Lanxess CEO Says China Concerns Overblown

09.10.2015 -

Investor concerns about weakening business in China are overblown, Lanxess CEO Matthias Zachert said in an interview with the news agency Reuters. His assertions echoed recent remarks by Patrick Thomas, CEO of Covestro – the former Bayer MaterialScience – who described the Chinese slowdown as a “wobble.”

While the Lanxess chief acknowledged that his group’s business with the People’s Republic has been weaker in the second half of 2015, as expected, he said the German specialty chemicals producer’s view of the market, which accounts for about 13% of its sales, has not deteriorated since August.

Compensating for the Chinese softness, Zachert said markets in Germany and southern Europe as well as demand from US customers in the automotive and construction industries have surpassed expectations. On the downside, the recession in Brazil’s market, where Lanxess has rubber production facilities, has made for sluggish business.

All in all, Zachert said Lanxess expects to be able to report a 10% rise in EBITDA against the 2014 period when revealing Q3 2015 results on Nov. 5. Management’s guidance for full year EBITDA, in the range of €840-880 million, is anticipated to remain "roughly intact.”

The German group's earnings prospects have brightened over the year, Zachert told Reuters. He attributed the improvement to lower raw material costs, a strong US dollar and the acceleration of internal cost-cutting measures aimed at softening the blow of global overcapacity in the synthetic rubber industry.