Adjusted EBITDA increases year on year by 44.5% to EUR 471 million / Earnings buoyed by supply and demand situation / Sales down 1.4% to EUR 3,020 million / Stable volumes at declining selling prices
Materials manufacturer Covestro substantially improved its operating result in the third quarter of 2015. Compared with the prior-year period, adjusted EBITDA increased by 44.5% to EUR 471 million. One main reason for this was a significant decline in raw material prices, which against the backdrop of a more favorable supply and demand situation more than offset a decline in selling prices. Currency effects of around EUR 70 million also contributed positively to this increase in earnings.
“Our first results as an independent company show that our business remains on the right track,” said Covestro CEO Patrick Thomas. “The third quarter underlines once again our good performance and particularly our earnings power.”
EBIT, too, increased significantly to EUR 287 million, up 64% from the third quarter of the previous year. Reflected here were special items of minus EUR 18 million (Q3 2014: minus EUR 2 million) comprising expenses for the consolidation of production sites as well as expenses for and proceeds from the carve-out and stock market flotation of Covestro. Adjusted EBIT increased by 72.3% to EUR 305 million in the third quarter of 2015.
Covestro sales declined in the third quarter of 2015 by 1.4% year on year to EUR 3,020 million. While volumes were level overall with the prior-year period, selling prices decreased in all three operational segments, especially Polyurethanes, which develops, manufactures and markets raw materials for versatile foams. However, positive currency effects largely offset these lower prices.
Sales of the Polyurethanes segment in the third quarter of 2015 receded by 8.5% year on year to EUR 1,512 million. This resulted mainly from much lower selling prices for the three product groups toluene diisocyanate (TDI), diphenylmethane diisocyanate (MDI) and polyether polyols, due primarily to declining raw material prices overall which were largely passed on to customers. However, the lower selling prices were compensated in part by positive currency effects.
Growth at Polycarbonates
The Polycarbonates segment grew sales by 13% to EUR 819 million in the third quarter of 2015. This growth was attributable to a positive volume trend although selling prices for the high-performance plastics dipped slightly. Positive currency effects also contributed to the increase in sales.
Sales in the Coatings, Adhesives, Specialties segment expanded by 2.6% to EUR 519 million. Currency effects offset the slight year-on-year decline in volumes and selling prices.
Sales growth in the first nine months
In the first nine months of 2015, Covestro grew sales by 5.7% to EUR 9,284 million. Volumes expanded in all segments. Additional momentum came from currency effects, which overall more than offset the decline in selling prices, especially at Polyurethanes and Polycarbonates.
Compared with the previous year, adjusted EBITDA for the first three quarters of 2015 improved by a substantial 45.6% to EUR 1,385 million. Considerably lower raw material prices and higher volumes more than offset the decline in selling prices. Currency effects had a positive impact of around EUR 200 million. EBIT increased year on year by 55.4% to EUR 760 million.
Research and development expenses at Covestro increased by 18.2% in the first nine months of the current year to EUR 188 million (9M 2014: EUR 159 million), including EUR 63 million in the third quarter (Q3 2014: EUR 48 million). The company also invested an additional EUR 62 million in the first nine months of 2015 (9M 2014: EUR 56 million) in joint development projects with customers, including EUR 21 million in the third quarter of 2015 (Q3 2014: EUR 19 million).
Covestro will be publishing a full report for the third quarter, including a forecast for the full year, on November 12, 2015.