March 14, 2019 / 6:27 AM / a year ago

Lanxess sees flat 2019 profit on weak demand from China automakers

COLOGNE, Germany (Reuters) - Germany’s Lanxess said on Thursday weak demand from Chinese automakers for its plastics business, offset by a better outlook for agrochemical ingredients, would lead to flat operating earnings this year.

Lanxess said it had seen a solid start to the year despite a weakening economy, predicting earnings before interest, taxes, depreciation and amortisation (EBITDA), adjusted for one-offs, for 2019 to be around last year’s 1.02 billion euros (871.1 million pounds), which was up almost 10 percent on 2017.

But the shares dropped 2.5 percent at 1039 GMT, after three days of gains. Analysts at Credit Suisse said a change in international accounting standards was flattering the guidance.

The company’s engineering plastics business was suffering from weak demand from Chinese automakers as the U.S-Chinese trade dispute rages on, said Chief Executive Matthias Zachert.

“We expect the polymer business, not least because of its exposure to the automobile industry, to be weaker in 2019. But we do keep a confident outlook for our agrobusiness,” he said, adding that new ingredients for crop chemicals were winning market share in a weak market.

Lanxess posted flat operating earnings in the fourth quarter as more expensive energy and freight offset higher sales volumes, while demand from the automotive and construction industry softened.

Fourth-quarter adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) stagnated at 179 million euros ($203 million), the company said. That was slightly above the average analyst forecast for 175 million euros in a Reuters poll.

The industrial intermediates business, with products such as fuel additives, heat transfer fluids or rubber chemicals, saw strong earnings gains in the fourth quarter and would also buoy the 2019 results, it said.

The group would pay dividend of 0.90 euros per share for 2018, it said, below the 0.94 euros expected by analysts.

Reporting by Ludwig Burger; Editing by Richard Pullin and David Evans

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