Last Updated : 12 May 2009 at 15:55 IST

Lanxess sales fall 31%, India operations grow

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Commodity Online
MUMBAI: German specialty chemicals major, Lanxess AG (FRA:LXSG) in India, has been impacted by the economic downturn as company’s sales significantly declined for first quarter of 2009 as compared to the corresponding period in 2008.

Lanxess witnessed a significant fall in the demand during the first quarter of 2009 due to extremely difficult market environment worldwide. Group sales had dropped by 31.3% YoY to EUR 1,054 million against EUR 1,535 million in the corresponding period in 2008.

The Group had reported a net loss of EUR 14 million for the first quarter against net income of EUR 104 million for the prior-year period. The operating cash flow climbed by EUR 77 million to EUR 122 million, allowing a substantial reduction in net financial liabilities from EUR 864 million at the end of 2008 to EUR 744 million on March 31, 2009.

However, despite 2009 being the year of global economic crisis, the Jhagadia project of the group, continued its steady growth. The new ion exchange resins plant which would be inaugurated in Jhagadia is said to be Asia’s largest unit of its kind.

In addition, the company’s rubber chemicals plant is currently being relocated from Thane to Jhagadia. Both plants expect to begin production by next year with 230 employees.

Dr. Joerg Strassburger, Managing Director and Country Representative for LANXESS India Private Limited mentioned that despite the difficult environment, the company continued to make steady progress on the Jhagadia project, which has a total of EUR 50 million investments.

“I am convinced that we will overcome this difficult situation and that the chemical industry in India will continue to grow in the coming years,” said Dr. Strassburger.

However, the company posted a positive operating result due to the package of measures named “Challenge09”. Lanxess expects business to pick up in the second quarter as demand recovers and the benefits of “Challenge09” are increasingly felt.

The company expected sales and earnings to remain below last year’s level during 2009. But the company expected a significant improvement compared to the first quarter, but the earnings would still be below the second quarter of last year.