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Promising 'Valley of Tears,' New Lanxess CEO Accelerates Job Cuts, Downsizing, Amid Chemicals Slump

Lanxess CEO Matthias Zachert on May 8 at the company's annual shareholders' meeting in Cologne II. Source DPA
Lanxess CEO Matthias Zachert on May 8 at the company's annual shareholders' meeting in Cologne.
  • Why it matters

    Why it matters

    Chemicals firm Lanxess needs to reorganize, possibly closing, selling or merging operations, to cope with overcapacity and falling prices.

  • Facts

    Facts

    • In 2013, Lanxess had a loss of €159 million on sales of €8.3 billion.
    • Lanxess’ synthetic rubber production operates in an industry with extreme overcapacity.
    • The former Lanxess finance chief became chief executive in April after his predecessor suddenly left.
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“A valley of tears” is what Matthias Zachert, the chief executive of bulk chemicals maker Lanxess, promised shortly after taking helm in April. The next two to three years would be “rocky”, he said a month later at Lanxess’ annual shareholders meeting.

Zachert, a 46-year-old who was the company’s finance chief from 2004 to 2011, has been blunt when saying that Lanxess needed to change in order to improve results.

At the meeting, shareholders were disgruntled that an investment program of the previous executive, who suddenly left in February, faltered, and contributed to a net loss of €159 million in 2013 on sales of €8.3 billion.

“We must use the current phase of weakness to renew and realign ourselves,” he told investors, adding that Lanxess would reduce investments and look for partnerships.

A few weeks before the shareholders meeting, his bluntness was already awarded when he was able to raise €430 million in capital to strengthen the Cologne-headquartered firm’s balance sheet and fund the restructuring.

 

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