LANXESS Targets Deeper Cuts and Deleveraging as Chemical Markets Remain Weak

LANXESS is pursuing a strategy of deeper cost reductions and portfolio restructuring as weak demand in critical markets, specifically agriculture and construction, continues to exert significant pressure on company earnings. Faced with a challenging macroeconomic environment, the management team is implementing stringent measures to stabilize the balance sheet and bolster operational efficiency.

The company’s internal optimization program, known as FORWARD!, has already generated approximately €150 million in savings. Moving forward, LANXESS expects to realize an additional €170 million in savings through 2028. These initiatives encompass broad structural changes to internal processes and a strategic shift in manufacturing capacity toward the pharmaceutical sector, which currently offers higher stability and demand compared to the company's traditional heavy industry segments.

Second-quarter financial results showed a degree of recovery, with EBITDA pre rising to €152 million, up from €94 million in the first quarter of the year. Furthermore, free cash flow shifted into positive territory during this period. However, management has urged caution, noting that this quarterly improvement may not signal a long-term trend, given the persistent weakness observed across global chemical markets.

Deleveraging remains the cornerstone of the company’s financial strategy. LANXESS has set a target to bring its net debt down to a level below 2.5 times EBITDA, with the ultimate goal of returning to a sustainable investment-grade credit rating. This process requires tight management of working capital and capital expenditures, as well as evaluating options for asset monetization, such as the potential divestment of its stake in Envalior.

For the full year 2026, LANXESS has maintained its EBITDA pre guidance in the range of €450 million to €550 million. Looking toward the immediate future, the company projects third-quarter EBITDA pre to land between €130 million and €150 million. Despite these proactive steps, the company acknowledges that internal cash generation remains constrained by the continued stagnation within its primary end-market sectors.