Print

Covestro's positive momentum continues

Covestro's positive momentum continues
Following a successful third quarter, materials manufacturer Covestro sees confirmation of its confidence for the full fiscal year. The company, which was recently listed on the stock market, expects a substantial increase in profitability in 2015. Free operating cash flow is on track for a new record and net income for the third quarter improved by around 62%.

"2015 should be a very good year for Covestro," affirmed CEO Patrick Thomas. "We are demonstrating above all our earning power and financial strength. It is pleasing that all three segments and especially Polycarbonates are likely to participate in the positive development."

Covestro anticipates a substantial increase in adjusted EBITDA in 2015, up from EUR 1.16 billion in the previous year. This should be supported especially by a more favorable supply and demand situation. The company is assuming a year-on-year increase in adjusted EBITDA in the fourth quarter.

In 2015, Covestro expects sales to improve slightly (on a reported basis) from the prior-year figure of EUR 11.76 billion. A low-single-digit percentage increase in core volume growth is forecast.

Covestro also expects to set a new record for free operating cash flow (FOCF) in the current year. This indicator is the basis for the sustainable dividend policy planned by the company and stood at EUR 302 million in 2014.

Covestro is planning to reduce net financial debt including post-employment benefit obligations to EUR 4 billion and is thus aiming at the lower end of its target indebtedness of 2.5 to 3.0 times adjusted EBITDA.

In the Polyurethanes segment slight core volume growth is anticipated in 2015. Adjusted EBITDA is predicted to exceed the prior-year figure of EUR 592 million. Polyurethanes are high-performance foams used, for example, in automotive seating and upholstered furniture and as insulating materials for buildings and refrigerated appliances.

Covestro is forecasting a mid-single-digit percentage increase in core volume growth for the Polycarbonates segment in 2015. Adjusted EBITDA is expected to more than triple compared with the prior-year figure of EUR 160 million. Polycarbonate is a versatile high-performance plastic used in key areas such as the automotive and electronics industries.

In the Coatings, Adhesives, Specialties segment, the company is assuming core volume growth in the low-single-digit percentage range for 2015. It is also planning to increase adjusted EBITDA from the prior-year level of EUR 437 million. This segment develops and manufactures raw materials for coatings, adhesives and sealants, as well as specialties for use in textiles, cosmetics and medical and sports products.

Covestro already posted increases in adjusted EBITDA in all three segments in the third quarter of 2015. Against the backdrop of a more favorable supply and demand situation, this figure rose by almost 45% overall against the prior year to EUR 471 million. Net income improved by around 62% to EUR 160 million.

By contrast, declining selling prices saw Covestro sales decrease in the third quarter by 1.4% to EUR 3.02 billion. However, core volume growth remained stable. Free operating cash flow increased by almost 13% year on year to EUR 251 million.