Lanxess (LXS) Q2 2024 earnings summary

Executive summary

• Q2 2024 profitability improved with EBITDA pre exceptionals up 69% year-over-year to €181 million, despite a 5.6% sales decline, driven by cost structure improvements, higher volumes, and operational leverage.

• Free cash flow reached €83 million, supported by tight working capital management and reduced net financial debt.

• The FORWARD! program and cost-cutting initiatives delivered sustainable margin gains and operational efficiency.

• Adjusted EPS from continuing operations improved to €0.60 in Q2 2024 from -€0.19 in Q2 2023.

• Market conditions remain soft, with sequential improvements but no broad-based demand recovery.

Financial highlights

• Q2 2024 sales were €1,678 million, down 5.6% year-over-year; EBITDA pre exceptionals was €181 million (+69% YoY), with a margin of 10.8%.

• Net financial debt reduced to €2,547 million; equity ratio stable at 47%.

• Free cash flow improved to €83 million from €0 million YoY.

• H1 2024 sales were €3,285 million (-10.7% YoY); EBITDA pre exceptionals was €282 million (-4.7% YoY).

• Gross profit increased 17% YoY in Q2 to €364 million; gross margin rose to 21.7%.

Outlook and guidance

• FY 2024 EBITDA pre exceptionals is expected to increase by 10–20% over the €512 million reported in 2023, with Q3 EBITDA pre seen at or above Q2 levels.

• No broad-based demand recovery anticipated; ongoing weakness in agro and construction sectors.

• CapEx guidance for 2024 lowered to ~€330 million, with expectations to remain in the €300 million range for 2025.

• Further improvement in cash flow and profitability targeted for 2025 and 2026.

• Segment outlooks: Consumer Protection to match prior year at best, Specialty Additives to see slightly to moderately higher earnings, Advanced Intermediates to deliver significantly higher earnings.