Lanxess, the German speciality chemicals company, is set to cut 1,000 jobs by the end of 2015 and reduce management bonuses in response to a fall in demand for synthetic rubber from the automotive industry.
The Cologne-based company, which last year joined Germany’s blue-chip Dax index, said it aimed to save €100m in annual costs from 2015 through efficiency improvements and restructuring measures.
The reduction in headcount will be achieved via early retirement and voluntary severance packages. Lanxess had 17,500 employees at the end of last year.
The group also plans to examine “strategic options” for non-core businesses accounting for about €500m in annual revenues, compared with a total of €9.1bn last year.
“Currently, it is foremost the synthetic rubber activities that are experiencing a temporary weakness in demand, increased competition in the market and volatile raw materials prices,” Lanxess said.
Lanxess, which was spun off from Bayer, the German drugs group, in 2004 and performed strongly in subsequent years, abandoned its 2014 profit guidance last month after reporting a 95 per cent drop in second quarter net profit.
About 40 per cent of the company’s sales are linked to the automotive and tyre industries. Data this week showed European car sales in August fell to their lowest level since 1990.
Shares in the group were down 1.7 per cent in early European trading at €50.73. Lanxess’ stock has fallen about 24 per cent this year.
The company has cautioned that “trading conditions for our businesses remain tough, and the fragile sentiment in Europe is now evident in other markets that are important for us, such as China and Brazil”.
Lanxess has begun restructuring in the rubber business by closing a site in South Africa and downsizing operations in Belgium.
The company stuck to its full-year forecast of between €700m and €800m of earnings before interest, taxation, depreciation, amortisation and exceptional items.