Annual Report Contents
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ANNUAL REPORT CONTENTS 01 TO OUR STOCKHOLDERS 55 LANXESS ON THE CAPITAL MARKET KEY 01 LANXESS at a Glance 02 Global Presence 59 CORPORATE GOVERNANCE ✓ Audited disclosures of the LANXESS Group that 03 Key Data 60 Corporate Governance Report NFR are included in the 2019 04 Letter from the CEO 68 Report of the Supervisory Board non-financial Group report 05 STRATEGY 72 FINANCIAL INFORMATION Combined Management Report 72 References to pages 10 CORPORATE RESPONSIBILITY 134 Consolidated Financial Statements within the report 11 Actively Shaping Sustainability 218 Responsibility Statement 13 Active Stakeholder Dialog 220 Independent Auditor’s Report 14 Systematic Prioritization of Sustainability Topics References to websites 19 Good Corporate Governance 522 FURTHER INFORMATION 24 Employees 226 About This Report 39 Resilient Sourcing 229 Non-financial Group Report: Independent Assurance Report 40 Safe and Sustainable Sites 231 Environmental and Safety Performance Data: 46 Climate Action and Energy Efficiency Independent Assurance Report 51 Sustainable Product Portfolio 233 GRI Content Index 53 Business-Driven Innovation 239 Sustainability Initiatives and Indices 54 Valuing Customer Relationships 240 Financial Calendar/Contacts Contents To our Stockholders Strategy Corporate Responsibility LANXESS on the Capital Market Corporate Governance Management Report Financial Statements Further Information LANXESS AT A GLANCE Group Structure Advanced Intermediates Specialty Additives Performance Chemicals Engineering Materials Segments Advanced Industrial Polymer Additives Inorganic Pigments High Performance Intermediates Materials Lubricant Additives Business Material Protection Saltigo Products Urethane Systems Rhein Chemie Liquid Purification Business units Technologies › Agrochemicals › Phosphorous-based or › Color pigments › Automotive › Automotive brominated flame retardants › Disinfection, Preservation and › Electrical/electronics › Construction › Lubricants Material Protection Products › Construction › Aromas and flavors › Colorants, polymer additives › Products for water treatment › Medical equipment › Pharmaceuticals › Mining › Rubber chemicals › Tires and wheels Applications › Semiconductors and photovoltaics › Oil and gas › Industrial and mechanical products Europe no. 1–2 Top 3 position No. 1–4 in niches Leading position Market positions 1 Annual Report 2019 | LANXESS Contents To our Stockholders Strategy Corporate Responsibility LANXESS on the Capital Market Corporate Governance Management Report Financial Statements Further Information GLOBAL PRESENCE 57% 53% 23% 21% 14% 18% 23% 15% 6% North America Germany Asia-Pacific 31% 13% 14% 5% 5% 2% EMEA w/o Latin America Germany Employees Sales Capital expenditures Note: All figures reported are from continuing operations. 2 Annual Report 2019 | LANXESS Contents To our Stockholders Strategy Corporate Responsibility LANXESS on the Capital Market Corporate Governance Management Report Financial Statements Further Information KEY DATA 2019 LANXESS Konzern Q4/2018 Q4/2019 Change % 2018 2019 Change % 9) € million Q4/2018 Q4/2019 Change % 2018 2019 Change % Employees (December 31) 15,441 15,479 0.2 Personnel expenses (€ million) 1,258 1,333 6.0 Sales 1,674 1,636 (2.3) 6,824 6,802 (0.3) Work-related injuries resulting in at Gross profit 365 383 4.9 1,738 1,759 1.2 least 1 day’s absence Gross profit margin 21.8% 23.4% 25.5% 25.9% (per million hours worked) 1.5 1.6 6.7 EBITDA pre exceptionals1) 175 197 12.6 986 1,019 3.3 Proportion of apprentices hired in 1) EBITDA margin pre exceptionals 10.5% 12.0 % 14.4% 15.0% Germany 84.0% 88.0% 1) EBITDA 162 160 (1.2) 906 910 0.4 Turnover resulting from voluntary EBIT pre exceptionals1) 67 75 11.9 581 557 (4.1) resignations 3.1% 3.0% EBIT1) 44 0 (100.0) 491 407 (17.1 ) Specific energy consumption EBIT margin1) 2.6% 0.0 % 7.2% 6.0% (in gigajoules per metric ton of Net income (loss) 99 (48) < (100) 431 205 (52.4) product) 4.99 5.08 1.8 from continuing operations 33 (22) < (100) 282 240 (14.9) Specific CO2e Scope 1 emissions from discontinued operations 66 (26) > 100) 149 (35) < (100) (in CO2 equivalents, metric tons per metric ton of product) 0.28 0.28 0.0 Weighted average number of shares 91,522,936 87,447,852 (4.5) 91,522,936 88,334,641 (3.5) Specific CO2e Scope 2 emissions Earnings per share (€) 1.08 (0.55) < (100) 4.71 2.32 (50.7) (in CO2 equivalents, metric tons per from continuing operations 0.36 (0.25) < (100) 3.08 2.72 (11.7) metric ton of product) 0.30 0.29 (3.3) from discontinued operations 0.72 (0.30) > 100 1.63 (0.40) < (100) Emissions of volatile organic com- Earnings per share from continuing pounds (in thousand metric tons) 0.7 0.7 0.0 operations adjusted for exceptional items and amortization of intangible 1) E BIT: earnings before interest and taxes. 