Covestro AG's first quarter earnings before interest, taxes, depreciation and amortization (EBITDA) have fallen 58.4 percent year-on-year to 442 million euros ($493.8 million), impacted by higher competitive pressure and weak performance in both polyurethane and polycarbonates segments.
While core volumes dipped slightly by 1.8 percent in the first three months of the year, sales figures declined 16 percent to 3.2 billion euros ($3.57 billion) compared to the same period last year.
Against "exceptionally positive" prior-year results, the company also posted a 72.2 percent decline in net income, at 179 million euros ($199.9 million).
Although significantly below the results of last year's first quarter, Covestro said April 29 that the results remained "in the expected range," and thereby confirmed its targets for 2019.
"The first quarter was in line with our guidance and confirms our subdued expectations for the full year," CEO Markus Steilemann said.
The company, he added, is now focusing on investments and efforts to improve efficiency.
"In anticipation of continued challenging environment influencing results throughout the year, we are especially focusing on efficient production and processes and targeted investments," said Chief Financial Officer Thomas Toepfer.
Core volumes in the polyurethanes segment remained largely stable in the first quarter of 2019. Sales in the segment, however, declined by 24.3 percent to 1.4 billion euros ($1.56 billion) due to lower selling prices, with all three regions posting lower revenues. Segment earnings fell 75.4 percent to 157 million euros ($175.4 million) due to lower margins.
Driven by weaker demand from the automotive industry, core volumes in the polycarbonates segment decreased by 6.3 percent. The unit registered a 16.7 percent decline in sales at 860 million euros ($960.6 million), again due to lower selling prices. With falling margins and stable raw material prices, the unit's earnings fell 48.8 percent to 155 million euros ($173 million).
For fiscal 2019, Covestro projects core volume growth to be in the low- to mid-single-digit percentage range. EBITDA for the fiscal year is forecast to be between 1.5 - 2.0 billion euros ($1.67-2.2 billion), with the second quarter EBITDA anticipated to be around the level of first quarter 2019.
