Q1 2024 Results

LANXESS Group

Q1 EBITDA bottoming out, operational improvement visible; volume increase in Advanced Intermediates

Investor Relations

André Simon

Kennedyplatz 1

Head of Investor Relations

50569 Cologne

P: +49

221-8885-3494

Germany

F: +49

221-8885-4944

Q1 2023

Q4 2023

Q1 2024

Δ vs. Q1

Comments on Q1

Lower sales prices driven by pass through of input costs; while volumes

Sales

€1,899 m

€1,436 m

€1,607 m

-15%

↓ picked up sequentially, yoy comparison reflects still stronger Q1 of previous

year

EBITDA pre

€189 m

€97 m

€101 m

-47%

↓ EBITDA pre and margin declined on basis of lower prices and volumes; ramp

Margin

10.0%

6.8%

6.3%

-3.7 pp.

↓ up of structural savings does not yet outweigh reduction of temporary savings

Adjusted EPS1

€0.63

-€0.30

-€0.09

>-100%

↓

EPS reflecting net income result; also including at-equity contribution from

Envalior

Operating cash flow

€171 m

€224 m

-€48 m

>-100%

↓ Free cash flow held back by operating result and volume driven increase in

Free cash flow

€112 m

€92 m

-€87 m

>-100%↓

receivables

Net financial debt2

Mar 2023

Dec 2023

Mar 2024

-31%

↓

Net financial debt significantly reduced towards year-end; increase in Q1

€3,796 m

€2,498 m

€2,609 m

driven by higher receivables due to positive sales development

Capex

€59 m

€132 m

€39 m

-34%

↓ Maintaining disciplined capex management amid cost savings program

Price

Volume

FX

Portfolio

Sales - 15% - 9%

- 5%

- 1%

0%

All figures apply to continuing operations (excluding BU HPM)

  1. Adjusted for exceptional items, amortization of intangible assets and attributable tax effects
  2. Deducting cash, cash equivalents, near cash assets, short-term money market investments

1

Consumer Protection

§

EBITDA stable sequentially: Agro- destocking is offset by pick-up in other markets

  • YoY volume decline in all BUs, mainly in BU SGO due to intensified agro destocking and F&F still limited by steam supply outage
  • Massive agro-destocking is sequentially offset by pick-up in other markets
  • EBITDA pre and margin decline based on lower volumes, especially for agro end market

Specialty Additives

Moderate pick-up sequentially: Improving despite construction weakness

  • Lower prices in all BUs, mainly due to pass through and market weakness
  • Slightly lower volumes reflect continued weakness in construction
  • Sequentially all BUs with increasing sales
  • EBITDA pre and margin compared against still relatively strong previous year especially for flame retardants

Advanced Intermediates

Meaningful sequential volume improvement; volumes increase also year- over-year

  • Sales decline due to price pass through clauses as input costs normalize
  • Volumes have turned positive, additionally supported by customers' re-stocking for BU Inorganic Pigments
  • EBITDA pre and margin remain unsatisfactory but start to improve

YoY

Sales - 21%

YoY

Sales - 15%

YoY

Sales - 10%

Price Volume FX Portfolio

- 5% - 16% - 1% 0%

Q1 2023

Q4 2023

Q1 2024

EBITDA pre

€94 m

€50 m

€49 m

margin

14.5%

9.8%

9.6%

Price Volume FX Portfolio

- 10% - 4% - 1% 0%

Q1 2023

Q4 2023

Q1 2024

EBITDA pre

€98 m

€41 m

€48 m

margin

14.8%

8.3%

8.5%

Price Volume FX Portfolio

- 14% + 5% 0% 0%

Q1 2023

Q4 2023

Q1 2024

EBITDA pre

€44 m

€24 m

€37 m

margin

8.5%

6.5%

8.0%

2

FY 2024 guidance:

EBITDA pre expected to increase by 10-20%

Our view on economic environment

  • Demand has stabilized and is starting to pick up
  • Burden from agro customers' destocking continues

LANXESS outlook

  • FY guidance: EBITDA pre expected to grow by 10-20% (incl. BU URE)
  • EBITDA pre expected to sequentially increase in Q2 and Q3, with normal seasonality in Q4
  • Continued focus on cash generation
    • Balanced working capital approach
    • Strong capex discipline

Housekeeping items 2024*

Capex: ~€350 m

Operational D&A ~€550 m (thereof ~€150 m of intangible amortization effect) All other segments: ~-€130m EBITDA pre

Underlying tax rate: ~26%- 27%

Exceptionals: ~€60 m

FX sensitivity: One cent change of USD/EUR resulting in ~€3 m EBITDA pre impact after hedging

* Including BU Urethane Systems

First signs of volume improvements visible, however agro destocking weighs on Consumer Protection

Safe harbor statement

The information included in this presentation is being provided for informational purposes only and does not constitute an offer to sell, or a solicitation of an offer to purchase, securities of LANXESS AG. No public market exists for the securities of LANXESS AG in the United States.

This presentation contains certain forward-looking statements, including assumptions, opinions, expectations and views of the company or cited from third party sources. Various known and unknown risks, uncertainties and other factors could cause the actual results, financial position, development or performance of LANXESS AG to differ materially from the estimations expressed or implied herein. LANXESS AG does not guarantee that the assumptions underlying such forward-looking statements are free from errors, nor does it accept any responsibility for the future accuracy of the opinions expressed in this presentation or the actual occurrence of the forecast developments. No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, any information, estimates, targets and opinions contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and accordingly, no representative of LANXESS AG or any of its affiliated companies or any of such person's officers, directors or employees accepts any liability whatsoever arising directly or indirectly from the use of this document.

