UPDATE 1-Lanxess warns of challenging automotive markets

Wed Jun 19, 2013 11:34am EDT

* CFO says still no recovery in tyre, rubber markets

* CFO guides for middle of Q2 target range

* Shares drop to two-month low, worst DAX performer (Adds analyst comment, background on feedstock supplies)

By Ludwig Burger and Frank Siebelt

FRANKFURT, June 19 (Reuters) - Shares in Lanxess, the world's largest maker of synthetic rubber for tyres, fell to a two-month low on Wednesday as the company said it was mired in weak car markets that showed no sign of recovery.

"The market conditions remain challenging. Car and tyre demand has not yet recovered," a company spokesman said when asked about market talk that finance chief Bernhard Duettmann sounded a cautious note during an investor presentation in New York.

The spokesman cited Duettmann as saying that Lanxess was likely to reach the middle of its previous target range.

Germany's Lanxess, which competes with Exxon Mobil in synthetic rubber for tyres, tubes and window seals, has said it expects second-quarter adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of 174-220 million euros ($233-$295 million).

Landesbank Baden-Wuerttemberg analyst Ulle Woerner said analyst consensus was for slightly higher adjusted EBITDA than the range mid-point of 200 million euros.

Kepler Cheuvreux analyst Markus Mayer said in a note that demand would take longer to improve than expected.

"In our view, the news shows just how oversupplied the rubber market is currently."

The shares extended losses and dropped 3.6 percent to a two-month low at 1502 GMT, making them the worst performer on Germany's blue-chip index DAX.

European car sales plunged to their lowest level in two decades in May, further eroding prospects for a recovery this year.

The spokesman added that the price of butadiene, the most important chemical raw material used by Lanxess, has dropped, particularly in Asia.

The company, which is the world's largest consumer of butadiene, has long-term contracts with suppliers.

Smaller competitors that mainly buy butadiene on the spot market lose out to Lanxess when supplies are scarce and expensive but win more business when prices decline. ($1=0.7467 euros) (Reporting by Ludwig Burger and Frank Siebelt; Editing by David Cowell)

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