Business & people
Covestro reports 66.5% EBITDA growth in 2017 first quarter
Source: CPRJ Editorial Team
▲ CEO Patrick Thomas (left) and Supervisory Board Chairman Dr. Richard Pott at Covestro's Annual General Meeting.
Covestro followed up its success last year with a strong first quarter in 2017. The Group's core volumes increased 9% and at €846 million, EBITDA was up 66.5% over the prior year period.
Net income also rose by 157.1% to €468 million, compared with €182 million in the first quarter of 2016.
"The high demand for our products indicates that innovative plastics play an important role in mastering the challenges posed by global megatrends such as urbanization, climate change, or the evolution of mobility. The proof is our strong volume growth and resulting improved earnings in all segments," said Covestro CEO Patrick Thomas.
"We continue our positive momentum and deliver an EBITDA improvement Year on Year (YoY) for the 9th consecutive quarter. For the remainder of this year we remain optimistic and thus have raised our forecast."
Based on the first quarter's positive business performance, Covestro has adjusted the forecast given in the 2016 Annual Report for the full year 2017. The company still expects core volume growth in the low-to-mid-single-digit percentage range. It now anticipates free operating cash flow significantly above the average of the last three years. Moreover, Covestro now expects return on capital employed (ROCE) to significantly exceed the 2016 level.
In 2017 first quarter, core volumes in the Polyurethanes segment rose 6.8% YoY. All product groups, particularly MDI and TDI, contributed to this increase. The key driver was greater demand from the global construction sector as well as from furniture and mattress industry in the NAFTA and APAC regions, according to the company.
In light of the market demand development in this segment, Covestro decided to continue production of the rigid foam precursor MDI in Tarragona, Spain. At the same time, it is working on converting a plant in the Northern German town of Brunsbüttel. The company expects to double MDI production capacity there to approximately 400,000 metric tons in the course of 2018.
The Polycarbonates segment also once again recorded strong growth of 14.7% YoY in core volumes. The volumes sold in all three regions climbed, mainly because of greater demand from the automotive and electrical & electronics industries.
Covestro doubled its polycarbonate production capacity in Shanghai to nearly 400,000 metric tons per year in 2016. With a total annual production capacity of around 1.5 million metric tons, the company is now the world’s leading producer of this high performance plastic.
Core volumes in the Coatings, Adhesives, Specialties segment increased by 8.1% as against the prior-year quarter. Significant volume growth was reported particularly by the APAC and EMLA regions.
Last year, Covestro commissioned a world-scale plant for raw materials for coatings in China. In contrast to the other two segments, prices of Coatings, Adhesives, Specialties on average remained at the previous year's level.
