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LANXESS: Lanxess' Q2 2025 Earnings: A Tough Quarter Amidst Depressed Demand and High Volatility

Lanxess' Q2 2025 earnings report was marked by a decline in sales and EBITDA, with the company citing depressed demand, high volatility, and short order patterns from customers. Sales were down 4 percentage points, while EBITDA decreased by EUR 150 million compared to the same period last year. The decline was driven by volume, price, and portfolio effects. Despite these challenges, the company managed to keep working capital stable, with a positive surprise in inventory levels. Cash flow was also positive, with EUR 31 million of free cash flow in Q2. "We have started a review of our production network and have taken measures to improve efficiency," said Matthias Zachert, CEO of Lanxess.

LXS.DE

EUR 17.34

-1.25%

A-Score: 3.1/10

Publication date: August 14, 2025

Full Report

Author: Analystock.ai

📋 Highlights
  • Sales and EBITDA Decline: Sales fell 4% while EBITDA dropped EUR 150 million YoY due to volume, price, and portfolio effects.
  • Free Cash Flow and Debt Reduction: Generated EUR 31 million free cash flow in Q2, with net debt reduction driven by urethane sales.
  • Cost-Saving Measures: Closed Hexane oxidation plant (EUR 10 million annual savings) and underutilized Widnes plant to boost efficiency.
  • 2025 Guidance Adjusted: Revised EBITDA target to EUR 520–580 million amid macroeconomic challenges and chlorine force majeure.
  • Energy Cost Management: Implemented contracts to pass energy costs to customers, offsetting EUR 31 million free cash flow volatility risks.

Guidance and Outlook

Guidance for 2025 was adjusted to EUR 520 million to EUR 580 million, taking into account the macroeconomic environment and the chlorine force majeure. The company assumes that demand will pick up in 2026, driven by the German government stimulus program, and is prepared for the increase in demand. However, Zachert expects Q3 to be tough due to seasonality and the ongoing impact of tariffs, with an order uptick expected in Q4 as customers prepare for 2026.

Segment Performance

The Consumer Protection segment, which is less impacted by Chinese competition, faces pressure from customers due to agro weakness. However, its profitability is resilient due to higher specified and data-protected product grades. The agro business is still challenging, but the company is participating in innovations and is positive about the mid and long term.

Valuation Metrics

With a P/E Ratio of -15.81, a P/B Ratio of 0.49, and an EV/EBITDA of 3.83, Lanxess' valuation appears to be relatively low. The company's ROIC and ROE are also low, at 0.08% and -3.04%, respectively. However, its free cash flow yield is an attractive 7.02%. These metrics suggest that the company's current valuation may be pricing in some of the challenges it is facing.

LANXESS's A-Score