Lanxess' Realignment Strategy: Mergers, Streamlining, Job Cuts
The realignment plans include the combination of the group functions Aliseca (ASC), Industrial & Environmental Affairs (IEA) and Innovation & Technology (INN) into the new group function Production, Technology, Safety & Environment (PTSE). Par Singh will head the group function. Some maintenance tasks will be delegated to the business units in the future, eliminating a number of interfaces and thus raising efficiency, Lanxess explained.
Plant Closures Ahead for Lanxess?
The group function Internal Auditing (IA) and the Corporate Security unit will be integrated into the group function Law and Intellectual Property (LIP). The new group function Legal & Compliance (LEX) will be headed by Jochen Schroer.
In a second phase, an “operational excellence initiative” will examine all production facilities with respect to market requirements and synergy potential –this crucial step will certainly decide over future plant closures. Apart from future of its production sites, Lanxess has already begun examining its portfolio.
Agrochemicals With Good Results, Rubber Disappointing
Business development in the second quarter of 2014 was marked by good demand for agrochemicals and a positive impetus from the construction industry, but also by a persistently difficult competitive situation for synthetic rubbers and negative currency effects. Lanxess registered year-on-year volume gains in all regions except Latin America. Volumes for the Group as a whole increased by 2 percent, which did not fully offset the 5 percent decline in selling prices. Overall, sales of the Lanxess Group declined by 5.7 percent to approximately EUR 2 billion.
"The continuing low earnings level and increasing competition show the need for further action to improve competitiveness," said Zachert. Net income improved substantially to EUR 55 million, compared to EUR 9 million for the same period of last year. This was partly due to an improved financial result and lower exceptional charges. In the prior year, EUR 40 million had been incurred for restructuring in the Performance Chemicals segment.