Outlook
Outlook
LANXESS believes that global economic growth will further weaken during the remainder of 2008. The chemical economy will continue to develop favorably, supported by the growth markets. The prospects for North America continue to deteriorate, especially in the construction and automotive sectors. The outlook for the global automotive and tire markets remains robust, with the main focus on the growth regions of Asia-Pacific, Central and Eastern Europe and Latin America because of their dynamic development. We expect demand for LANXESS products such as rubbers and agrochemical intermediates to continue to expand in these regions, albeit at a somewhat slower pace than in the recent past.
The aim for the second half of 2008 must be to offset additional cost increases for raw materials, energy and personnel. Prices for petrochemical raw materials are likely to remain high and volatile. The strength of the euro against other currencies, especially the U.S. dollar, will also affect business trends.
Based on these assumptions, LANXESS still anticipates operational sales growth for the full year 2008. EBITDA pre exceptionals is expected to come in at over €700 million, against €719 million in 2007. The €719 million EBITDA pre exceptionals reported for the full year 2007 included a €20 million earnings contribution from the Lustran Polymers activities prior to their divestiture at the end of September 2007. We are adhering to our target of achieving an EBITDA margin in line with the industry average, having no business with an EBITDA margin below 5%, and maintaining an investment-grade rating.
As part of its targeted investment and growth strategy, LANXESS is planning capital expenditures of between €330 million and €350 million in 2008.