LANXESS pushes deeper cost cuts and debt reduction as weak agriculture and construction markets pressure earnings. The company targets net debt below 2.5x EBITDA and continues reshaping its portfolio toward specialties and U.S. growth.
LANXESS is pushing deeper into cost-cutting and debt reduction as weak agriculture and construction markets keep pressure on earnings. The specialty chemicals company said its FORWARD! program has generated about €150 million in savings, with another €170 million targeted through 2028 from restructuring and capacity shifts toward pharmaceuticals.
Second-quarter EBITDA pre rose to €152 million from €94 million in the first quarter. Free cash flow turned positive at €56 million after a negative €29 million in the prior period. Catharina Kaiser of LANXESS investor relations cautioned that one quarter does not establish a trend.
The company maintained its 2026 EBITDA pre guidance of €450 million to €550 million and expects third-quarter EBITDA pre of €130 million to €150 million, below the second-quarter level. LANXESS does not assume a material improvement in the second half compared with the first half, with cost savings and operational measures expected to remain the primary earnings drivers.
"Persistently weak agro and construction industries are tearing our earnings down," Kaiser said, adding that LANXESS is focusing on measures it can control rather than relying solely on a cyclical recovery.
Debt target and Envalior stake
Deleveraging remains a priority. LANXESS is targeting net debt below 2.5 times EBITDA and aims to restore sustainable investment-grade status. The strategy includes tighter capital and working-capital management and monetization of its stake in the Envalior joint venture, including repayment of a related shareholder loan.
Kaiser said deleveraging through internally generated cash remains challenging at current earnings levels. Using the midpoint of the company's 2026 EBITDA pre guidance, she cited expected capital expenditures of roughly €330 million, as well as tax, interest and leasing expenses.
LANXESS recently issued a new bond carrying a 4.375% coupon despite its non-investment-grade rating, Kaiser said. The company's bonds have no financial covenants, and she said LANXESS currently has strong access to debt markets and a manageable maturity profile.
Portfolio shift toward specialties, U.S. growth
Kaiser said LANXESS has reshaped its portfolio over recent years, moving away from commodity chemicals and reducing historical exposure to mobility-related markets, particularly tires and automotive applications. The company has increased its focus on specialty, higher-value markets and consumer-related end markets.
LANXESS has expanded its U.S. business significantly since 2016, with the region rising from 15% of sales to nearly one-third of group sales in 2025. On an adjusted portfolio basis, U.S. sales have almost doubled over the past decade, supported by acquisitions including Chemtura, Emerald Kalama Chemical and IFF's microbial control business. The company's IFF stock page shows an Alpha Score of 39/100, labeled Mixed.
Kaiser said the larger U.S. footprint provides access to a large specialty-chemicals customer base and innovation opportunities, while potentially providing benefits amid tariff-related uncertainty. The company also sees its chemical products as supporting structural trends including battery and electrification technologies, renewable energy, and water treatment.
Cost actions and capacity
The FORWARD! program's additional measures through 2028 include organizational efficiencies, production-network changes and position reductions worldwide. LANXESS has closed its hexane oxidation plant in Uerdingen in the Advanced Intermediates business and one plant in Widnes, U.K., serving its flavors and fragrances operation.
In Germany, the company recently added planned Saltigo production-network adjustments that it expects will save €20 million. Kaiser said Saltigo is also seeking to shift capacity away from the weaker agricultural market toward the higher-margin and more resilient pharmaceutical industry.
Capacity utilization averaged about 65% to 70% in recent quarters, Kaiser said, improving toward 70% in the second quarter. She described roughly 80% as a healthy utilization level for the chemicals industry and said LANXESS retains capacity to support volume growth if demand improves.
The company also benefited from demand shifts tied to the Middle East crisis and supply-chain disruptions affecting Asian competitors, she said.
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