Covestro Sales Decline in 2019 Third Quarter Despite Volume Growth
Covestro’s Coatings, Adhesives, Specialties segment reported a drop in core volumes by 4% as a result of weaker demand for coating raw materials from all key industries.
In the third quarter of 2019, Covestro reports that it achieved core volume growth of 5.3% over the prior-year period in a continuing challenging economic environment. At the same time, group sales declined as expected by 14.6% to €3.2 billion (approximately $3.6 billion) due to continued lower selling prices. Growth was attributable mainly to the construction, furniture, electrical, and electronics industries.
“After generating solid volume growth in the second quarter, demand once again grew in the third quarter,” said Markus Steilemann, Ph.D., CEO. “The economic climate remains challenging, which we notice particularly in the automotive sector. However, our volume growth indicates that our business is well diversified across various industries.”
In order to remain successful in the long run with its sustainable and innovative solutions, Covestro reports that it aims to narrow its focus on circular economy going forward and has launched a new strategic program to this end. In its production processes in particular, the group is aiming for the greatest possible use of raw materials from sustainable sources, such as plants, waste, and carbon dioxide. This should eliminate the use of fossil resources such as crude oil as much as possible. Above all, used plastics must be recycled systematically and to the greatest possible extent.
Covestro’s core volumes in the Polyurethanes segment increased by 5.1% in the 2019 third quarter. The increased demand in the furniture and electrical and electronics industries, especially in household appliances, as well as in the construction sector more than offset weaker demand from the automotive industry. However, sales in this segment decreased by 20.1% to almost €1.5 billion (~ $1.7 billion) due to lower selling prices stemming from increased competitive pressure.
Core volumes in Polycarbonates rose by 9.3% over the prior-year quarter. The electrical and electronics industry and the construction sector were the main contributors to this growth. Sales in this segment decreased by 13.2% to €901 million (~ $1 billion) in the third quarter of 2019.
The Coatings, Adhesives, Specialties segment reported a drop in core volumes by 4% as a result of weaker demand for coating raw materials from all key industries, particularly the automotive sector. Sales therefore decreased by 3% to €588 million (~ $656 million).
Covestro reports that, as expected, the first nine months were marked by growing competition and a pricing shift. Core volume growth amounted to 1.5%. Group sales decreased by 15.8% to €9.5 billion (~ $10.6 billion), mainly as a result of lower selling prices.
Additional details are available at www.covestro.com.