Covestro, a leading global supplier of high-performance polymer materials, reported its first quarter 2023 results.
Despite a challenging business environment and weak demand, the company exceeded its own and analysts expectations. Group sales were down 20.1% to EUR 3.7 billion, and EBITDA was 64.5% lower year over year at EUR 286 million. However, the company’s focus on efficiency as part of its Sustainable Future strategy helped limit the negative impacts.
Guidance for 2023 Adjusted
Covestro has adjusted its guidance for the key management indicators EBITDA, free operating cash flow, and ROCE above WACC for fiscal 2023. The company now projects that the Group’s EBITDA will be between EUR 1.1 billion and EUR 1.6 billion, free operating cash flow of between EUR 0 million and EUR 500 million, and ROCE above WACC of between –6.0 percentage points and –2.0 percentage points. Covestro’s GHG emissions measured as CO2 equivalents are now projected to be between 4.2 million metric tons and 4.8 million metric tons.
Share Buyback Program Resumed
Covestro has decided to resume its current share buyback program in the short term. The buyback of the next sub-tranche with a volume of up to EUR 75 million will begin in May 2023.
Performance Materials and Solutions & Specialties Segments Robustly Positioned
Covestro’s Performance Materials segment focuses on the reliable supply of standard products at competitive market prices, while the Solutions & Specialties segment serves the need for complex products with a high pace of innovation in combination with application technology services. Both segments are well positioned to successfully overcome challenges on their own and gear to customers’ needs.
Performance Materials Segment
Group sales in the Performance Materials segment fell by 25.0% to EUR 1.8 billion, attributable in particular to the decline in volumes sold and lower average selling prices. The segment’s EBITDA declined by 72.1% year over year to EUR 173 million, primarily due to lower margins and a reduction in volumes sold driven by demand and availability factors.
Solutions & Specialties Segment
Sales in the Solutions & Specialties segment fell by 15.3% to EUR 1.9 billion, mainly due to a decline in volumes sold and lower average selling prices. The segment’s EBITDA fell by 26.3% year over year to EUR 165 million, primarily due to the demand-related decrease in volumes sold. However, the rise in margins had a positive effect as lower raw material prices outweighed the decline in selling prices.