Lanxess AG (LXS), the chemical maker that joined Germany’s benchmark DAX index in September, said it will idle a factory in Belgium and another in the U.S. because of weak orders.
The factory closures, which will stop producing in coming weeks, are a reaction to “soft” underlying demand, which has continued into 2013 across most businesses, the company said. Lanxess shares fell as much as 4 percent to 64.20 euros in Frankfurt trading.
A butyl rubber plant Zwijndrecht in Belgium will be closed for four weeks in May and production of ethylene propylene diene monomer, or EPDM, in Orange, Texas will be closed for as many as six weeks, said Daniel Smith, spokesman for the Leverkusen, Germany-based company. Lanxess is budgeting for demand to increase over the course of the year as it reaches for an operating profit target of 1.4 billion euros ($1.8 billion) next year.
“We are not surprised at all about the very cautious outlook for the first half of 2013,” Peter Spengler, an analyst at DZ Bank said in a note to clients. “We hope for a good second half performance. There is even some hope for a decent second quarter.” Spengler rates Lanxess hold.
The outlook overshadowed fourth-quarter results that beat analysts’ estimates. Earnings before interest, taxes, depreciation, amortization and one-time items increased 37 percent to 239 million euros in the fourth quarter, the company said today in an unscheduled statement. Berenberg analyst Jaideep Pandya had predicted 215 million euros.
Sales held steady at 2.12 billion euros, in line with estimates. Earnings per share in the quarter rose to 62 euro cents from 6 euro cents.
The factory near Antwerp has a capacity of about 150,000 metric tons of butyl, which is used in the inner liners of car tires, spokesman Smith said.
Butyl is at the commodity end of Lanxess’s portfolio, subjected to competition from rival makers including China Petroleum & Chemical Corp. (600028), Exxon Mobil Corp. (XOM:US) and Russia’s Sibur Holding OJSC. Lanxess Chief Executive Officer Axel Heitmann is steering the focus toward higher-margin rubbers produced with catalysts to increase their performance and efficiency.
The plant in Texas can produce 60,000 metric tons of EPDM, which is used in wiper blades and door sealants, he said.
Shares of the maker of pigments, leather chemicals and water-treatment chemicals were down 3.3 percent at 64.70 euros as of 12:28 p.m. local time. The stock has fallen 2.6 percent this year for a market value of 5.4 billion euros.
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