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By Ozan Ergenay
(Reuters) - German specialty chemicals maker Lanxess said on Monday it expected its fourth-quarter core profit to exceed market expectations by more than 20%, largely due to pre-buying by U.S. customers ahead of Donald Trump’s inauguration given the threat of potential tariffs.
The company expects its earnings before interest, taxes, depreciation and amortisation (EBITDA) pre-exceptionals for October-December 2024 to be around 159 million euros ($164 million), exceeding analysts' forecast of 130 million, according to a Vara consensus.
For all of 2024, the chemicals group expects EBITDA, adjusted for special items, of around 614 million euros, also about 20% above the previous year's level and at the upper end of its guidance range of 10-20% growth.
Shares in Lanxess, which makes high-end speciality chemicals such as additives, lubricants, flame retardants and plastics, were up 6.4% in afternoon trading.
"The fourth quarter was positively influenced by a stronger than expected December, in particular due to customers’ pre-buying," the company said in a statement, flagging that the underlying macroeconomic environment had not improved.
"The beat was driven by positive pull-forward effects ahead of the inauguration of the U.S. president and not by a fundamental improvement in underlying demand. I therefore expect limited changes to the 2025 consensus for the chemical companies," said Thomas Schulte-Vorwick, an analyst at Metzler Capital Markets.
He said fourth quarter earnings of other chemical companies could also be better than expected thanks to the pull-forward effects ahead of Donald Trump’s inauguration, which takes place on Monday.
"This is a good indicator that volumes at German chemicals producers may have been surprisingly robust in Q4," Sebastian Bray, an analyst at Berenberg, said.
He said the market would be focused on indicators of whether volume improvement was sustainable in 2025, as Lanxess has highlighted pre-buying in the U.S. as a potential driver for its specialty additive and consumer protection product segments.
Lanxess will release its full-year 2024 results on March 20.
($1 = 0.9689 euros)
(Reporting by Ozan Ergenay, additional reporting by Anastasiia Kozlova, Editing by Rachel More, Matthias Williams, Bernadette Baum and Susan Fenton)
