Special charges of over half a billion euros weigh on the balance sheet of the specialty chemicals group Lanxess for the fiscal year 2021. The company announced on Tuesday evening that it had to write off 413 million euros on goodwill in the Flavors & Fragrances and Polymer Additives sectors, which were related to acquisitions.
The demand in these areas fell short of the company's expectations, which also applies to the current year. Solely for the joint venture Envalior, in which Lanxess still holds 40.9 percent of the shares, depreciations in the amount of a low to mid three-digit million figure are expected to be necessary.
The stake was still valued at 1.06 billion euros at the end of September. Despite these burdens, Lanxess expects that the adjusted operating result (Ebitda) for the year 2023 will be in line with analysts' estimates of an average of 510 million euros.
The Speciality Chemicals Group had already reduced its forecast for the fiscal year 2021 to 500 to 550 million euros in autumn after expectations in the Flavors & Fragrances and Polymer Additives sectors could not be met. These areas had moved into the company's focus due to acquisitions.
The joint venture Envalior, which was formed by the merger of the plastics and polymers division of Lanxess with the corresponding division of the Dutch company DSM, caused a stir. The financial investor Advent acquired the majority of Envalior, which resulted in a billion profit for Lanxess.
Despite the Strains, Lanxess Expects Adjusted EBITDA to be within Analyst Estimates of 510 Million Euros on Average in 2023. This Also Confirms the Company's Forecast, Which Was Lowered to Between 500 and 550 Million Euros in the Fall and Showed a Loss of 266 Million Euros for the Current Year. Thus, the Write-Downs on Goodwill and the Stake in Envalior Will Not Affect the Operating Result for 2023.
For Lanxess, however, this means that it is likely to slide into the red figures in the ongoing year in its continuing operations. The loss amounted to 266 million euros after nine months. Nevertheless, the company is confident that it will achieve solid results in the long term. The special charges in the balance sheet of the past year should not have any impact on the long-term development of Lanxess.
