Covestro Meets Guidance for 2020 First Quarter Despite Coronavirus Impact
Covestro’s core volumes decreased by 4.1% in the first quarter of 2020, compared to the prior-year quarter.
Covestro recently announced that it met its EBITDA guidance for the first quarter of 2020 in a business environment strongly impacted by COVID-19. Core volumes decreased by 4.1% compared to the prior-year quarter, mainly as a result of significantly weaker demand in China due to coronavirus-related interruptions of production at local customers in February and March 2020.
Coupled with a worldwide decline in selling prices, mainly driven by increased competitive pressure in the Polyurethanes and Polycarbonates segments, this led to lower group sales of around €2.8 billion (approximately $3 billion), a 12.3% decline. EBITDA stood at €254 million (~ $275.8 million), a 42.5% decline, which was in the expected range for the first quarter.
“The coronavirus pandemic is an exceptional situation and has reinforced the existing global uncertainties even further,” said Markus Steilemann, CEO. “Protecting the health of our employees and their families as well as our business partners is our top priority. In addition, Covestro is doing everything it can to continue to be a reliable supplier for its customers during this crisis. We are confident that we will successfully master this challenge with our absolute focus on customers, strict cost awareness and strong team spirit.”
In the first quarter of 2020, Covestro’s business in all segments was affected by the significant impact of the coronavirus pandemic, particularly in China. The Polyurethanes segment saw core volumes decline by 3.6% compared with the prior-year quarter during this period. This is mainly attributable to the downturn in volumes in the electrical, electronics, and household appliances sectors, as well as the automotive industry. As a result of increased competition worldwide and the change in total volumes sold, sales declined 13.7% to around €1.3 billion (~ $1.4 billion).
Core volumes in Polycarbonates declined by 4.9% from the prior-year quarter due to considerably lower volumes sold in the electrical, electronics, and automotive industries. A low level of selling prices and decreased volumes drove sales in the Polycarbonates segment down by 14.8% to €733 million (~ $795.8 million).
Core volumes in the Coatings, Adhesives, Specialties segment fell 5.2% compared to the prior-year quarter. This development was driven by weaker demand for coating precursors in all key customer industries, particularly the automotive industry. Sales were down 8.8% to €572 million (~ $621 million) due to a decline in total volumes sold and lower average selling prices.
Covestro had adjusted its previous annual guidance in mid-April as a consequence of the foreseeable negative effects of the coronavirus pandemic on the global economic development and therefore also on future business performance. “Updating our guidance was necessary in view of the serious impact of the coronavirus pandemic on global markets,” said Thomas Toepfer, Ph.D., Covestro’s CFO. “Covestro has a solid position and still has a strong balance sheet and high liquidity. We continue to rely on our operational efficiency, cost cutting programs and ongoing review of our investments to safeguard our stable financial foundation during these challenging times.”
Additional details are available at www.covestro.com.
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