High costs, weak economy
Covestro is in the red
01/13/2023, 7:55 p.m
The plastics group Covestro surprisingly presented the key points of the past fiscal year. And just as unexpectedly, the group presented a loss. At the same time, the DAX company spreads confidence and sees itself “armed for a longer period of economic weakness”.
The specialty chemicals group Covestro surprisingly slipped into the red last year. The DAX company announced that the reason for this was unplanned depreciation and tax claims. Even in day-to-day business, significantly less got stuck. “Covestro’s business development in the past year was significantly influenced by the drastic increase in energy and raw material costs, high inflation and a weakening global economy,” said CEO Markus Steilemann.
Based on preliminary figures, Covestro reported a consolidated loss of 300 million euros. A year ago, the group had earned 1.6 billion euros. Analysts expect an average profit of 420 million euros. The group referred to extraordinary depreciation of fixed assets of around 470 million euros and value adjustments of deferred tax assets of around 250 million euros.
Meanwhile, revenue increased by a good 2 billion to almost 18 billion euros over the year. Preliminary earnings before interest, taxes, depreciation and amortization (EBITDA) almost halved to almost 3.1 billion euros. Covestro thus missed both its own forecast and the expectations of analysts.
The management sees the free cash flow for 2022 at around 130 million euros. “Even in these difficult times, we are able to generate liquid funds,” said CFO Thomas Toepfer. This is shown by the sales at a record level and the clearly positive cash flow. “Our balance sheet is very solid, so that we are also prepared for a prolonged economic downturn.” Covestro intends to publish the complete set of figures on March 2nd.