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German specialty chemicals maker Lanxess plans to cut an additional 550 jobs as part of an expanded cost-reduction drive, the Cologne-based company announced Thursday, citing weak demand, falling margins, and a prolonged downturn across the European chemical sector.
The company reported annual revenue of €5.67 billion ($6.49 billion) for fiscal year 2025, a 10.9% year-over-year decline and below analysts' average estimate of €5.72 billion. Adjusted earnings before interest, taxes, depreciation, and amortization fell more sharply, dropping 17% to €510 million, as the profit margin contracted to 9% from 9.6% in 2024.
Weak demand across Lanxess' customer base weighed on sales volumes, while competition from Asian rivals forced the company to lower some prices. The sale of its urethane-systems business to Japan's UBE Corp. last year also removed that division's earnings contribution, and currency effects further hit performance.
About two-thirds of the 550 layoffs will take place in Germany. Alongside other cost efficiencies, the reduced headcount is expected to help Lanxess save around €100 million annually by the end of 2028.
As part of its existing cost-cutting program, Lanxess has already reduced administrative staff's weekly working hours to 35 hours and frozen senior management salaries.
Chief Executive Officer Matthias Zachert said 2025 had been a difficult year for both Lanxess and the wider industry. "The guiding principle for 2026 remains that we control the things we can control," Zachert said. "That means continuing to cut costs, streamline processes, and create new market opportunities."
For 2026, Lanxess forecasts adjusted earnings before interest, taxes, depreciation, and amortization of between €450 million and €550 million. Zachert said any recovery was unlikely before the second half of the year, citing Germany's government infrastructure stimulus program as a potential driver of positive momentum.
The government of Chancellor Friedrich Merz has unveiled a package worth around $1 trillion to boost defense and infrastructure spending over several years, raising hopes of a revival in the country's industrial sector and exports.
Analysts at JPMorgan said the outlook implied a steep climb ahead. "This implies that a significant step-up in earnings may be needed over the rest of the year to deliver even the low end of the guidance range," JPMorgan analysts said in a note.
Europe's chemical suppliers are facing an additional blow from the war in the Middle East. Iran's attacks on energy infrastructure and its effective blockade of shipping through the Strait of Hormuz in the Persian Gulf are already driving up raw-material costs, Germany's chemical-industry association warned last week. Giant supplier BASF said this week it was raising some prices in Europe by as much as 30%, or more for some products, in response to the surge.
Frankfurt-listed Lanxess shares, which have fallen 24% since the start of the year, slid 6.4% to €12.51 in morning trading on Thursday after the results were released.
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