Covestro profit plunges 70 percent

Covestro AG continued to post weak results in the third quarter of the year, due in part to growing competition, a pricing shift, and high prior-year comparison levels.
 
Over the first nine months of the year, Covestro’s sales fell 15.8 percent to 9.5 billion euros ($10.5 billion), mainly as a result of lower selling prices, the Leverkusen, Germany-based company announced Oct. 28.
 
Earnings before interest, taxes, deductions and amortization (EBITDA) declined by 54.4 percent to 1.32 billion euros ($1.46 billion), while profit plunged 70.5 percent to 515 million euros ($571.5 million).
 
In the third quarter of 2019 Covestro said it achieved core volume growth of 5.3 percent over the prior-year period “in a continuing challenging economic environment.”
 
For the three-month period, group sales declined 14.6 percent to 3.2 billion euros ($3.55 billion) while earnings fell 50.5 percent to 425 million euros ($471.7 million).
 
Core volumes in the polyurethanes segment increased by 5.1 percent, helped by higher demand in the furniture and electrical and electronics industries, which more than offset weaker demand from the automotive segment. However, sales in this segment decreased by 20.1 percent to 1.47 billion euros ($1.63 billion) due to lower selling prices stemming from increased competitive pressure. The segment’s EBITDA fell 54.6 percent to 196 million euros ($217.5 million) for the period.
 
The polycarbonates unit saw core volumes rise 9.3 percent year-over-year, due to increased demand from the electrical and electronics industry and the construction sector. Lower selling prices, however, led to a 13.2 percent fall in sales at 901 million euros ($999.8 million) and 58.1percent decline in earnings at 132 million euros ($146 million).
 
“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,” CEO Markus Steilemann said.
 
Covestro has linked the growth mainly to the construction, furniture, electrical and electronics industries.
 
Based on the results of the third quarter, Covestro has narrowed the forecast for fiscal year 2019, with EBITDA for the year expected to stand between 1.57 billion euros ($1.74 billion) and 1.65 billion euros ($1.83 billion). The group registered EBITDA of 3.2 billion euros ($3.55 billion) in 2018.