Sudden! Another International Giant Announced the Sale of Its Polyurethane Business!

On November 6, Lanxess announced a reduction in its profit target for 2023. At the same time, it announced that the company has launched a plan to sell the polyurethane system business unit. As the only remaining polymer business of LANXESS Group, this business unit no longer fits the group's strategic positioning, and the group has made systematic adjustments to its business portfolio in recent years.The polyurethane system business unit has six production sites worldwide and employs approximately 400 people. In the case of polyurethane, although the barriers to this product are very high, many companies have not received good returns over the years, resulting in companies in the industry being disinterested in expanding production.

It is reported that high energy prices and declining global demand have led the German chemicals giant to cut its dividend and profit prospects. Currently, Lanxess expects earnings before interest, taxes, depreciation and amortization (EBITDA) in fiscal 2023 to be 500 million to 550 million euros. The adjusted outlook is below the current consensus level of 571 million euros. Lanxess previously expected earnings before interest, taxes, depreciation and amortization in fiscal 2023 to be 600 million to 650 million euros. Beyond this, demand for Lanxess' specialty chemicals products is expected to be lower than expected in the fourth quarter. Active destocking by agro-industrial customers, as well as supplier-related production restrictions in the Flavors and Fragrances business unit at the Botlek (Netherlands) production site, will have an additional impact on results.

In view of the weak business development, the Management Board intends to recommend a reduction in the dividend for the 2023 financial year to 0.10 euros.

Preliminary data shows that Lanxess's earnings before interest, taxes, depreciation and amortization (EBITDA) in the third quarter of 2023 are expected to be 119 million euros, roughly in line with the current market expectations of 120 million euros.

Polyurethane was first developed by German scientists in the 1930s. It is a new material produced by the polycondensation of liquid isocyanate and liquid polyether or glycol polyester. The world's polyurethane market is mainly concentrated in the United States, Western Europe, China, South Korea and Japan. From a global perspective, the Western polyurethane industry is relatively mature. Driven by the transfer of global polyurethane industry production capacity and the rapid development of downstream industries, the Asian market has a good momentum of industry development, especially China is currently the largest producer of polyurethane, represented by Wanhua Chemical.

Previously, SKC's board of directors decided to sell 100% of the shares of SK Pucore, a polyurethane raw material business subsidiary, to a private equity fund operating company for a sale amount of 410.3 billion won (approximately 2.2 billion yuan). The sale objects also include optical polyurethane materials business of Woori Finechem, which SKC acquired in 2019.