Lanxess: Strait back to tough times

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Lanxess: Strait back to tough times

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Lanxess

Strait back to tough times

Reiterate Rating: UNDERPERFORM | PO: 12.50 EUR | Price: 15.16 EUR

Reiterate Underperform, PO cut to EUR12.5 01 July 2026

We believe Lanxess (like peers Evonik and Brenntag which have preannounced), likely Equity

benefited in Q2 from temporary tightness with the Strait of Hormuz closure restricting

production at Asian Chemical competitors that were relatively more dependent on

Key Changesfeedstock supply and logistical routes from the Middle East. This presumably allowed

Lanxess to recapture some market share in Europe previously ceded to imports; (EUR) Previous Current

especially in Intermediates. With the Strait now re-opening, ensuing chemical price Price Obj. 15.00 12.50

deflation will probably trigger destocking; especially if excess inventory was built up. 2026E EPS -1.70 -1.95

More fundamentally, a return to over-supplied markets shifts attention back to Lanxess’ 2027E EPS -1.03 -1.36

lack of competitiveness and levered capital structure. Underperform, PO cut to EUR12.5 2028E EPS 0.91 0.50

from EUR15.

Lack of pricing power reflected in lack of returns FundamentalMatthew YatesEquity>> Research

Research Analyst

Despite a decade of portfolio churn designed to assemble a better business, we forecast MLI (UK)

Lanxess to earn just a 1% return on capital this year. We are inclined to think Lanxess’ +44 20 7996 4537

matthew.yates@bofa.com

problems are not simply cyclical but rather reflect an under invested and under-managed

John Campbell >>

asset base, that is vulnerable to competitive pressures. Given the low margin of Lanxess’ Research Analyst

assets and the probable need to perennially rationalise its cost base (peer Evonik just MLI (UK)

+44 20 7995 0643