Editing by Christopher Cushing, Varun H K and Kate Mayberry)
