"We want to grow our presence in the segment of consumer protection. This segment involves biocides and microbicides, where there is a market trend that favors the use of less toxic materials. The acquisition of EKC complements this trend well."

Miguel Ángel Rodríguez & Pedro Bojaca

GENERAL MANAGER, LANXESS MEXICO & SENIOR MANAGER M&A AND PROJECTS HR, LANXESS

December 16, 2022

How has Lanxess achieved its strong position in the Mexican market?

PB: Our strategy has been to specialize in products that offer high value-added, high margins, and high impact. By offering high-quality specialty chemicals, agility, and excellent customer service, we have been able to diversify our portfolio and have expanded our presence in the global market through multiple lateral acquisitions. After we acquired Chemtura, we saw more growth opportunities and were able to expand our portfolio, beginning with Virkon, a Chemours disinfecting product that is used across multiple industries. Additionally, we acquired Emerald Kalama Chemicals (EKC), which was dedicated to the preservation and intermediary chemistry. With this acquisition, we entered the flavor and fragrances market. Lastly, in 2022 we finalized the acquisition of International Flavors and Chemicals, Lanxess’ largest acquisition yet, which significantly expanded our portfolio of biocides, conservatives and preservatives. This strategy is rooted in our mantra of “Energizing Chemistry,” which, to us, means being able to provide chemical solutions fast and efficiently to our clients.

Which industries does Lanxess see potential growth in?

PB: Our division of advanced industrial intermediate products, such as raw materials for herbicides and pesticides, is geared mainly towards agriculture, where we see a growing demand for agricultural goods. Our specialty additives division produces products such as flame retardants and plasticizers, which are commonly used in construction, and also demonstrate a demand due to the need for housing worldwide. There is also growth in our lubricant additives division, which is focused on providing products to aviation, automotive and manufacturing companies. We have a line of engineering plastics such as polymers that are in high demand in the automotive industry, and we are finalizing a deal to form a new company specializing in engineering plastics – we anticipate this new company to be fully operational in January 2023.

Finally, we want to grow our presence in the segment of consumer protection. This segment involves biocides and microbicides, where there is a market trend that favors the use of less toxic materials. The acquisition of EKC complements this trend well, as we are focused on expanding into the food and beverages industry by providing food preservatives that are safe for consumption.

What is Lanxess’ regional reach in Mexico?

PB: In Mexico, we do not have production capacity, but we have a high distribution capacity of specialty chemicals that serve many of the country’s industries. We carry strong inventories to navigate potential logistical challenges and seek to have a strong line of communication with our clients. Mexico serves as a strategic distribution hub for our clients throughout Latin America.

What strategies is Lanxess implementing to reach its sustainability goals?

PB: Lanxess is committed to reaching climate neutrality by 2050, with a strong emphasis on the efficient management of water and developing products conducive to the circular economy. We see three sustainability trends towards water conservation, consumer products, and the energy transition. Regarding water conservation, we have projects in Italy and India, for example, where we are developing strategies to recycle water and thus minimize the use of this resource at our production sites worldwide. We also are planning to increase our capacity to provide products that are derived from renewable resources instead of petrochemicals.

MR: We seek to be a leader in sustainability, which will require the active participation of the government, specifically in terms of regulations, and the participation of the public. It is important to change the mentality of the consumer so that they become familiar with chemical products and willing to demand and pay for environmentally responsible products. This shift has been moderate in the Mexican market, but we have implemented educational campaigns to stimulate the paradigm shift to more sustainable products.

What are the main objectives for Lanxess going into 2023?

MR: We want to expand our reach to Central and South America, by using Mexico as a strategic distribution hub. We are also focused on consolidating our recent acquisitions. Despite unfavorable economic forecasts, we plan on strengthening our portfolio in biocides, engineering plastics, and fragrances & flavors.

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