Despite the increasingly challenging market environment, Covestro continued its positive performance since 2018 and achieved solid results in the third quarter.
In general terms, the following six aspects are shown:
• Group sales increased by 4.8% to € 3.7 billion
• Core business sales remain stable
EBITDA reached 859 million euros, flat with last year
• Net profit increased by 1% to € 496 million
• Free-running cash flow decreased by 12.2% to € 578 million due to increased investment
• Cost savings target: € 350 million per year Dr Markus Steilemann, chief executive of Covestro, said: ' We continue to Markus Steilemann the road to success. The identified investment projects will guide us and lay the groundwork for future organic growth. We will expand our capacity in all segments of our business to strengthen our leadership position in the highly attractive industry and grow at a faster pace than the global economic growth rate. In addition, we will improve the cost structure in the medium term through the efficiency Improvement Program.
' Covestro has recently announced an investment of about 1.5 billion euros to expand its MDI capacity at the Texas Baytown base in the United States to build a 500,000-ton/year world-class plant, which is expected to start production in 2024. At the same time, the company is advancing investment projects in Brunsbüttel, Spain, in Tarragona, Belgium, Antwerp and China, in order to increase the production capacity of MDI and its precursors, thereby benefiting from global market growth.
In the long term, the MDI market is expected to grow by about 5% per annum, about 2% higher than global GDP growth. Covestro is also committed to the development of innovative products to help achieve sustainable development.
For example, the company is developing a new thermoplastic polyurethane product made from carbon dioxide, a series of the first products that were released in the fall of 2018.
Annual Financial Guidance Confirmation Dr Thomas Toepfer, chief financial officer of Covestro, said: ' The third-quarter performance is in line with our expectations, Tao Pengfei. We note that the global economy is facing increasing challenges, and that our product supply capabilities in Europe and Asia have also been affected in the past quarter. Still, we can keep our sales steady. In this context, today we confirm the 2018 financial guidelines.
' Covestro expects a low single-digit percentage increase in core business sales for 2018. Free-running cash flow is expected to exceed 2 billion euros.
The company expects the occupied capital rate of return (ROCE) to be flat with 2017, while maintaining a forecast that EBITDA will be higher than the 2017 level. 3.5 Cost Savings goal: annual
Billion euros At the same time, Covestro has made good progress on another strategic lever: increased efficiency and efficiency are expected to be significantly improved by enhancing cross-sectoral collaboration and increasing the application of digital solutions.
The most late 2021, the annual cost savings of 350 million euros, the goal is to limit the growth of operating costs.
The measures identified are primarily intended to permanently reduce non-labour costs, but the company will continue to reduce some 900 full-time positions globally, such as in the administrative field.
Strong growth in polycarbonate and coatings, adhesives and specialty chemicals plates In the third quarter, sales of the polyurethane segment declined slightly, by 1.2% to 1.849 billion euros.
The decline in sales in EMLA (Europe, the Middle East, Africa and Latin America except Mexico) and the Asia-Pacific region was offset by growth in NAFTA (US, Canada and Mexico). The reasons for the decline include price changes, exchange rate effects and unplanned factory shutdowns. Sales of the core business of the polyurethane business sector fell by 2%. The EBITDA of the business sector fell 21.5% to 432 million euros.
The main reason is the purchase price of raw materials increased. The polycarbonate segment continued to grow strongly in the third quarter, with sales rising 11.3% to 1.038 billion euros.
Core business sales increased 2.6%, and sales prices increased, with a positive impact on sales. Sales in EMLA and the Asia-Pacific region have risen sharply, offsetting the downturn in NAFTA. The EBITDA of the sector rose 49.3% to 315 million euros, benefiting from higher margins and selling prices.
This result includes a non-recurrent income of 36 million euros from the sale of the US plate business. Sales of coatings, adhesives and specialty chemicals increased by 8.8% to € 606 million. This sector has grown in all three regions. In the third quarter, the segment's core business sales also rose sharply, up 7.2% from a year earlier.
EBITDA Rose 0.8% to 126 million euros, roughly flat with last year's level. Covestro's performance for the nine months 2018 years ago laid a solid foundation for the whole year. The cumulative core business sales increased 1.5% from a year earlier. Sales rose 6.9% to 11.3 billion euros, and EBITDA grew 13.7% to 2.9 billion euros.