3) ROCE: EBIT pre exceptionals in relation to capital employed (total assets (€)2) 0.77 0.64 (16.9) 4.48 4.73 5.6 EBIT pre exceptionals: EBIT disregarding exceptional assets less deferred tax assets and interest-free liabilities). ROCE charges and income. for 2018 as published including the Leather business unit. Capital Dividend per share (€) 0.90 0.958) 5.6 EBIT margin: EBIT in relation to sales. employed as of December 31, 2019, adjusted. See “Value Manage- ROCE3) 11.4% 10.0% EBITDA: EBIT before depreciation of property, plant and ment and Control System” in the combined management report Cash flow from operating activities – equipment and amortization of intangible assets, less for details of capital employed. continuing operations 172 267 55.2 441 634 43.8 reversals of impairment charges on property, plant, equip- 4) Equity ratio: equity in relation to total assets. ment and intangible assets. 5) Net financial liabilities: Sum of current and non-current financial Depreciation and amortization 118 160 35.6 4157) 5037) 21.2 EBITDA pre exceptionals: EBITDA disregarding exception- liabilities (adjusted for liabilities for accrued interest) less cash, cash Cash outflows for capital al charges and income. equivalents and near-cash assets. See “Value Management and expenditures 235 213 (9.4) 482 508 5.4 EBITDA margin pre exceptionals: EBITDA pre exceptionals Control System” in the combined management report for details. Total assets 695 1 8,687 8,695 0.1 in relation to sales. 6) See “Value Management and Control System” in the combined See “Value Management and Control System” in the management report for details of the financial assets deducted. Equity (including non-controlling combined management report for details. 7) Net of reversals of write-downs of €1 million. interests) 2,773 2,647 (4.5) 2) E arnings per share from continuing operations pre excep- 8) Dividend proposal to the Annual Stockholders’ Meeting on Equity ratio4) 31.9% 30.4% tionals and amortization of intangible assets: earnings per May 13, 2020. Provisions for pensions 1,083 1,178 8.8 share from continuing operations disregarding exceptional 9) There were 14,304 employees in continuing operations as of the charges and income, amortization of intangible assets and reporting date. 5) Net financial liabilities 1,923 2,522 31.1 attributable tax effects as well as non-recurring earnings Net financial liabilities after deduction effects of the U.S. tax reform in the previous year. See of short-term money market invest- “Business Performance of the LANXESS Group” in the ments and securities6) 1,381 1,742 26.1 combined management report for details. 3 Annual Report 2019 | LANXESS Contents To our Stockholders Strategy Corporate Responsibility LANXESS on the Capital Market Corporate Governance Management Report Financial Statements Further Information Letter from the CEO We can look back on 2019 as an eventful and challenging year in which we achieved products founded by us but operating independently, is now Europe’s market leader. The our targets. LANXESS is in a good position both operationally and financially and is digital transformation in the chemicals industry is coming – and we are leading the way. steering a successful course in a difficult economic environment. In particular, our “Climate Neutral 2040” initiative last year was a good demonstration of how to com- As you can see, we are taking a strategic approach to our future. However, it is only bine sound business and sustainability. possible to achieve permanent business success if we take responsibility for the envi- ronment and society at the same time. We have therefore integrated all dimensions of The past restructuring of our company paid off again in this challenging year. Our sustainability into our corporate strategy. Accordingly, it was only natural for us to renew focus on more stable and simultaneously more profitable specialty chemicals gives our commitment to the principles of the U.N. Global Compact in 2019. us a strong foundation that sustains us when times get tougher. Our continued inclusion in two Dow Jones Sustainability Indices shows that we are We were listed in We have steadily evolved on this basis. For example, we have placed greater emphasis on the right track. We were listed in the Dow Jones Sustainability Index (DJSI) World the Dow Jones on the issue of consumer protection and, at the end of the year, announced the purchase for the ninth time in a row and in DJSI Europe for the third time in a row – as the best Sustainability Index (DJSI) World of the Brazilian biocide manufacturer IPEL. This acquisition enhances our position as company in our sector. for the one of the leading manufacturers of biocidal active ingredients and formulations and th 9 expands our production network. Everything that we achieved in 2019 was the result of impressive teamwork. On behalf time in a row. of my colleagues on the Board of Management, I thank all employees for their dedicated Another crucial step was the decision to divest our chrome chemicals business and and hard work in the last few months.