3

Financial Overview Q1 2024

in € million

LANXESS

Q1/2023

Sales

1,899

Price*

Volume*

Currency*

Portfolio*

EBIT

34

Deprec. & amortizat.

137

EBITDA

171

exceptionals in EBITDA

18

EBITDA pre excep.

189

normalized D&A

136

EBIT pre excep.

53

exceptionals in EBIT

19

Capex

59

Net financial debt

2,498

* approximate numbers

Q1/2024

1,607

-57

140

83

18

101

139

-38

19

39

2,609

Consumer Protection

Chg. in

Q1/2023

Q1/2024

%

-15%

647

509

-9.2%

-5.4%

-0.8%

0.0%

n.m.

47

3

2%

46

46

-51%

93

49

0%

1

0

-47%

94

49

2%

46

46

n.m.

48

3

0%

1

0

-34%

17

12

4%

Specialty Additives

Chg. in

Q1/2023

Q1/2024

%

-21%

664

566

-4.8%

-15.9%

-0.6%

0.0%

-94%

53

1

0%

45

47

-47%

98

48

-100%

0

0

-48%

98

48

0%

45

47

-94%

53

1

-100%

0

0

-29%

23

14

Advanced Intermed.

Chg. in

Q1/2023

Q1/2024

%

-15%

516

465

-9.6%

-4.1%

-1.1%

0.0%

-98%

18

9

4%

26

28

-51%

44

37

0%

0

0

-51%

44

37

4%

26

28

-98%

18

9

0%

0

0

-39%

16

11

All other Segments

Chg. in

Q1/2023

Q1/2024

%

-10%

72

67

-14.1%

4.6%

-0.4%

0.0%

-50%

-84

-70

8%

20

19

-16%

-64

-51

n.m.

17

18

-16%

-47

-33

8%

19

18

-50%

-66

-51

n.m.

18

19

-31%

3

2

4

Cash Flow Statement Q1 2024

in € million

Q1/2023

Q1/2024

Income before income taxes

13

-119

Amortization, depreciation and write-downs of intangible assets and property, plant and

equipment

137

140

Income from investments accounted for using the equity method

-1

46

Financial losses (gains)

24

11

Income taxes refunded/paid

-10

-1

Changes in inventories

-11

17

Changes in trade receivables

17

-203

Changes in trade payables

2

20

Changes in other assets and liabilities

0

41

Net cash provided by (used in) operating activities - continuing operations

171

-48

Net cash provided by (used in) operating activities - discontinued operations

-10

0

Net cash provided by (used in) operating activities - total

161

-48

Cash outflows for purchases of intangible assets and property, plant and equipment

-59

-39

Cash outflows for financial and other assets held for investment purposes

-1,394

-20

Cash inflows from financial and other assets held for investment purposes

0

140

Cash inflows from the sale of subsidiaries and other businesses, less divested cash and

cash equivalents

1,267

0

Interest and dividends received

4

2

Net cash provided by / used in investing activities - continuing operations

-182

83

Net cash provided by / used in investing activities - discontinued operations

-6

0

Net cash provided by / used in investing activities - total

-188

83

Proceeds from borrowings

267

1

Repayments of borrowings

-227

-16

Interest paid and other financial disbursements

-17

-13

Net cash provided by / used in financing activities - continuing operations

23

-28

Net cash provided by / used in financing activities - discontinued operations

-1

0

Net cash provided by /used in financing activities - total

22

-28

Change in cash and cash equivalents - continuing operations

12

7

Change in cash and cash equivalents - discontinued operations

-17

0

Change in cash and cash equivalents - total

-5

7

Cash and cash equivalents as of beginning of period

360

146

Exchange differences and other changes in cash and cash equivalents - total

-4

2

Cash and cash equivalents as of end of period

351

155

of which continuing operations

277

155

of which discontinued operations

74

0

5

Income Statement Q1 2024

in € million

Q1/2023

Q1/2024

Chg. in

%

-15%

Sales

1,899

1,607

Cost of sales

-1,463

-1,327

9%

Gross profit

436

280

-36%

19%

Selling expenses

-276

-223

Research and development expenses

-27

-28

-4%

General administration expenses

-71

-68

4%

Other operating income

12

21

75%

Other operating expenses

-40

-39

3%

Operating result (EBIT)

34

-57

n.m.

n.m.

Income from investments accounted for using the equity method

1

-46

Interest income

4

2

-50%

Interest expense

-30

-11

63%

Other financial income and expense

4

-7

n.m.

Financial result

-21

-62

<-100%

n.m.

Income before income taxes

13

-119

n.m.

Income taxes

-3

21

Income after income tax from continuing operations

10

-98

n.m.

Income after income tax from discontinued operations

-54

0

-100%

Income after income taxes

-44

-98

<-100%

of which attributable to non-controlling interests

0

0

0%

Net income (attributable to LANXESS AG stockholders)

-44

-98

<-100%

EPS total (in €)

-0.51

-1.13

<-100%

thereof EPS (in €) from continuing operations

0.12

-1.13

n.m.

thereof EPS (in €) from discontinued operations

-0.63

0.00

-100%

EPS adjusted (in €)*

0.63

-0.09

n.m.

* continuing operations only

Abbreviations:

Consumer Protection

F&F Flavors & Fragrances

LPT Liquid Purification Technologies

MPP Material Protection Products

SGO Saltigo

Specialty Additives

LAB Lubricant Additives Business

PLA Polymer Additives

RCH Rhein Chemie

Advanced Intermediates:

AII Advanced Industrial Intermediates IPG Inorganic Pigments

6

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Lanxess AG published this content on 08 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 May 2024 05:08:10 UTC.