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Lanxess (Baa3): 4Q23 Results

BASIC INDUSTRIES

Negative for spreads with rating pressure building. Tough conditions for Lanxess confirmed with no relief on the horizon.

  • Revenue missed consensus by 9%, while adj. EBITDA beat by 2%.
  • FY FCF beat at €512mn vs €283mn expected. Looks mostly driven by destocking of inventory.
  • Leverage is left at 4.9x vs 4.1x YoY due to lower EBITDA. Better than expected due to higher FCF.
  • Large exceptional in adj. EBITDA, which was negative pre adjustment.
  • Outlook is downbeat with the environment remaining challenging “at least in H1”.
  • Moody’s leverage threshold is 3.5x; with the difficult outlook the rating may come under pressure at some point this year.
  • LXSGR has underperformed for some time with downgrade risk increasingly priced in.
  • Call 12.30 CET https://onlinexperiences.com/scripts/Server.nxp?LASCmd=AI:4;F:QS!10100&ShowUUID=BE26729A-0732-4B49-9B4A-DB8B9F5A783A

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