Lanxess, the German specialty chemicals company, continues to be severely affected by persistent weak demand. The outlook for the company is bleak and many investors are beginning to lose patience. The current industry slump has hit Lanxess even harder than before. In the fourth quarter, management, under the leadership of Matthias Zachert, had to slash its forecasts for operating profit again, due to even weaker than expected demand.

Consequently, the share price dropped dramatically again. At the end of trading of the MDax, the share lost 7.7 percent in value and dropped to 21.23 Euros. In annual terms, Lanxess leads with a price loss of almost 44 percent, holding the red lantern in the index of medium-sized listed companies.

Analyst Chris Counihan from the US investment bank Jefferies commented on the repeated forecast cut and particularly pointed out the impact on the company's balance sheet. At this level of results, free cash flow is limited, which is now reflected in the reduced dividend. Lanxess expects an adjusted earnings before interest, taxes, and amortization (EBITA) of 500 to 550 million euros for the current year. Originally, the executive board had anticipated between 600 to 650 million euros. Analysts had most recently predicted an average operating result of around 571 million euros.

At the beginning of the year, Lanxess CEO Zachert had predicted an operating result that matched the previous year's level of 930 million euros. In May, the company issued a forecast that already matched the level of the previous year. But just a few weeks later in June, the forecast had to be lowered again. This further reduction in profit expectations at Lanxess is another example of the current situation faced by many large German chemical companies. Both BASF and Evonik had to scale back their goals this summer. The industry suffers not only from high energy prices, but especially from low demand due to the faltering world economy.

At Lanxess, the situation is now additionally complicated by the onset of stock reduction among customers in the agricultural industry and production restrictions due to suppliers. The company also announced it will cut the dividend for the current year from 1.05 euros to 10 cents per share. To achieve savings of around 100 million euros in the current year, Lanxess launched a savings program in August. Among other things, hiring is to be stopped and investments cut across Europe.

Long-term profound measures such as streamlining the administration should save around 150 million euros per year. In Germany, two out of a total of 53 operations are affected.

In the future, it will become increasingly important for Lanxess to broaden its technological and product base. The difficult market situation underscores that diversification at both levels is essential for successfully mastering future challenges.