LANXESS Aktiengesellschaft Q1 Earnings Call Highlights

Key Points

• Weak Q1 performance: Group sales fell 14% year‑over‑year and EBITDA declined 29%, with Intermediates hit hardest (sales -17%, EBITDA -33%) while Consumer Protection and Specialty Additives also saw double‑digit EBITDA declines.
• Guidance and liquidity: Management confirmed full‑year EBITDA guidance of EUR 450–550 million and says an October EUR 500 million maturity is "quasi pre‑financed," with > EUR 400 million cash and ~EUR 1.3 billion undrawn facilities while implementing cost savings and planned job reductions over 2–3 quarters.
• Supply‑chain risks and pricing actions: Management warned of Middle East–related logistics and feedstock risks, has implemented price increases in April and May (varying by product, some >50%), and noted a gradual demand recovery since March though utilization remains below normal (~65% last year).

LANXESS Aktiengesellschaft ETR: LXS executives told investors the company saw a “soft start” to 2026 but is expecting a meaningful sequential improvement in the second quarter, supported by improving volumes since March and price increases intended to offset rising input costs.

Speaking on the company’s first-quarter 2026 results call, CEO Matthias Zachert said January and February were marked by lower volumes, while March showed a “positive tone” as business improved. He also cautioned that year-on-year comparisons are affected by two factors: a weaker U.S. dollar versus the prior year and the fact that LANXESS’ urethanes business is no longer consolidated in 2026.

Cash flow, working capital, and net debt

Zachert said management has remained focused on cash flow and balance sheet strength. He described first-quarter cash flow as negative due to normal seasonality, noting that LANXESS typically starts the year with cash outflows in the first and second quarters before improving later in the year.

Net working capital was described as “pretty tightly” managed and lower than the previous year, though Zachert said he expects a gradual increase in the second quarter as precursor and energy costs rise. Net debt, which he said normally increases by about EUR 100 million to EUR 200 million at the beginning of the year, was kept “by and large” at a comparable level due to cash management.

Middle East conflict and implications for demand, supply chains, and pricing

Zachert said escalating conflict in the Middle East has “swiftly changed market conditions,” putting pressure on value chains and increasing customer concerns about delivery security. He contrasted the current situation with the war in Ukraine, arguing that while the Ukraine conflict disadvantaged European chemical producers due to reduced Russian energy supplies to Europe, the Middle East conflict could have broader global economic consequences, with Asia likely to be most affected given the region’s reliance on Iranian oil and gas supply.

He said logistical chains are under pressure but reported no negative impact so far on supplies shipped to LANXESS or its customers, citing contracts in place for ocean freight and other logistics. He also said LANXESS moved quickly on pricing after seeing oil and gas markets react in early March, stating the company was “one of the first chemical companies” to announce a series of price increases aimed at mitigating input-cost inflation.

Segment outlook: advanced intermediates seen with strongest momentum

On segment trends, Zachert offered qualitative guidance relative to the prior two to three quarters of 2025:

• Consumer Protection: Zachert said this segment should be “by and large not be really affected” by the Middle East conflict, though some precursor prices may rise. He emphasized that consumer demand is the key driver and noted some precursors come from China, which is being monitored.
• Additives: He said there is “moderate upside potential,” while acknowledging bromine and flame retardant supply can involve the Middle East. He added that LANXESS has sourcing from El Dorado, which he said is not affected.
• Advanced Intermediates: Zachert said this segment has the “strongest momentum,” particularly the AII business, which had been pressured by competition from China. He said customer demand for delivery security is rising and that chemical pricing in China has increased over the past four to six weeks, a trend he said is also showing up in LANXESS’ own pricing.

Guidance: sequentially stronger Q2 expected; full-year view unchanged

Despite what he called a world “in quite a turmoil,” Zachert said LANXESS is maintaining its full-year guidance. He provided a quantitative second-quarter corridor of EUR 130 million to EUR 150 million (in the context of the discussion, referring to EBITDA expectations), calling it a “strong sequential improvement” versus the first quarter and driven by volume, pricing, or both depending on the business.

However, he also highlighted that further escalation in the Middle East could weigh on demand, potentially pushing results toward the lower end of the company’s guidance range.

Q&A: order visibility, crop protection dynamics, anti-dumping, bromine seasonality, and distributors

During Q&A, Zachert said the company has strong visibility into April volumes and pricing, a “good order book for May,” and a “reasonable indication” for June. He added that March momentum continued into April, and that volumes were at the same momentum as March with “a slight uptick for April and May.”

On pricing, Zachert said increases announced in March are being rolled out over several weeks, with faster implementation where spot pricing applies and more lag where quarterly contract structures are in place. In response to UBS, he said pricing should “ramp up” through the second quarter, with “first steps in April,” around “two-thirds” achieved in May, and “the full effect” expected in June, while noting LANXESS will monitor any resulting volume impacts.

Asked by Deutsche Bank about net pricing versus costs, Zachert said prices should rise sequentially in the second quarter versus the first, and—if momentum continues and geopolitical conditions do not worsen—should also rise sequentially in the third quarter versus the second. He added that higher raw material and energy costs that began rising in March did not materially impact first-quarter profit and loss but are expected to become visible in the second quarter. He said the company’s second-quarter guidance already reflects absorption of those rising costs.

On crop protection and Saltigo, Zachert said commodity crop protection products had faced severe generic pressure from India and China in the past 12 months. He said China’s freight issues and supply-chain pressures may alter competitive dynamics, though he said LANXESS does not yet see an immediate reaction in Europe and would typically expect such changes to emerge three to six months later.

Regarding EU anti-dumping actions, Zachert said these processes typically take 12 to 18 months. Discussing adipic acid, he said that following anti-dumping decisions, Chinese suppliers had “loaded up” the market six to nine months ahead of the declaration, delaying the benefits until excess stock is absorbed. He said that for adipic acid, that absorption and the related volume and pricing improvement are “now happening.” He also said he expects additional anti-dumping cases to be decided over the course of the year and that other products could be positively impacted.

On why customers are emphasizing security of supply, Zachert told JPMorgan that some customers who shifted to China over the last several months for pricing reasons are now returning to LANXESS’ order book, and that the company is also seeing “completely new customers.” He added that Chinese pricing has been moving upward, which he said is supportive for European pricing as well.

On bromine, Zachert attributed recent price moves to seasonal patterns tied to extraction methodology, saying prices typically rise in the colder months (Q4 and Q1) and decline in Q2 and Q3. He cited bromine prices rising to around EUR 60,000 to EUR 70,000 before moving down to roughly EUR 38,000 to EUR 40,000, which he characterized as still “in the healthy territory” and up versus levels from one to two years ago.

Finally, in response to Goldman Sachs on distributors, Zachert said LANXESS uses distributors globally where order sizes are too small or customers are too distant, but the company is also strengthening direct customer relationships to improve market transparency and customer insight. He added that customers seeking preferred treatment and clarity may favor direct access to manufacturers, while acknowledging the chemical distribution market includes a wide range of business models.

Closing the call, Zachert said management would be meeting investors and invited follow-up questions through investor relations.

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.

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