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Lanxess selling rubber chemicals business as part of major restructuring

Last week, Lanxess responded to challenging market conditions with a sweeping new restructuring program called “Advance” that will reduce employment, cut costs, and restructure its product portfolio.

In terms of restructuring, Lanxess will maintain its current structure of 14 business units under its three established segments but is pursuing strategic options for specific non-core businesses.

These non-core activities have combined sales of roughly EUR 500 million, close to EUR 30 million in EBITDA pre exceptionals, and a headcount of roughly 1,000. The activities include the High Performance Materials (HPM) business unit’s Perlon-Monofil business line, Rubber Chemicals’ (RUC) accelerators and antioxidants business lines, and High Performance Elastomers’ (HPE) nitrile butadiene rubber business line. The affected sites are in Brunsbuettel and Dormagen, Germany, Kallo, Belgium, Bushy Park, USA, Jhagadia, India, La Wantzenau, France, and Nantong, China. All options for these sites will be considered in line with legal frameworks and local employee participation.

The Rubber Chemicals business unit is already in the midst of a restructuring program that will include closing a production plant in South Africa and downsizing its operations in Belgium.

In terms of workers, Lanxess will reduce its headcount by about 1,000 employees, or about 6% of its workforce; about 300 of these employees are located in Germany. In addition, Lanxess chairman Axel Heitmann said that there would be a 3% pay cut for all employees this year. Lanxess will book €150 million in one-off charges in 2013–14 to cover Advance.

According to Lanxess, the restructuring is a direct result of poor demand for synthetic rubber.

Mobility and catering for the tire and automotive industry—including the supply of rubber and plastics—currently accounts for 40% of Lanxess’s sales. The company wants to reduce its reliance on mobility and is seeking to strengthen its advanced intermediates and performance chemicals segments, Heitmann says. Lanxess will seek acquisitions in these areas, Heitmann says.
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