Welcome to LANXESS Annual Report 2012!

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Investor Information

LANXESS can look back on a very gratifying trading year in 2012. The price of our stock increased substantially, gaining about 66 percent over the year. Another highlight was admission to Germany’s lead index, the DAX, on September 24.

The world’s stock markets posted a positive performance for the full year 2012. The German indices, in particular, rose considerably in value. The DAX, for example, was one of the top-performing indices in the world, with growth of almost 30 percent. The MDAX, which included our stock up until its DAX listing, also recorded a substantial gain, closing around 34 percent higher at year end. Like the German indices, the Dow Jones STOXX 600 ChemicalsSM, the LANXESS benchmark index, also posted a gratifying increase in value, growing by slightly more than 29 percent. The euro debt crisis remained a central topic in 2012 and had a substantial impact on the equity markets. However, its effects on the stock markets varied widely from one quarter to the next.

The mood on the markets was more positive again in the first months of the year. Having started 2012 still below 6,000 points, the DAX topped the 7,000-point threshold in March for the first time since 2011 and achieved its highest quarterly gain for 2012 – around 18 percent – in the first quarter. The MDAX also posted its strongest quarterly increase of 20 percent in the first months of the year and climbed back above the 10,000-point threshold. Our benchmark index, the Dow Jones STOXX 600 ChemicalsSM, also profited from the good market environment, giving its best performance for 2012 with growth of nearly 16 percent. The easing of the euro debt crisis, resulting in part from the successful haircut on Greek debt, was an important price driver for the stock markets during this time.

In the second quarter, however, the euro crisis and weak economic data triggered renewed corrections in the markets. A further focus of concern, apart from Greece, was the growing economic weakness throughout the euro area, especially in Spain and Italy. In addition, the poor performance of the U.S. economy also made the stock markets nervous. As a result, neither the German indices nor the Dow Jones STOXX 600 ChemicalsSM were able to sustain their substantial prior-quarter gains and closed lower at the end of the second quarter. Although down 7.6 percent, the DAX remained above the 6,000-point threshold, while the MDAX stayed above 10,000 points despite falling by nearly 3.4 percent.

The rest of the year saw a strong recovery on the stock markets, from which all indices benefited. Policy decisions that brought further relief to the euro debt crisis had a particularly bullish effect on stock market performance. The European Central Bank, for example, announced in September that it would allow the purchase of unlimited numbers of government bonds from the euro area’s crisis countries. Two months later, the euro countries and the International Monetary Fund agreed on a new aid package for Greece that, among other things, featured lower interest rates on bailout loans. Further positive impetus came from the United States in the second half of the year. In addition to announcing the monthly purchase of mortgage bonds, the U.S. Federal Reserve unveiled plans to buy long-dated U.S. treasury bonds, also on a monthly basis. It maintained its low interest rate policy as well.

In the wake of these developments, Germany’s blue-chip DAX index climbed back above the 7,000-point threshold, surpassing it considerably at times and reaching a five-year high of 7,668 points in December. It closed the year at 7,612 points, against 5,898 points at the end of 2011. At more than 11,000 points, the MDAX delivered strong growth of 34 percent. It closed at 11,914 points on the last trading day of the year, breaking the previous record high from 2007. For the Dow Jones STOXX 600 ChemicalsSM, the successful year ended on 663 points (December 30, 2011: 513 points).

The overall positive market environment in 2012 supported the strong price trend of our stock, which posted its largest gain of 55 percent in the first quarter. As a result of this significant growth, our shares again reached a price level of more than €60 after trading at just €40 at the end of 2011. In line with market and index trends, our stock also sustained losses in the second quarter, dipping below €50 at times. Then, from mid-July, a clear upward trend emerged. In September, our stock posted its high for the year and a new post-listing record of €68.90 (intraday high).

The admission of our stock to the DAX also occurred in September. The main criteria were that LANXESS ranked among the 30 largest publicly traded companies in Germany in terms of the average market capitalization over the 20 trading days leading up to the cut-off date, which was the last trading day in August, and among the 30 most traded companies on the stock exchange in terms of the trading volume reported in the Xetra order book for the previous twelve months. After seven years on the MDAX, our shares started trading on Germany’s lead index, the DAX, on September 24, 2012. In the ensuing weeks, the solid price trend continued. Our stock closed at €66.27 on the last trading day of 2012.

In addition to the good stock market environment overall, our own corporate newsflow drew a positive response from the capital market. Key capital market information included the new medium-term earnings target we announced at our Media and Capital Markets Days in mid-September, which is to achieve an EBITDA pre exceptionals of €1.8 billion in 2018. Moreover, we intend to reach the €1.4 billion medium-term earnings target set in 2010 a year earlier than planned, in 2014 (see “Strategy” section).

We also reported on important growth projects targeted at strengthening our business units. One of the largest capital expenditure projects launched in 2012 is our new production facility for Nd-PBR, which we are building in Singapore at a cost of around €200 million and expect to bring on stream in the first half of 2015. In addition, a new €75 million plant for high-tech plastics is under construction in Antwerp, Belgium. A further highlight in 2012 was the groundbreaking for our largest single investment in China to date. In Changzhou, we are building the world’s biggest plant for EPDM synthetic rubber at a cost of around €235 million. This plant is also expected to start up in 2015.

Buoyed by an overall positive market environment, the systematic implementation of our strategy and clear communication of our medium-term earnings targets were reflected in the very favorable development of our share price. Up nearly 66 percent for the year, our stock substantially outperformed the solid growth in the DAX, MDAX and Dow Jones STOXX 600 ChemicalsSM indices in 2012. Since its initial listing on January 30, 2005, the value of our stock has increased by some 347 percent.

Capital Market Information
   
Share class No-par shares
Listing code LXS
WKN (German securities identification number) 547040
ISIN DE0005470405
Reuters/Bloomberg codes LXSG.DE/LXS:GR
Market segment Prime Standard
Trading venues XETRA, Frankfurt, Munich, Stuttgart, Düsseldorf, Hamburg, Hannover, Berlin
Selective indices DAX, Dow Jones STOXX 600 ChemicalsSM, DAXsupersector Basic Materials, MSCI Germany Standard, MSCI Germany Mid Cap, Dow Jones Sustainability Index World, FTSE4Good
Investment-grade ratings Standard & Poor’s: BBB (stable)
Moody’s: Baa2 (stable)
Fitch: BBB (stable)
 

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