Covestro recorded a strong third quarter of 2021, which saw a continuation of the high earnings momentum from the first half of the year. Since demand remained strong, high selling prices meant that sales increased by 55.9 percent to around EUR 4.3 billion (previous year: around EUR 2.8 billion). The core volumes sold rose slightly by 0.8 percent compared to last year’s third quarter, mainly as a result of additional volumes from the Resins & Functional Materials (RFM) business acquired from DSM on April 1, 2021. Temporarily limited product availability, caused by unplanned production outages, curbed growth potential despite continuing solid demand.

 

EBITDA was up 89.0 percent to EUR 862 million (previous year: EUR 456 million) on the back of a strong upward trend in margins. The high margins are attributable to significantly higher selling prices due to an advantageous competitive situation, which enabled Covestro to more than offset the rise in raw material prices. Consequently, net income more than doubled in the third quarter, rising to EUR 472 million (previous year: EUR 179 million). Free operating cash flow (FOCF) also increased by 5.5 percent to EUR 381 million (previous year: EUR 361 million).

 

“We were able to carry the entire momentum from the first half of the year over to the third quarter and benefited from the continuing high pricing level. Constantly robust demand for our products shows that we offer the right solutions for our customers,” said Dr. Markus Steilemann, CEO of Covestro. “With our portfolio, we’re ideally positioned to meet the increasing demand for sustainable solutions and can serve this need even more precisely with our new Group structure.”

 

Taking into account its current business performance, Covestro again revised its full-year guidance on November 8. The Group now anticipates EBITDA will be EUR 3.0 billion to EUR 3.2 billion for 2021 as a whole (previously: EUR 2.7 billion to EUR 3.1 billion). Due to a valuation-driven increase of working capital the FOCF is now expected to be EUR 1.4 billion to EUR 1.7 billion (previously: EUR 1.6 billion to EUR 2.0 billion). Covestro now anticipates that the return on capital employed (ROCE) will be 19 percent to 21 percent (previously: 16 percent to 20 percent). Due to limited product availability, core volume growth for the year as a whole is expected to be 10 percent to 12 percent (previously: 10 percent to 15 percent), of which around 6 percentage points will still be attributable to the RFM business.

 

“We’ve achieved significant increase in earnings and were at the upper end of the EBITDA guidance for the third quarter,” stated Dr. Thomas Toepfer, CFO of Covestro. “We feel confident that this positive earnings trend will continue. This is further emphasized with our revised full-year guidance.”

 

Covestro also assumes a positive medium-term trend. At its Investor Conference this September, the Group announced that it expects a substantial increase in mid-cycle EBITDA from its current level of EUR 2.2 billion to EUR 2.8 billion in 2024. This is due to Covestro’s organizational realignment implemented since July 2021 in the wake of the company’s transformation and the successful integration of RFM.