Strong demand in 'innovative plastics' drive Covestro growth
Covestro has started 2017 strong, with a 9.0% increase in “core volumes” and significant increases in sales and earnings in the first quarter of the year.
The “still-strong” demand for “innovative polymers” and a 13.4% overall selling price increase drove a sales growth of 24.7% to €3,586 million in the first three months of the year, the German materials company announced 25 April.
Earnings (EBITDA) were up 66.5% at €846m compared with the same period the year before, due in part to capacity growth and higher utilisation rates.
Net income also rose by over 157% to €468m in the three months to the end of March, compared to €182 million in 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 urbanisation, climate change, or the evolution of mobility,” said Covestro CEO Patrick Thomas.
For the remainder of the year, said Thomas, the Leverkusen-based company has raised its forecast.
Covestro expects core volume growth in the “low-to-mid-single-digit percentage range.”
In the first quarter, core volumes in the polyurethanes segment rose by 6.8% year-on-year, with MDI and TDI particularly contributing to the increase. Segment earnings more than double compared to Q1 last year at €482 million, due mainly to higher margins. The Polyurethanes segment saw a price rise of 25.8% over the prior-year quarter.
The key driver, said Covestro, was greater demand from the global construction sector as well as from furniture and mattress industry in the NAFTA and APAC regions.
In light of the market demand development in its polyurethane segment, Covestro said that it had decided to continue production of the rigid foam precursor MDI in Tarragona, Spain.
Additionally, the materials company is working on converting a plant in the northern German town of Brunsbüttel to double MDI production capacity there to 400 kilotonnes per annum (ktpa) by 2018.
The polycarbonates segment also recorded strong growth of 14.7% in core volumes year-on-year. The volumes climbed mainly because of greater demand from the automotive and electrical/electronics industries.
The segment’s EBITDA rose by 31.1% to €232 million. To meet the growing demand, Covestro doubled its polycarbonate production capacity in Shanghai to nearly 400ktpa in 2016.
» Publication Date: 25/04/2017