Welcome to LANXESS Annual Report 2012!

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Financial condition

  • High operating cash flow thanks to solid business performance
  • Business-related increase in cash tied up in working capital
  • Cash used for investing activities reflects extensive capital expenditures for growth projects
  • Maturity profile of financial liabilities significantly extended
  • High level of liquidity to support growth strategy

The cash flow statement shows inflows and outflows of cash and cash equivalents by type of business operation.

Cash Flow Statement
€ million 2011 2012 Change
Income before income taxes 655 669 14
Depreciation and amortization 325 378 53
Other items (52) (91) (39)
Net cash provided by operating activities before change in working capital 928 956 28
Change in working capital (256) (118) 138
Net cash provided by operating activities 672 838 166
Net cash used in investing activities (923) (674) 249
Net cash provided by financing activities 276 46 (230)
Change in cash and cash equivalents from business activities 25 210 185
Cash and cash equivalents as of December 31 178 386 208

Cash provided by operating activities, before changes in working capital, increased by a slight €28 million to €956 million in fiscal 2012 compared to the year before. This was mainly due to the €14 million increase in income before income taxes to €669 million. The LANXESS Group’s asset base has expanded due to our extensive investment and acquisition activities in recent years, and depreciation and amortization increased as a result from €325 million to €378 million. The other items include payments that had to be made to counterparties under roll-over hedges for intra-Group foreign currency loans due to the marked decrease in the value of the euro at times during the year. These payments did not affect earnings.

The increase in working capital compared with December 31, 2011 resulted in a cash outflow of €118 million. The outflow from the change in working capital in 2011 was €256 million. The development in both periods was mainly attributable to the replenishment of inventories and increase in receivables, as well as to higher raw material costs. This was financed from the high cash inflows yielded by operating activities.

LANXESS’s investing activities in fiscal 2012 resulted in a cash outflow of €674 million, down from €923 million in the previous year. Disbursements for intangible assets and property, plant and equipment came to €696 million, which was just above the prior-year level of €679 million. The cash outflows for the acquisition of subsidiaries and other businesses, net of acquired cash and subsequent purchase price adjustments, amounted to €44 million, against €285 million the previous year. The companies acquired in the reporting year included, in particular, Tire Curing Bladders, LLC, Little Rock, United States, and Bond-Laminates GmbH, Brilon, Germany. Cash inflows from financial assets came to €41 million and mainly comprised the proceeds from the sale of short-term money market investments and a partial repayment of contributions by Currenta GmbH & Co. OHG. These were partially offset by cash outflows for the purchase of a 3.4% interest in BioAmber Inc.

Free cash flow – the difference between the cash inflows from operating activities and the cash used in investing activities – increased by €415 million from minus €251 million in 2011 to €164 million. The previous year’s negative free cash flow was attributable to the acquisition of the Keltan EPDM business in May 2011.

Net cash provided by financing activities came to €46 million, against a net inflow of €276 million the year before. Cash inflows of €893 million comprised proceeds from borrowings, including, in particular, the issuance of bonds and private placements with a total volume of €760 million. A large portion of the outflows of €652 million for the repayment of borrowings was attributable to the repayment in the second quarter of 2012 of the remaining €402 million owed under a bond that was issued in 2005. Interest payments were comparable with the previous year’s amounts. An outflow of €71 million was accounted for by the dividend paid to the stockholders of LANXESS AG in May (2011: €58 million).

The net change in cash and cash equivalents from business activities in fiscal 2012 was €210 million, against €25 million the previous year. After taking into account other changes in cash of minus €2 million, cash and cash equivalents at the closing date amounted to €386 million, against €178 million at the previous year’s closing date.

Taken together with near-cash assets (short-term investment of liquid assets in money market funds) of €411 million, against €350 million the previous year, the Group retained a sound liquidity position of €797 million as of December 31, 2012, compared to €528 million at the end of 2011.


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