Issue Date: February 3, 2014 | Web Date: January 31, 2014
Lanxess Drops CEO As Profits Fall
Axel C. Heitmann, the head of the German chemical maker Lanxess from the day it was created almost 10 years ago, will leave the firm at the end of this month. His surprise departure follows a recent decline in profits after a long period of growth.
Lanxess was formed in 2004 when Bayer spun off what it saw as undesirable businesses in plastics, rubber, and specialty chemicals. From sales of about $8.5 billion, Lanxess has grown to be a $12 billion-plus company with a workforce of 17,500.
Lanxess asserts that Heitmann’s imminent departure is “by mutual agreement.” But European media reports suggest otherwise. They speculate that Heitmann was pushed out because he rejected a call by the firm’s board to act decisively in the face of excess capacity and low prices for synthetic rubber, a key business for Lanxess.
The company declines to comment on the specifics but acknowledges that market pressures are behind the leadership change. “Lanxess is facing significant challenges, for example, in terms of market capacities and business portfolio,” says board chairman Rolf Stomberg. The board determined that it’s “the right time to hand over responsibility to a new leadership in order to overcome these challenges,” Stomberg adds.
Heitmann will be replaced by Matthias Zachert, chief financial officer of the German pharmaceutical and chemical firm Merck KGaA. Zachert had been Lanxess’s CFO from 2004 to 2011. He is set to take up the reins at Lanxess by May 15.
Installing Zachert “implies that the business environment remains rather delicate and competition is getting fiercer,” Martin Evans, a stock analyst at J.P. Morgan Cazenove, told clients in a report on the shake-up. Under Zachert, Lanxess can expect “a new orientation of the group’s portfolio and probably another program introducing cost-reducing measures,” Evans adds.
Lanxess is not the only European chemical firm experiencing financial woes. DSM recently revealed weakness in its nutrition business for the fourth quarter of 2013. Also, Kemira has warned that its fourth-quarter profits will be lower than expected.
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