Covestro has sound 2016 despite lower sales

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 EUR 11.9 bn as a result of lower prices and foreign exchange effects.

The company said that EBITDA was up 41.9% to EUR 2 bn.

Volumes in its polyurethanes business were up 7,7% compared to 2015 and sales were down 2.6% at EUR 5.9 bn compared to EUR 6.1 bn 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 EUR 1.5 bn compared to EUR 1.4  bn, up 11%, the company said.

Covestro's Coatings, Adhesives, Specialties (CAS) business, which primarily comprises CASE products, also saw sales fall slightly to EUR 2 bn compared with EUR 2.1 bn in 2015. However, for the segment EBITDA at EUR 500m in 2016 was up 3.3% on the EUR 484 m 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 a the end of of the year, the firm added.

In the CAS segment volumes were stable despite the expected contractural 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."