March 11, 2020 / 7:09 AM / 5 months ago

UPDATE 1-Lanxess sees coronavirus hit, will boost protection products

(Adds CEO quote, details on outlook and coronavirus impact)

March 11 (Reuters) - German specialty chemicals maker Lanxess predicted a drop in its 2020 core profit because of the coronavirus outbreak and said it will focus this year on growth in protection products, including antiviral disinfectants.

Lanxess has been trying to boost production of its antiviral disinfectant Rely+On Virkon to meet rising demand caused by the epidemic, which has killed over 4,000 and spread to over 100 countries.

“In 2020, we will be increasingly devoted to the high-margin consumer protection business and new applications in the field of battery technology,” Chief Executive Matthias Zachert said.

Lanxess, whose products include construction pigments and engineering plastics, said it expects its 2020 earnings before interest, tax, depreciation and amortization (EBITDA) at 0.90 billion euros to 1.0 billion euros, below the 1.02 billion euro($1.16 billion) figure reported for 2019.

The group said the epidemic looked set to hurt its supply and delivery chains and the outlook included an estimated hit of between 50 million euros and 100 million euros.

The coronavirus impact should amount to 20 million euros in the first quarter of 2020 due to temporary production shutdowns and value chain disruption in China, the company said, adding it expected the effect to worsen in the second quarter before a potential gradual relief.

The reported a 12.6% increase in fourth-quarter core profit before exceptional items to 197 million euros ($223.52 million), above the 186 million euros expected on average by analysts in a company-provided consensus.

Lanxess’ rivals Covestro and Evonik have released better-than-feared fourth-quarter results as the overall chemicals sector outlook remains gloom.

Shares of the former Bayer unit have fallen 32% so far this year, lagging the broader sector as well as Germany’s mid-cap index, mostly due to the weakness in the auto industry.

The automotive segment, which the company said should remain weak in 2020, accounts for 20% of Lanxess’ sales. ($1 = 0.8814 euros) (Reporting by Zuzanna Szymanska in Gdansk; Additional reporting by Sarah Morland Editing by Tomasz Janowski)

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