German specialty-chemical firm Lanxess has announced a downgrade in its 2023 forecast today, citing an expected decrease in Q4 demand. The company's revised pre-exceptional EBITDA now lies in the range of EUR500 million to EUR550 million, a significant decrease from the initial estimate of EUR600 million - EUR650 million.
The agroindustry customer destocking and production limitations at the company's flavors and fragrances unit in the Netherlands have been identified as key factors contributing to this downward revision. As a consequence of these challenges, Lanxess has also decided to reduce its 2023 dividend to EUR0.10.
The company's third-quarter results, which are in line with the market expectation of EUR120 million, are scheduled for release on Wednesday. The updated forecast and impending results were disclosed by Pierre Bertrand.
InvestingPro Insights
Drawing from InvestingPro data and tips, we can gain a deeper understanding of Lanxess's current financial situation. The company's market cap stands at a solid 2042.79M USD, and it has a low Price / Book multiple of 0.33 as of Q2 2023, indicating that the stock may be undervalued. Despite a challenging market environment, Lanxess has managed to increase its revenue by 8.97% in the last twelve months as of Q2 2023, although the rate of revenue growth has been slowing down.
On the dividend front, Lanxess has a commendable record, having raised its dividend for 7 consecutive years. This history of consistent dividend payments, however, is set to change with the recent announcement of a dividend reduction for 2023.
InvestingPro Tips suggests that investors should be aware of the company's volatility, as the stock price movements have been quite unpredictable. Furthermore, the company has not been profitable over the last twelve months, and analysts do not anticipate that it will turn profitable this year.
In light of these insights, investors are encouraged to consider the company's long-term performance and financial health. For more in-depth analysis and additional tips, consider exploring the InvestingPro platform, which currently offers over 10 additional tips on Lanxess's performance.
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