Soft Outlook for Lanxess in 2018 Due to Currency Headwinds; Shares Overvalued
No-moat Lanxess reported fourth-quarter results slightly below our expectations. EBITDA increased 36% over the prior-year period, but this was primarily due to the Chemtura acquisition, which closed on April 21, 2017. Volumes were strong across the segments, but some saw margins decline from higher raw material costs. Guidance for 2018 seems unambitious, given that the year will benefit from an extra three-plus months of Chemtura in the comparison. This is likely why the stock is trading down to...Lanxess is a management holding company, engaged in chemicals enterprise with a portfolio ranging from polymers to industrial, specialty and fine chemicals. Co. has three segments, which comprise 14 business units. Co.'s Performance Polymers segments include five units, Butyl Rubber, Performance Butadiene Rubbers, Keltan Elastomers, High Performance Elastomers, and High Performance Materials. Advanced Intermediates segments include two units, Advanced Industrial Intermediates, and Saltigo. Performance Chemicals segments, include seven units, Material Protection Products, Inorganic Pigments, Functional Chemicals, Leather, Rhein Chemie, Rubber Chemicals, and Liquid Purification Technologies.
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