LANXESS Aktiengesellschaft (ETR:LXS) reported a “weak start” to 2026, with sluggish market conditions in January and February followed by a more encouraging turn in March, according to CEO Matthias Zachert on the company’s first-quarter press conference call.
Claus Zemke, who moderated the call, said Zachert and CFO Oliver Stratmann would review Q1 results and the outlook for the full year. Management confirmed full-year guidance, citing improving volumes since March and continued cost discipline, while also warning that geopolitical tensions—particularly in the Middle East—are adding uncertainty to energy markets and supply chains.
First-quarter results show declines in sales and earnings
By segment, Zachert described broad-based pressure:
- Consumer Protection: Weak demand and a weak U.S. dollar weighed on results. Sales declined and EBITDA fell 15%, according to management.
- Specialty Additives: Volumes were “slightly up,” but price pressure—particularly tied to developments in the U.S.—pushed sales down 4% and EBITDA down 15%.
- Intermediates: Zachert said Intermediates “suffered most” again, with sales down 17% and EBITDA down 33%, citing volume pressure and noting that both business units in the segment are primarily active in Germany.
Zachert argued that “site conditions in Germany are still not competitive by global comparison,” and said that was being reflected in results, particularly for operations with a stronger domestic footprint.
Middle East conflict: logistics intact so far, but risks building
Management devoted a significant portion of the call to the potential implications of the Middle East conflict for chemical supply chains and costs. Zachert said the company had reviewed the situation from multiple angles, including logistics and raw material procurement.
“From the logistics side and also from the raw material procurement side, we don’t feel any direct impact on our production that would have hit us,” Zachert said, while cautioning that the situation remains fluid and that the next few weeks would be telling as shipments already in transit are delivered and replacement flows are arranged.
Zachert said LANXESS expects the global situation to remain tense and warned of “additional distortions” tied to the Strait of Hormuz. He added that reported force majeure events have been increasing, which he said was indicative of mounting supply stress.
In response to a question from Handelsblatt’s Gert Freundhof, Zachert said the company assumes supply-chain distortions could persist for the next four to six weeks, with Asian countries such as China, India, Korea, and Japan more exposed due to their dependence on Middle East feedstocks, including naphtha. Even if the Strait of Hormuz were to reopen soon, he said logistics industry contacts expect “3 to 6 months” before conditions stabilize.
Demand improves gradually from March; pricing actions underway
Zachert said demand began strengthening in March, with a “continuous increase in volumes” that has carried into the second quarter. He characterized the improvement as gradual rather than a short-term spike, suggesting it was not driven by inventory hoarding.
Thomson Reuters’ Patricia Weiss asked whether the momentum reflected inventory builds. Zachert said LANXESS saw “a gradual increase day by day,” along with easing price pressure from China, which he described as “a healthy development.”
Pricing has become a central lever as costs rise. Zachert said that immediately after the outbreak of war in the Middle East, LANXESS began increasing prices with the goal of passing through higher logistics and raw material costs “right away.” He said one wave of price increases would take effect in April and another in May.
Asked by FAZ’s Jonas Janssen about the magnitude of increases, Zachert said it varies widely by product group depending on energy and feedstock intensity. He cited increases of “5%–10%” in some groups, while in others “price increases go up to 50% plus.”
Intermediates: China dynamic shifting; utilization still below normal
On Intermediates, Zachert said the competitive pressure from China that weighed on 2025 performance has begun to shift. He tied part of the change to raw material economics in Asia, describing how discounted Russian oil after the Ukraine war had lowered feedstock costs for Asian chemical value chains, enabling aggressive pricing into Europe.
Zachert said that dynamic appears to be changing, with China now facing higher raw material costs that are “similar to the ones that we have to pay,” leading to rising prices in China for products LANXESS also produces. He said that is strengthening LANXESS’s position versus last year’s conditions.
Still, capacity utilization remains weak. In response to Börsen-Zeitung’s Annette Becker, Zachert said utilization is “still tense” but improving, and that the company has not reached a “normal level,” which he described as above 80% in the industry. He said utilization ended last year at 65% (below 70% for the year) and is expected to increase more clearly in the second quarter. Higher volumes, he added, should improve absorption of fixed costs and support margins, with the impact expected to be most pronounced in Intermediates.
Guidance confirmed; refinancing and job cuts discussed
Despite the weak Q1, Zachert confirmed LANXESS’ full-year 2026 guidance of EBITDA between EUR 450 million and EUR 550 million. He said management remains “modest” given persistent uncertainties, including Middle East tensions and currency headwinds, and expects negative exchange-rate effects from a weak dollar to last throughout the year.
On Germany’s economic stimulus efforts, Zachert said the effects may only become visible in the second half of the year, and potentially more clearly in the first half of the following year. He added that the company had hoped for a faster pickup in construction, but “we don’t see it in the order books yet,” despite an increase in permit applications.
Kölner Stadt-Anzeiger’s Torsten Waldhof asked about job reductions in Germany. Zachert said the company had addressed the topic during its earlier financial statements press conference and is now implementing the program. He said it would take “2-3 quarters,” and that the effort has started and is proceeding according to timeline.
Stratmann addressed questions on the company’s credit profile and funding. Asked about Moody’s junk-level rating, he said LANXESS aims to be an investment-grade company and is focused on improving key performance indicators through cost savings, working capital management, pricing adjustments that reflect higher input costs, and reducing leverage.
In response to a refinancing question from Andrew Noel, Stratmann said a benchmarked EUR 500 million maturity is due in October and is “quasi pre-financed.” He said the company has more than EUR 400 million in cash and about EUR 1.3 billion of completely unused credit facilities, adding that management is monitoring markets and will use refinancing windows “as we find them attractive.”
Looking ahead, Zachert said supply reliability has become a more prominent customer concern than in prior quarters, when price dominated discussions. Whether that shift becomes a longer-term change in procurement behavior remains uncertain, he said, though customers have seen that “being completely dependent on Asia can lead you to… a situation where you are completely stuck.”
About LANXESS Aktiengesellschaft (ETR:LXS)
LANXESS Aktiengesellschaft, together with its subsidiaries, operates as a specialty chemicals company that engages in the development, manufacture, and marketing of chemical intermediates, additives, specialty chemicals, and consumer protection products worldwide. It operates through three segments: Consumer Protection, Specialty Additives, and Advanced Intermediates. The Consumer Protection segment provides material protection products; disinfectant, hygiene, and preservative solutions; flavors and fragrances; liquid purification technologies for the treatment of water and other liquids; and precursors and intermediates for the agrochemicals, pharmaceuticals, and specialty chemicals industries.
