UPDATE 2-Germany's Lanxess halves dividend after 2013 loss

Wed Feb 26, 2014 8:56am EST

Related Topics

* Lanxess expects 159 mln euro net loss in 2013

* Analysts had forecast 108.3 mln net profit

* Books Q4 charge of 257 mln euros

* Halves dividend to 0.50 euro per share

* Shares down 4 percent (Adds industry background, CEO change, 2014 outlook)

By Marilyn Gerlach and Ludwig Burger

FRANKFURT, Feb 26 (Reuters) - German synthetic rubber specialist Lanxess said it would halve its dividend after slumping to a net loss in 2013, as overcapacity and rising costs forced it to write down the value of several of its businesses.

The surprise impairment charges of 257 million euros ($353 million), which sent Lanxess shares down as much as 6 percent on Wednesday, come ahead of the arrival of its new chief executive by mid-May.

Lanxess said in January that former finance chief Matthias Zachert would come back to replace current boss Axel Heitmann, who has been criticised by some investors for overinvesting in synthetic rubber plants.

The German company, formerly part of synthetic rubber inventor Bayer, has suffered from sluggish demand for tyres and from Asian rivals challenging its dominant position as both a supplier of rubber and as a buyer of butadiene, the main petrochemical precursor material for rubber.

As part of an overhaul announced in September, Lanxess wants to cut 100 million euros in annual costs, reduce jobs and hive off non-core businesses accounting for about 500 million euros in sales.

"We don't rule out that as part of the change at the helm more measures to improve efficiency will be announced, which would eventually benefit Lanxess and its stock," NordLB analyst Thorsten Strauss said on Wednesday.

Lanxess proposed a dividend of 0.50 euros per share for 2013, down by half from the 1 euro it paid a year earlier. Analysts had on average expected a 2013 dividend of 0.69 euros.

Lanxess said it expected an annual net loss of 159 million euros, compared with analysts' average forecast for a net profit of 108.3 million euros, according to Thomson Reuters data.

The company is due to report full 2013 earnings on March 20.

Shares in Lanxess were down 4 percent to 52.64 euros at 1301 GMT at the bottom of Germany's blue-chip index, which was down 0.3 percent.

The writedowns related to its Rubber Chemicals, Keltan Elastomers and Higher Performance Elastomers businesses, the company said.

A company spokesman said Keltan Elastomers' planned 235 million euro investment in a rubber plant in Changzhou, China, remained on track.

Earnings before interest, tax, depreciation and amortisation (EBITDA) before one-offs would not be affected by the impairments and would be 735 million euros in 2013, within Lanxess' target range of 710-760 million, it said.

Adjusted EBITDA would improve slightly in 2014, it added.

($1 = 0.7282 euros) (Editing by Maria Sheahan and Mark Potter)

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