Lanxess is a specialty chemicals company based in Cologne, Germany. The group specialises in the development, manufacturing, and marketing of chemical intermediates, additives, specialty chemicals, and plastics, and its products are used in a wide range of industries. The company is listed on the XETRA and currently has a market capitalisation of €2.9 billion.
Lanxess had a successful 2019 despite a challenging economic environment. While sales growth was flat, EBITDA pre-exceptionals increased by 3.3% to €1.019 billion, and EBITDA margin pre-exceptionals reached an all-time high of 15%. The company lifted its dividend by 6%. “In 2019’s difficult economic environment, we withstood the first true test since our realignment. Lanxess is now more profitable and more stable than ever,” said Matthias Zachert, Chairman of the Management Board. Looking ahead, Lanxess plans to focus more closely on higher-margin consumer protection products. “Our Consumer Protection products are characterized by attractive and stable growth rates. At the same time, our years of expertise in these often heavily regulated markets give us a competitive edge,” said Zachert.
Lanxess shares have experienced a large sell-off recently due to the coronavirus and we think this sell-off has created an attractive buying opportunity. We say this because in the last week we have observed the largest amount of insider buying activity in more than two years. Those buying have included Zachert, as well as CFO Michael Pontzen, both of whom are likely to have a good understanding of the company’s future prospects. With multiple insiders taking advantage of recent share price weakness, we think the stock has the potential to rebound.