Covestro Optimistic Despite Challenging 2019 Second Quarter
While Covestro’s core volumes rose by 1.1%, group sales fell 16.9% to €3.2 billion (approximately $3.6 billion) in the 2019 second quarter due to lower selling prices.
Covestro recently announced its financial results for the second quarter of 2019. Reportedly as expected, ongoing intense competitive pressure and uncertainties in major sales markets persisted into the second quarter. While core volumes rose by 1.1%, group sales fell 16.9% to €3.2 billion (approximately $3.6 billion) due to lower selling prices.
“The economic situation is still challenging, since global economic and political uncertainties remain,” said Markus Steilemann, Ph.D., CEO. “Nonetheless, we reached our earnings targets and were able to increase our core volumes again in the second quarter. This underscores the trend towards more sustainable solutions, which we offer to many industries.”
Based on the results of the first half of 2019, Covestro has confirmed its guidance for the current fiscal year. The results for the first six months were well under the previous year’s level, but Covestro reports that this was because 2018 was marked by exceptionally high margins in some product groups. For fiscal 2019, Covestro continues to project core volume growth to be in the low- to mid-single-digit percentage range.
“Our half-year results met our expectations in the current economic environment,” said Thomas Toepfer, Ph.D., chief financial officer. “Thus, we confirm our guidance for the fiscal year. At the same time we will closely follow further developments in our major sales markets. The automotive industry developed much weaker than expected, on the other hand the construction sector as well as the wood and furniture industry evolved better.”
In the Polyurethanes segment, core volumes grew by 0.7%. Sales declined 24.3% to almost €1.5 billion (~ $1.7 billion) , driven by lower selling prices as a result of increased competition.
Core volumes in Polycarbonates rose by 4.4% over the 2018 second quarter. While the electrical and electronics industry and the construction sector contributed to this growth, volumes in the automotive industry declined. Sales were down 15% to €898 million (~ $998.9 million) in the second quarter of 2019.
The Coatings, Adhesives, Specialties segment saw a decline in core volumes of 4.7%. As a result, sales were down 1.3% to €621 million (~ $690.8 million). Exchange rate movements and the gradual purchase of the shares of Japan-based DIC Covestro Polymer Ltd. had a positive effect.
Covestro reports that, on the whole, the first six months of 2019 saw growing competition, as expected. Volumes sold remained mostly stable (down 0.4%), while group sales dropped 16.4% to almost €6.4 billion (~ $7.1 billion) due to lower selling prices. In the Polyurethanes and Polycarbonates segments in particular, selling prices were well below those of the prior-year period.
Additional details are available at www.covestro.com.