Stock Groups

Chemicals group Lanxess says Russian gas embargo would hit profit -Breaking

[ad_1]

© Reuters. FILE PHOTO: The headquarters of chemical substances maker Lanxess are seen in Cologne, Germany November 15, 2018. REUTERS/Wolfgang Rattay

By David Latona

(Reuters) -German speciality chemical substances maker Lanxess on Thursday mentioned a possible embargo on Russian fuel would weigh on its manufacturing and core revenue this yr, after releasing upbeat steering for the present quarter.

The Cologne-based group mentioned an entire freeze on Russian fuel imports would have an estimated direct damaging impact of 80 million to 120 million euros ($85-$127 million) per yr on its adjusted core revenue (EBITDA), although the oblique results have been unquantifiable.

Lanxess, which makes high-end speciality chemical substances resembling components, lubricants, flame retardants and plastics, expects a second-quarter core revenue of 280 million to 350 million euros, in contrast with 277 million final yr, because it intends to maintain passing on greater uncooked materials and vitality prices in all segments.

The corporate has to date managed to largely push via common value hikes of 31% amid world supplies shortages whereas cashing in on sturdy demand for high-margin speciality chemical merchandise.

Chief Govt Officer Matthias Zachert advised journalists that if vitality costs have been to stay secure, the corporate might face round 1 billion euros in vitality prices for the complete yr, twice as a lot as in 2021.

He mentioned that within the occasion of a fuel embargo, which might have “catastrophic penalties” for the German chemical substances sector, manufacturing on the most gas-intensive websites can be shut down, whereas a discount in output can be wanted at different crops.

Shares within the Frankfurt-listed firm have been down 3.3% at 1030 GMT, among the many worst performers on the German mid-cap index.

For the complete yr, Lanxess nonetheless expects EBITDA earlier than one-off objects to be considerably greater than in 2021.

Nevertheless, it mentioned the outlook didn’t embody the potential results of the struggle in Ukraine or the acquisition of IFF’s Microbial Management enterprise, which is anticipated to shut within the third quarter.

($1 = 0.9439 euros)

[ad_2]