Covestro records drop in 2019 earnings, income

Yuan Luhang
Falling sales were attributed to lower prices, which were mainly due to increased competitive pressure in the company's main business segments.
Yuan Luhang

During the 2019 fiscal year, sales of Covestro fell by 15.1 percent to 12.4 billion euros (US$13.4 billion) despite product volumes increasing by 2 percent.

EBITDA (earnings before interest, taxes, depreciation and amortization) of Covestro declined by 49.9 percent to approximately 1.6 billion euros while net income fell 69.7 percent to 552 million euros.

The fall of sales was attributable to low selling prices, which were mainly due to increased competitive pressure in all three main segments of the company, according to Covestro’s financial report.

The three segments of the company include the Polyurethanes segment, the Polycarbonates segment, and the Coatings, Adhesives, Specialties segment.

The former two segments, which produce high-tech plastics, posted positive volume growth, with the Polyurethanes segment increasing by 2.3 percent and the Polycarbonates segment increasing by 2.7 percent year on year.

Growth was due to stronger demand in electrical, electronics and household appliances industries and the construction industry, which offset impact from weakened demand in the automotive industry.

“2019 was marked by a number of geopolitical and macroeconomic uncertainties. Nevertheless, demand for our materials remains intact, which confirms our view that plastics are more valuable for the future than ever before,” said Covestro’s CEO Markus Steilemann.

Given the continuing challenging economic outlook for 2020, Covstro will focus on increasing efficiency, prioritizing projects and investments and cutting costs.

For 2020, Covestro anticipates low single-digit percentage growth in core volumes. It assumes that EBITDA for the year will be between 1 and 1.5 billion euros. In the first quarter, EBITDA is expected to be between 200 and 280 million euros.

The company added that the financial impact of the coronavirus on the current fiscal year cannot yet be fully predicted.

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