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(37) Segment reporting

Key Data by Segment
                     
€ million Performance Polymers Advanced Intermediates Performance Chemicals Reconciliation LANXESS
                     
  2011 2012 2011 2012 2011 2012 2011 2012 2011 2012
                     
External sales 5,059 5,176 1,545 1,674 2,130 2,203 41 41 8,775 9,094
Inter-segment sales 1 0 52 53 10 9 (63) (62) 0 0
Segment/Group sales 5,060 5,176 1,597 1,727 2,140 2,212 (22) (21) 8,775 9,094
Segment result/EBITDA pre exceptionals 768 817 264 305 289 281 (175) (178) 1,146 1,225
Exceptional items affecting EBITDA (9) (9) (19) 6   (17) (17) (17) (45) (37)
Segment assets 3,468 3,779 941 1,030 1,421 1,452 135 151 5,965 6,412
Segment acquisitions 219 36     120 5     339 41
Segment capital expenditures 447 455 117 104 113 139 23 36 700 734
Depreciation and amortization 159 207 63 67 77 85 13 15 312 374
Impairments 2 2 7 0 1 2 3 0 13 4
Segment liabilities 1,012 988 454 505 527 598 473 587 2,466 2,678
Employees (December 31) 4,977 5,348 2,883 2,841 5,819 6,031 2,711 2,957 16,390 17,177
Employees (average for the year) 4,748 5,237 2,875 2,862 5,574 6,019 2,652 2,844 15,849 16,962
 

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Key Data by Region
                         
€ million EMEA (excluding Germany) Germany North America Latin America Asia-Pacific LANXESS
                         
  2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012
                         
External sales by market 2,546 2,526 1,569 1,577 1,458 1,611 1,201 1,185 2,001 2,195 8,775 9,094
Non-current region assets 706 746 937 1,043 438 454 431 397 575 781 3,087 3,421
Acquisitions 108   42 36 57 5 118   14   339 41
Capital expenditures 165 157 222 211 53 68 43 46 217 252 700 734
Employees (December 31) 3,357 3,442 7,846 8,072 1,427 1,553 1,585 1,626 2,175 2,484 16,390 17,177
 

Notes to the segment reporting

The valuation principles applied in segment reporting correspond to the uniform recognition and valuation principles used for the consolidated financial statements prepared in accordance with IFRS.

On December 31, 2012 the LANXESS Group comprised the following reporting segments:

   
Segment Operations
   
Performance Polymers Special-purpose rubbers for high-quality rubber products, e.g. for use in vehicles, tires, construction and footwear; engineering plastics, polyamide compounds
Advanced Intermediates Intermediates for the agrochemicals and coatings industries; fine chemicals as precursors and intermediates for pharmaceuticals, agrochemicals and specialty chemicals; custom manufacturing
Performance Chemicals Material protection products; inorganic pigments for the coloring of concrete, emulsion paints and other coatings; finishing agents for the leather industry; rubber chemicals; ion exchange resins for water treatment; plastics additives such as flame retardants and plasticizers
 

The reconciliation eliminates inter-segment items and reflects assets and liabilities not directly allocable to the core segments including, in particular, those pertaining to the Corporate Center. It also includes the €8 million (2011: €12 million) interest in investments accounted for using the equity method and the corresponding income of €1 million (2011: €7 million) (see note [3]).

The transfer prices used for inter-segment business transactions are calculated using the OECD rules as if they had been agreed upon between independent third parties in comparable circumstances (arm’s-length principle).

The majority of employees reflected in the reconciliation provide services for more than one segment. They include technical service staff.

The reporting regions are those into which LANXESS’s activities are organized: EMEA (Europe [excluding Germany], Middle East, Africa), Germany, North America, Latin America and Asia-Pacific.

Regional sales are calculated according to the recipient’s place of business. In fiscal 2012, no individual customer of the LANXESS Group accounted for more than 10% of Group sales.

Since the earnings figure used for management purposes within the LANXESS Group is the operating result before depreciation and amortization (EBITDA) pre exceptionals, this is the amount reported as the “segment result.” It comprises gross profit, selling expenses, general administration expenses, research and development expenses and other operating income and expenses. It does not include, in particular, depreciation and amortization or exceptional items, which relate principally to restructuring activities.

In light of the Group’s central financial management, interest income and expense and income tax income and expense are not reported at segment level.

Reconciliation of Segment Sales
     
€ million 2011 2012
     
Total segment sales 8,797 9,115
Other/Consolidation (22) (21)
Group sales 8,775 9,094
 
Reconciliation of Segment Result
     
€ million 2011 2012
     
Total segment results 1,321 1,403
Depreciation and amortization (325) (378)
Net interest expense (93) (96)
Other financial income and expense (35) (46)
Exceptional items in EBITDA (45) (37)
Income from investments accounted for using the equity method 7 1
Other/Consolidation (175) (178)
Income before income taxes 655 669
 

Segment assets principally comprise intangible assets, property, plant and equipment, inventories and trade receivables. In particular, segment assets do not include cash and cash equivalents, income tax receivables, receivables from derivatives, or other financial assets.

Information on equity-method income is contained in Note [3]. It mainly comprises income from site services provided by Currenta GmbH & Co. OHG, Leverkusen, Germany, and is not related to the operating business of the segments.

Reconciliation of Segment Assets
     
€ million Dec. 31, 2011 Dec. 31, 2012
     
Total segment assets 5,830 6,261
Near-cash assets 350 411
Deferred tax assets 196 211
Cash and cash equivalents 178 386
Derivative assets 16 44
Other financial assets 109 14
Income tax receivables 64 41
Other/Consolidation 135 151
Group assets 6,878 7,519
 

Capital expenditures made by the segments mainly comprise additions to intangible assets, property, plant and equipment.

All depreciation, amortization and impairments in fiscal 2011 and 2012 were recognized directly in profit or loss.

Segment liabilities mainly comprise provisions, trade payables and other liabilities. In particular, segment liabilities do not include income tax liabilities, liabilities from derivatives, or other financial liabilities.

Reconciliation of Segment Liabilities
     
€ million Dec. 31, 2011 Dec. 31, 2012
     
Total segment liabilities 1,993 2,091
Other financial liabilities 2,098 2,334
Deferred tax liabilities 75 82
Income tax liabilities 112 80
Derivative liabilities 53 14
Other/Consolidation 473 587
Group liabilities 4,804 5,188
 

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