LANXESS Aktiengesellschaft Q2 Earnings Call Highlights

LANXESS Aktiengesellschaft (ETR:LXS) reported stronger sales and earnings in the second quarter of 2026 than in the first quarter, supported by improved volumes, pricing and demand effects linked to the Middle East conflict, Chief Executive Officer Matthias Zachert said during the company’s quarterly press conference.

The company confirmed its full-year 2026 guidance despite what Zachert described as a persistently difficult economic environment, foreign-exchange headwinds from a weaker U.S. dollar and uncertainty surrounding logistics disruptions caused by low water levels on the Rhine River.

Second-Quarter Sales and Earnings Improve Sequentially

Sales increased 6% from the prior-year period, driven by both volume and price gains, according to Zachert. Prices rose 3%, while EBITDA increased only moderately year over year because the prior-year period included positive one-off effects. The second-quarter 2026 EBITDA result was based solely on operating performance, he said.

Compared with the first quarter, sales rose 13% and EBITDA increased 62%, exceeding the company’s guidance for the period, Zachert said. All three company segments recorded sequential improvements in both sales and EBITDA.

LANXESS also generated clearly positive free cash flow in the second quarter. Zachert noted that free cash flow during the first half is typically more moderate or negative before improving in the third and fourth quarters.

The company said the industry’s price and volume development had been slow over the past 12 months, beginning with the escalation of tariffs in the second quarter of 2025. Momentum began to improve in the first quarter of 2026 and accelerated in the second quarter, with gains in both pricing and volumes.

Full-Year Outlook Maintained

Zachert said LANXESS sees no major economic stimulus in the second half of 2026 from Germany’s government investment package, although that could change in the future. The company also remains exposed to unfavorable currency effects because of its export business.

Nonetheless, the company maintained its full-year outlook. LANXESS expects third-quarter EBITDA of between EUR 130 million and EUR 150 million, Zachert said, adding that the result should compare favorably with the prior-year quarter, though the improvement may be less pronounced than previously expected relative to the second quarter.

Responding to a question about why LANXESS did not raise its outlook while some chemical-industry peers had done so, Zachert said the company had already issued an ambitious second-quarter forecast when it reported first-quarter results in May. He said the company had guided for an increase of more than 50% and subsequently delivered on that expectation.

The CEO said cost discipline remains necessary given global economic uncertainty. LANXESS has communicated the plant closures it considers necessary, he said, while additional actions would depend on whether the economic environment and demand deteriorate materially.

Low Rhine Water Levels Raise Logistics Costs

Low water levels on the Rhine have become a significant operational issue for industrial companies in North Rhine-Westphalia. Zachert said barges can currently carry only 20% to 30% of their normal capacity, while certain loading and unloading points have become inaccessible.

LANXESS formed a crisis team about five weeks earlier to coordinate its businesses, procurement operations, suppliers and logistics providers. The company shifted many transports from waterways to rail and road, and Zachert said production had not been materially affected.

“Production shutdown is the real challenge,” Zachert said in response to questions. “So far, we have been able to maintain the supply chains intact,” with no relevant production interruptions.

The additional logistics costs associated with the low-water situation are in the single-digit millions of euros, according to Zachert. He said those costs are manageable, but a loss of production volume would be more serious. LANXESS has secured supplies for the next one to two weeks and is examining supply arrangements for the next four to six weeks on a daily basis.

The company has one smaller phthalic anhydride operation that has been affected, but Zachert said the impact was not material. Its major North Rhine-Westphalia operations remained in service.

LANXESS ships approximately 400 kilotons annually by waterway in North Rhine-Westphalia, Zachert said. He added that investments made since previous low-water episodes in 2018 and 2019 have increased the company’s flexibility by allowing more sites to receive supplies by road as well as waterway. The company incurred upper-single-digit-million-euro investments for those measures, while current additional logistics costs remain in the single-digit-million-euro range.

Middle East Effects and Asian Competition

Zachert said the Middle East conflict supported demand in the second quarter, though he cautioned that its duration and implications are beyond the company’s control. During the first two to four weeks of the conflict, LANXESS saw higher customer order volumes, but he said there was no dramatic inventory build-up.

Customers remained cautious about ordering excessive quantities because prices had increased, he said. As a result, LANXESS does not expect a major destocking effect in the third quarter and instead anticipates normal seasonal demand patterns.

On competition from Asia, Zachert said pressure in Europe had been particularly significant after tariff escalation, as some product flows from Asia to the U.S. were diverted to Europe. While Chinese competition will remain, he said LANXESS does not expect the intensity seen in 2025 to recur.

Zachert also said European Union anti-dumping measures could help Germany’s chemical industry counter what he described as dumping exports from Asia.

Chief Financial Officer Oliver Stratmann said the company accounts for Envalior as an at-equity investment. The negative net contribution from Envalior is reflected in LANXESS’s profit and loss statement and reduces the balance-sheet value of the investment, he said, rather than being recorded as depreciation.

About LANXESS Aktiengesellschaft (ETR:LXS)

LANXESS Aktiengesellschaft, together with its subsidiaries, operates as a specialty chemicals company that engages in the development, manufacture, and marketing of chemical intermediates, additives, specialty chemicals, and consumer protection products worldwide. It operates through three segments: Consumer Protection, Specialty Additives, and Advanced Intermediates. The Consumer Protection segment provides material protection products; disinfectant, hygiene, and preservative solutions; flavors and fragrances; liquid purification technologies for the treatment of water and other liquids; and precursors and intermediates for the agrochemicals, pharmaceuticals, and specialty chemicals industries.

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