"The strong recovery in the automotive sector has contributed significantly to our growth, and so did our engineering materials segment, which includes both our high-performance materials and urethane systems business units."

Vinod Agnihotri

MANAGING DIRECTOR ASEAN AND HEAD OF MPP, APAC LANXESS

July 21, 2022

Lanxess completed four acquisitions in 2021, could you share with us how have these complemented your business?

2021 was a very productive year for Lanxess. The acquisition of Emerald Kalama Chemical in the US was fed into our newly created Flavors & Fragrances business unit, through which we strengthened our position in the cosmetic markets. We also consolidated our Material Protection Products (MPP) business unit through the agreed acquisition of the microbial control business of IFF (International Flavors and Fragrances Inc), a leading supplier of antimicrobial ingredients. Also in the consumer protection segment, we completed two bolt-on acquisitions of biocides specialist Intace, which is a Paris-based manufacturer of specialty fungicides for the packaging industry, and of Theseo, a French producer of animal health and biosecurity solutions.

Could you briefly introduce the newly formed Flavors & Fragrances (F&F) business unit?

F&F is a newly established business unit that combines the portfolio we acquired from Emerald Kalama together with our heritage products of the Advanced Industrial Intermediates (AII) business unit. This is a growing segment with great potential in Southeast Asia. The acquisition has given us access to products like benzoic acid-based chemistries with application not only in the F&F sectors but also in beverage preservation.

Could you comment on the company’s performance in FY2021?

Lanxess registered strong growth in 2021, with an EBITA margin growth of 17% and group sales totals up 23% compared to 2020. The strong recovery in the automotive sector has contributed significantly to our growth, and so did our engineering materials segment, which includes both our high-performance materials and urethane systems business units. We have also seen good recovery across the consumer protection segment, the swine flu inflaming demand for disinfectants. The specialty additives business benefited from the gradual recovery in the aviation industry, as well as healthy demand for construction materials from O&G and polymer industry players.

How does the rise in raw material prices impact specialty chemical players like Lanxess?

Fluctuations in raw material prices precede the pandemic and have rampantly affected the chemical industry for the past four years. Along with other elements of cost volatility, like the cost of personnel or energy costs, the escalation of energy prices is clearly a concern for energy-intensive industries like ours.

Lanxess received various sustainability recognitions, including making it at the top of the Dow Jones Sustainability Index (DJSI). Could you highlight these achievements?

I am proud to be part of a company that pays considerable attention to sustainability. In the chemicals category, Lanxess is at the top of DJSI in Europe and second place in the world. MSCI ESG also moved us up to an AA+ rating. We continue to build on this track record by setting in place a very clear sustainability framework that will take us to climate neutrality by 2040. On the way, we are working to achieve interim targets like reducing consumption of groundwater by 15% by 2023 across all of our operating sites.

Could you elaborate on Lanxess’ investments in the battery space?

Lanxess already has a broad portfolio of chemicals and materials used in battery cells, like hydrofluoric acid and phosphorous chemicals. We are further establishing ourselves in the battery value chain by getting involved in lithium-ion production. Lanxess works with Canadian company Standard Lithium on trials to extract lithium from the brine. More recently, we began collaborating with Chinese company Guangzhou Tinci Materials Technology Co. (Tinci) to produce electrolyte formulations for their lithium-ion batteries at our plant in Germany.

What are Lanxess’ goals in terms of gender diversity?

Currently, women make up around 18.2% of our top management roles and around 25.7% in second-level management positions. We are committed to bringing this number to 30% by 2030. To bring more female professionals within the decision-making chain of the company, Lanxess supports young executives with mentoring and coaching offers, as well as creating an environment that is more flexible to support work-life balance. By the end of 2022, flexible working models will be available in most of Lanxess’ offices around the world.

Do you have a final message?

Together with harmonizing our acquisitions, we are heavily focused on bringing Lanxess to the next level, first of all by restructuring our product portfolio to stretch further away from unpredictable cyclical segments to more stable ones, and then by creating a more robust consumer protection segment. The next level is also about seeing through our commitment to sustainability and diversity.

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