Lanxess optimistic about 10% income growth in 2025

While the economic and geopolitical environment remains challenging, Lanxess still expects a portfolio-adjusted 10 percent income increase for the fiscal year 2025, according to the German specialty chemicals company.

Lanxess released the above growth target in a news conference held in Shanghai in early April, celebrating its 20th anniversary.

Spinning off from Bayer Group in 2005, Lanxess now employees about 12,000 people in 32 countries. Its sales revenue reached 6.4 billion euros ($7.3 billion) in 2024, down 5 percent from a year earlier, mainly due to lower sales resulting from reduced raw materials and energy prices.

According to Matthias Zachert, chairman of the board of management of Lanxess AG, the company will focus on the business units with stronger profitability, rich cash flows, lighter assets, lower carbon dioxide emission and lower correlation with the general economic cycles. Meanwhile, it will spin off businesses that are less profitable, asset-heavy and more vulnerable to economic cycles.

Thanks to its Shanghai-based Asia-Pacific Application Development Center which officially started operations in 2021, Lanxess managed to seek substantial growth in China over the past few years, offsetting the impacts of global economic uncertainties and the pandemic. Such growth is also closely related to the support from the local government and their swift management, according to Zachert.

For 2025, Lanxess will focus on its industrial and agrochemical clients in China. The growth prospect of China's economy will improve the performance of the entire chemical industry this year, said Zachert.

Chinese chemical industry has seen its capacity grown significantly over the past decade. In this sense, the industry will undergo some integration and restructuring in the near future. Some companies focusing on certain small and medium-sized segments will have to further tap into the international market to seek growth, according to Zachert.

But Zachert further explained that expansion in capacity is just natural amid rapid economic growth, which can be widely seen from the experiences of other economies.

However, steady economic growth requires stable capacity and market demand. In this sense, innovation will be crucial for any large economy which is still developing. Innovation requires profit and cash flow, which in turn requires a balanced capacity to control prices within a reasonable range. Only in this way can companies or economies make further investment, including that in innovation, he said.

Speaking of investment plans in China, Zachert said that the stage of mass investment in the country has passed. Lanxess has already invested in all the major markets over the past few years.

On the other hand, the global chemical industry has been declining. The operating rate of chemical companies is only 70 percent in Europe, while the normal rate should stand between 80 and 82 percent. Therefore, the top priority for Lanxess in the upcoming few years will be improving operating rate. But it is ready for further investment in the large and promising markets, such as China, when the global economy turns around, according to Zachert.

Lanxess has been studying and analyzing the impact of US tariff policies over the past nine months. While the company will not be hit directly by the tariff policies thanks to its global footprints, Zachert admitted that the global chemical industry will be influenced as the sweeping tariffs will affect the global GDP.

Zachert expressed his hopes that politicians can hold rational discussions instead of making emotional and impulsive decisions. Trade war has not been seen for many decades. What is happening now is appalling, which will benefit no one, he said.

Therefore, Zachert said that fair and equal cooperation should be reached so that countries' economy and industries can truly develop and prosper.