Covestro recently announced that it has been actively executing its crisis management plans in response to the global spread of the COVID-19 pandemic and adjusting business operations according to local developments. The board of management has taken actions to: adapt the company to the current conditions, protect the health of all Covestro employees, ensure the ability to deliver to customers, and secure its strong liquidity position.
As a consequence of the coronavirus pandemic and the increasingly adverse business environment, the company has concluded that its previously provided outlook cannot be upheld. The board of management therefore provided the following adjustments to the group financial guidance for 2020:
- Core volume growth is expected to be negative for 2020 compared to 2019. (It was previously projected to be positive in the low-single-digit-percentage range). Preliminary core volume growth in the first quarter of 2020 was -4.1%.
- EBITDA is expected to be between €700 million and €1.2 billion (approximately $765 million to $1.3 billion) in 2020. It had been projected to be between €1-1.5 billion (~ $1.1-1.6 billion). This adjustment is primarily due to declining core volumes.
- The target for short-term cost savings is being increased to more than €300 million (~ $328 million) in fiscal-year 2020, compared to the previous €200 million (~ $219 million), in addition to the ongoing “Perspective” restructuring program that is expected to contribute savings of €100 million (~ $109 million).
- Capital expenditures are being reduced by around €200 million and are now expected to amount to around €700 million in the 2020 fiscal year. They were previously projected to be €900 million (~ $984 million).
Covestro notes that this update takes into account the negative impact of the coronavirus pandemic as it is foreseeable on April 15, 2020, and assumes a recovery of the current situation starting in the third quarter of 2020. As the pandemic is still evolving, further updates to the financial expectations may be necessary.
For more information, visit www.covestro.com.