Capital expenditures
In 2012, capital expenditures for property, plant and equipment and intangible assets came to €734 million, compared with €700 million the year before, and led to cash outflows of €696 million (2011: €679 million). Depreciation and amortization totaled €378 million in the same period (2011: €325 million). This figure included €2 million in impairments reported as exceptional items (2011: €5 million). Adjusted for these impairments, capital expenditures in support of our growth strategy exceeded depreciation and amortization by a substantial 95% (2011: 118%).
Cash Outflows for Capital Expenditures vs. Depreciation and Amortization
In the reporting year, capital expenditures focused on the following areas:
- construction of new facilities, expansion and maintenance of existing facilities;
- measures to increase plant availability;
- projects to improve plant safety, enhan
ce quality and comply with environmental protection requirements.
Roughly two-thirds of the capital expenditures in 2012 went toward expansion or efficiency improvement measures, while the rest went to modify and maintain existing facilities. This underlines our goal of generating further organic growth through investment, as described under “Earnings strategy” in the “Strategy” section of this combined management report.
In regional terms, 29% of capital expenditures in 2012 were made in Germany, 22% in the EMEA region (excluding Germany), 9% in North America, 6% in Latin America and 34% in Asia-Pacific. Major capital expenditures in Germany mostly comprised our investments to increase capacities and modernize facilities in all segments, especially capacity improvements for the Advanced Industrial Intermediates business unit and the expansion of several plants for the Technical Rubber Products business unit. The large share of capital expenditures made in the Asia-Pacific region is due primarily to the construction of a new butyl rubber plant for the Butyl Rubber business unit in Singapore, the largest investment project so far in our company’s history.
Cash Outflows for Capital Expenditures by Segment
In the Performance Polymers segment, capital expenditures amounted to €455 million (2011: €447 million), €434 million (2011: €437 million) of which were cash outflows. Depreciation and amortization amounted to €209 million (2011: €161 million). The major capital expenditures in this segment were made in the Butyl Rubber business unit. Capital expenditures in the Advanced Intermediates segment amounted to €104 million (2011: €117 million). Cash outflows came to €92 million (2011: €107 million), exceeding the depreciation and amortization of €67 million (2011: €70 million). This figure includes capital expenditures in the Advanced Industrial Intermediates business unit for expansion of the formalin plant in Leverkusen, Germany, and expansion of menthol production in Krefeld-Uerdingen, Germany. In the Performance Chemicals segment, capital expenditures came to €139 million (2011: €113 million), €135 million (2011: €112 million) of which were cash outflows. Depreciation and amortization stood at €87 million (2011: €78 million). Key capital expenditures were the start of construction of a new CO2 concentration unit in Newcastle, South Africa, and construction of a production facility for leather chemicals in Changzhou, China, for the Leather business unit.
The following table shows major capital expenditure projects in the LANXESS Group.
