Welcome to LANXESS Annual Report 2012!

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Management’s summary of the fiscal year

In light of the global macroeconomic conditions, fiscal 2012 was characterized by predominantly declining demand, which varied by region, with concurrent volatility in the prices of key raw materials.

We recorded sales growth of 3.6% compared to the previous year. Adjusted for currency and portfolio effects, operational sales decreased by 2.9% against a strong prior year due to lower volumes. In the Performance Polymers segment, in particular, volumes were below the prior-year level because of restrained demand in the tire market. By contrast, the Advanced Intermediates segment profited from the gratifying development in the area of agrochemicals, especially in North America and Latin America.

Our price-before-volume strategy remained intact in 2012. Year on year, EBITDA pre exceptionals rose 6.9% to €1,225 million. The EBITDA margin also improved further, increasing to 13.5%. Earnings per share were slightly higher than the previous year, due to the slight improvement in after-tax income.

The integration and further development of our recent acquisitions, which have been assigned to the Performance Polymers and Performance Chemicals segments, has proceeded according to plan.

Our conservative accounting and financing policy is expressed by the solid indicators in our statement of financial position, which includes an equity ratio of 31.0%. Total assets increased mainly due to the capital expenditures made in support of our organic growth. Working capital rose slightly compared with the previous year, given the mixed business performance during the reporting year. In accordance with the consistency principle, we essentially applied the same measurement methods and exercised the same discretion as in the previous year. For further information, please see the explanations under “Estimation uncertainties and exercise of discretion” in the Notes to the consolidated financial statements as of December 31, 2012.

Our statement of financial position shows that we have a solid liquidity position. Additional substantial liquidity reserves in the form of undrawn credit lines are also available. Of the total financial liabilities, some 99% bear a fixed interest rate over the term of the financing, which is comparable to the previous year. Interest rate changes do not have a material effect on the LANXESS Group’s financial condition considering the current financing structure. Our financial liabilities are free of financial covenants.

Net financial liabilities stand at €1,483 million, which is 1.2 times EBITDA pre exceptionals. In fiscal 2012, the rating agencies reconfirmed the LANXESS Group’s creditworthiness with ratings of BBB and Baa2 with stable outlook.

In view of our stable liquidity and financing positions as well as the solid business performance, we believe that our company’s business situation is positive overall and provides a suitable foundation for attaining the profitable growth targets we have set.

Business Ratios – Multi-Period Overview
           
€ million 2008 2009 2010 2011 2012
           
Earnings performance          
Sales 6,576 5,057 7,120 8,775 9,094
EBITDA pre exceptionals 722 465 918 1,146 1,225
EBITDA margin pre exceptionals 11.0% 9.2% 12.9% 13.1% 13.5%
EBITDA 602 422 890 1,101 1,188
Operating result (EBIT) pre exceptionals 462 204 635 826 849
Operating result (EBIT) 323 149 607 776 810
EBIT margin 4.9% 2.9% 8.5% 8.8% 8.9%
Net income 183 40 379 506 514
Earnings per share (€) 2.20 0.48 4.56 6.08 6.18
           
Liquidity          
Cash flow from operating activities 492 565 430 672 838
Depreciation and amortization 279 273 283 325 378
Cash outflows for capital expenditures 342 275 501 679 696
Net financial liabilities 864 794 913 1,515 1,483
           
Assets and liabilities          
Total assets 4,592 5,068 5,666 6,878 7,519
Non-current assets 2,169 2,382 2,738 3,489 3,747
Current assets 2,423 2,686 2,928 3,389 3,772
Net working capital 1,289 1,096 1,372 1,766 1,849
Equity (including non-controlling interests) 1,339 1,445 1,761 2,074 2,331
Pension provisions 498 569 605 679 892
           
Key data          
ROCE 15.4% 5.9% 17.0% 17.2% 15.6%
Equity ratio 29.2% 28.5% 31.1% 30.2% 31.0%
Gearing 64.5% 54.9% 51.8% 73.0% 63.6%
Non-current asset ratio 47.2 47.0 48.3 50.7 49.8
Asset coverage I 61.7 60.7 64.3 59.4 62.2
Net working capital/sales 19.6% 21.7% 19.3% 20.1% 20.3%
Employees (as of December 31) 14,797 14,338 14,648 16,390 17,177
2008 figures restated          

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