Lanxess is to transform its fine chemicals business out into a legally-discrete subsidiary as part of a programme to increase its competitiveness in the market for pharmaceutical and agricultural chemicals, reports Phil Taylor.
The German chemical company, which was spun out of Bayer and debuted on the Frankfurt stock exchange earlier this year, has also announced a new round of job cuts, trimming 960 positions from its workforce by 2007 and consolidating its manufacturing plants in a bid to carve €100 million a year off its running costs.
Along with stytrenic resins, fine chemicals is the biggest-loss-making unit at Lanxess, which reported a net loss of €12m last year, an improvement on the €997m loss posted in 2003. On the plus side, sales were up 7 per cent to €6.7bn. Several unprofitable plants will be closed down in the fine chemicals business, but management has committed to investing €50 million in the business by 2007, with a further €50m in the warchest out to 2010, to boost the unit's competitiveness 'in the high-tech production of fine chemicals'.
Lanxess CEO Dr Axel Heitmann said the restructuring was imperative 'to ensure the survival of both units'. "We have achieved our aim of attaining competitiveness while at the same time preserving as many jobs as possible in Germany and Spain."
Around 200 jobs will be shed this year, with about 400 more in each of the next two years. The number of positions will be reduced by around 300 in the styrenic resins business unit and by about 500 in fine chemicals, according to the company.
Meanwhile, Lanxess also said that Morgan Stanley successfully placed about 11.6 million of its shares with institutional investors at €18.20 per share raising €211 million. It has also repurchased a mandatory €200 million bond from Bayer AG and resold it to Morgan Stanley 'in order to optimise its capital structure'.