"By early 2020, Lanxess had already started digitalizing its global asset base, and today two-thirds of our sites worldwide are equipped with data analysis software to facilitate autonomous analysis of manufacturing processes and generate big data."
Could you give us a brief overview of Lanxess’s performance over the past two years?
Activity in the ASEAN region has intensified for Lanxess over the last couple of years. From a global perspective, our EBITDA pre-exceptionals are expected at between €820 million and €880 million for the year. Sales have been down by 14.3% in the third quarter on account of the pandemic, but we are seeing the first indications that our performance is set to improve across different business units: our consumer protection segment is doing well, with demand for products like disinfectants staying consistent or increasing. The automotive segment is also picking up.
How is Lanxess positioning its portfolio in the forthcoming years?
One of the major strategic moves has been to realign our portfolio from a very cyclical business with a big presence in the automotive industry towards a more compact and resilient portfolio in specialty chemicals. Three years ago, Lanxess acquired US company Chemtura, which has played an important part in diversifying and strengthening our specialty basket. We are also keen to grow further in strategic segments such as biocides and disinfectants, thus becoming more prominent in the regulated space where we seek to develop our expertise. From our Chemtura business, we will be looking at growing the flame-retardant business and the LPT (Liquid Purification Technologies) business.
What is your take on the importance of the recently signed RCEP agreement?
I believe Southeast Asia has many bilateral foreign trade agreements (FTAs), which means the RCEP minus India has already been in place to a certain extent. How much further the RCEP will strengthen those individual FTAs or ease trade remains to be seen. In my experience, even where there are existing agreements, we sometimes still face difficulties when a rule in one jurisdiction is interpreted differently or not accepted in the same way in another jurisdiction. Going forward, there needs to be more clarity around the deliverables expected out of this agreement. As of now, it is early to judge what may come.
Could you familiarize our audience with Lanxess's achievements, but also its targets, when it comes to sustainability?
We are proud to be at the top of the Dow Jones Sustainability Index in Europe in the chemical category, and for coming second place globally. Because of our climate strategy and our well-devised principles on corporate governance, the NCSI ESG updated Lanxess’s ratings from triple B to A. For our next steps, we have set very tangible targets as part of our sustainability program: Lanxess aims to be carbon neutral by 2040, and we plan to become active in sustainable water management activities by 2023 and to reduce the consumption of absolute water at four sites by around 15%.
How do you perceive the progress made by the chemical industry towards digitalization?
Activities across the value chain up to sales and marketing are much more digitalized, especially if we look at commodities versus specialty chemicals. The commodity chemicals industry is heavily asset-intensive and companies have invested in necessary digital technologies to boost profits. Procurement, logistics, data analytics and product development have also seen digitalization, but the far end of the value chain, that is the distribution and selling, shows limited success. Personally, I believe we have a long way to go, not least because some chemicals are hazardous and very regulated and we need approvals that are not there yet.
Lanxess has been very active in terms of digitalization, having started very seriously two to three years ago. By early 2020, Lanxess had already started digitalizing its global asset base, and today two-thirds of our sites worldwide are equipped with data analysis software to facilitate autonomous analysis of manufacturing processes and generate big data. Integrated, these facilities inform decisions regarding predictive maintenance, product quality enhancements, efficient usage of resources, cost optimization, capacity utilization, research-related activities- all put together, they improve overall business performance. In Europe, we introduced CheMondis, a digital marketplace where we trade and promote chemicals together with our registered partners.