Covestro reports strong earnings despite lower sales in 2016

Cologne, Germany — 2016 was a record year for Covestro, the company said, with volumes up 7.5% and greater capacity utilisation, although sales fell by 1.5% to €11.9 billion as a result of lower prices and foreign exchange effects.

The company said that EBITDA was up 41.9% to €2 billion.

Volumes in its polyurethanes business were up 7,7% compared to 2015 and sales were down 2.6% at €5.9 billion compared to €6.1 billion in 2015.

Over the course of 2016 prices in the polyurethanes sector fell by 6.4% compared to a 12.4% drop in the previous year.

The fourth quarter of 2015 saw a dramatic, 20% fall in prices compared to an 11.6%  increase in prices in the fourth quarter of 2016. In the fourth quarter of 2016, sales of the polyurethane segment were €1.5 billion compared to €1.4 billion, up 11%, the company said.

Covestro’s Coatings, Adhesives, Specialities (CAS) business, which primarily comprises CASE products, also saw sales fall slightly to €2 billion compared with €2.1 billion in 2015. However, for the segment EBITDA at €500 million in 2016 was up 3.3% on the €484 million in 2015.

Covestro said that in 2016 demand was driven by key industries in the automotive and construction sectors. The company confirmed that in October 2016 an unforeseen outage at a supplier forced it to operate European MDT and TDI facilities at a reduced level and Covestro declared force majeur. This was lifted at the end of the year, the firm added.

In the CAS segment volumes were stable despite the expected contractual termination of trading activities. Lower raw material costs had a positive effect on earnings and, in addition, the trend towards higher quality end-products also benefitted the segment, Covestro said.

Patrick Thomas, CEO said “with a clear focus on sustainable growth in in line with global macro trends, we have established a strong position for profiting from long-term global market developments.”