Welcome to LANXESS Interim Report 2012!

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Europe’s stock markets came under pressure again in the second quarter. With the markets in the grip of the euro debt crisis, the German share indices fell sharply. LANXESS stock also declined considerably, closing the quarter at €49.72.

The general mood on the equity markets having turned rather more positive in the first quarter, concerns about Europe’s debtor nations again predominated in the second quarter. Following the haircut for Greece, the financial markets increasingly focused on the debt levels of Spain and Italy. The euro debt crisis was the chief source of market stress, but worries about a global economic downturn gained traction starting in June and exerted additional pressure on the markets. The decision by E.U. leaders at their summit in late June, which opens the way for eurozone countries to funnel capital from bailout funds directly to their ailing banks without further conditions, was a source of great relief to the markets, driving stock prices upward again on the last trading day of the second quarter.

The weak and very nervous market environment weighed heavily on the German indices and the Dow Jones STOXX 600 ChemicalsSM. The DAX, which had started the second quarter at a good 7,000 points, subsequently moved downward to hit a half-year low of 5,969 in early June. Buoyed by the outcome of the E.U. summit, it notched a nearly 300-point gain by June 29, the last trading day, closing at 6,416 for a loss of 7.6% on the quarter. The MDAX remained at or above 10,000 points until early June, thereafter dipping to a quarter low of 9,715. The MDAX declined nearly 3.4%, closing the quarter at 10,344. The Dow Jones STOXX 600 ChemicalsSM also fell substantially in the reporting period, closing the quarter at 558 points for a loss of 6.2%. In this market environment our stock price also came under pressure, at times posting considerable losses.

Important corporate news in the reporting period included the publication of strong first-quarter results along with specific earnings guidance for fiscal 2012. At the beginning of May, we confirmed our growth strategy for 2012 and announced that we expect full-year EBITDA pre exceptionals to come in 5% to 10% ahead of the figure for 2011. We also presented growth projects aimed at strengthening our business units in specific areas. In the Performance Polymers segment, for example, we are investing in a new high-tech plastics facility in Antwerp, Belgium for the High Performance Materials business unit. This €75 million investment in a new polymerization plant is an important step toward further global growth in this business unit. In the Advanced Intermediates segment, we brought on stream the new formalin production facility of the Advanced Industrial Intermediates business unit at the site in Krefeld-Uerdingen, Germany.

Despite the positive company news, our shares lost 19.7% of their value compared to the end of the first quarter and ended the period on June 29 at €49.72. From mid-May on, the stock price was no longer able to escape the trends in the lead index DAX or the benchmark indices MDAX and DJ STOXX 600 ChemicalsSM. For the half-year, however, our stock tangibly outperformed these indices with a gain of 24.3%. Further positive impetus was felt at the beginning of the third quarter, with LANXESS stock again rising above €50 despite continuing volatility.

LANXESS Stock Performance vs. Indices
Chart: LANXESS Stock Performance vs. Indices
    Q4 2011 Q1 2012 Q2 2012
Capital stock/no. of shares1) €/no. of shares 83,202,670 83,202,670 83,202,670
Market capitalization1) € billion 3.32 5.16 4.14
High/low for the period 46.90/31.34 63.80/40.17 64.40/45.75
Closing price1) 40.00 61.98 49.72
Trading volume million shares 33.753 38.106 39.490
Earnings per share 0.06 2.32 2.11
1) End of quarter: Q4: December 31, 2011, Q1: March 31, 2012, Q2: June 30, 2012
Reported Holdings of 3% or Above by Institutional Investors (as of July 10, 2012)
Dodge & Cox, San Francisco, U.S.A. 9.93%
BlackRock, Inc., New York, U.S.A. 9.99%
Norges Bank (central bank of Norway), Oslo, Norway 3.004%
Allianz Global Investors, Frankfurt, Germany 3.04%
Chart: Recommendations as of February 15, 2012
Chart: Recommendations as of July 10, 2012


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