Covestro reported stable Group sales of €3.6 billion for the third quarter of 2024, a slight increase of 1.0% compared to Q3 2023, driven by increased sales volumes, particularly in the EMLA and APAC regions. Lower raw material costs impacted selling prices, balancing the revenue effect. EBITDA rose 3.6% to €287 million, aligning with the projected range of €250 million to €350 million, while net income reached €33 million, up from a loss of €31 million in the previous year. Free operating cash flow (FOCF) declined by 63.6% to €112 million due to lower operating cash flows.
“We concluded the third quarter with higher sales volumes and improved earnings,” said Covestro CEO Dr. Markus Steilemann. “The current market environment remains challenging, but by consistently implementing our ‘Sustainable Future’ strategy, we are laying a foundation for sustainable growth and progress toward becoming fully circular.”
Guidance Narrowed for 2024 Fiscal Year
Covestro narrowed its 2024 guidance, now expecting EBITDA between €1.0 billion and €1.25 billion, previously forecasted between €1.0 billion and €1.4 billion. ROCE above WACC is now anticipated between –7.0% and –5.0%, adjusted from the prior range of –7.0% to –4.0%. Covestro continues to expect full-year GHG emissions between 4.4 and 5.0 million metric tons and FOCF between –€100 million and €100 million.
“Global demand remains low across industries and regions, but we’ve slightly increased EBITDA, showing that our efficiency and reliability measures are working,” said CFO Christian Baier.
Investment Agreement with ADNOC Supports Growth
On Oct. 1, 2024, Covestro signed an Investment Agreement with ADNOC International Limited and ADNOC International Germany Holding AG. ADNOC will make a public offer of €62.00 per share for all outstanding Covestro shares. ADNOC committed to supporting Covestro’s “Sustainable Future” strategy, including a 10% share capital increase, generating €1.17 billion to drive growth.
The Board of Management and Supervisory Board will review the offer document and expect to recommend acceptance to shareholders.
Climate Neutrality Advances with Renewable Energy Agreement
Covestro furthered its climate-neutrality goals by increasing renewable energy use, signing a ten-year solar energy purchase agreement with bp for its Spanish sites. This move raises renewable energy use at Covestro’s Tarragona production site from under 10% to approximately 30%.
Segment Performance
Performance Materials: Sales grew 4.1% to €1.78 billion, largely due to higher volumes in EMLA, with EBITDA surging 47.1% to €125 million. FOCF declined to €111 million, primarily due to reduced working capital release.
Solutions & Specialties: Sales decreased 2.0% to €1.77 billion due to lower demand-driven selling prices, despite increased volumes. EBITDA dropped 15.4% to €208 million, with FOCF down to €101 million, attributed to cash tied up in working capital and lower EBITDA.
Nine-Month Results
For the first nine months of 2024, Group sales were stable at €10.8 billion, but EBITDA decreased by 7.2% to €880 million. Net income was –€74 million, down from –€11 million, while FOCF was –€164 million, compared to €159 million for the same period last year.
