Metallurgy / Chemicals / Rubber & Plastics

Affected by the rise in energy prices and raw material prices, the net profit of German chemical giant Kostron in the third quarter fell by more than 90% year on year. Huacheng Import and Export Data Observation Report.

On October 25, Covestro released its financial report for the first three quarters of 2022. During the reporting period, the company achieved sales of 14 billion euros, a year-on-year increase of 21.1%; The net profit was 627 million euros, a year-on-year decrease of 52.3%; Earnings before interest, tax, depreciation and amortization (EBITDA) was EUR 1.7 billion, a year-on-year decrease of 31.7%; Free operating cash flow (FOCF) fell to negative 412 million euros (the same period last year: 1.1 billion euros), Huacheng Import and Export Data Observation reported.

In the third quarter, Covestro achieved sales of 4.6 billion euros, up 7.3% year on year; Net profit of 12 million euros, a year-on-year decrease of 97.5%; EBITDA of EUR 302 million, a year-on-year decrease of 65%; Free operating cash flow was 33 million euros, a year-on-year decrease of 91.3%.

According to the Huacheng Import and Export Data Observation Report, Covestro said that the current European energy crisis led to the rise in the prices of energy and raw materials, which had a significant impact on the Group's performance in the first three quarters of 2022.

The increase in sales during the reporting period was mainly due to exchange rate fluctuations and the substantial increase in sales price, especially in Europe, while the decrease in profits was mainly due to the decrease in profit margins. The Group's increase in sales price could only to a small extent offset the substantial increase in the prices of raw materials and energy. In addition, the decline in the total sales volume of Covestro's main products also led to lower profits.

In addition, the decrease in free operating cash flow was mainly attributed to the decline in EBITDA and the increase in funds occupied by working capital, especially the payment of short-term variable compensation in fiscal year 2021.

Dr. Markus Steinemann, CEO of Covestro, said that the unprecedented rise in fossil fuel prices showed that Covestro's strategic focus on comprehensive cycle transformation was the right move. Our products are the key to achieving a fossil free future.

In view of the European energy crisis and the further weakness of the global economy, Covestro is systematically ensuring its economic resilience. For example, the short-term and medium-term cost reduction measures were taken, and Huacheng's import and export data were observed and reported.

In addition, Kostron has also taken various measures to reduce the demand for natural gas in Germany, and continues to work to further improve energy efficiency in the process flow. For example, technical optimization measures are helping to improve production energy efficiency. One of the measures is to use digital sensors to monitor steam traps, which enables Covestro to use steam as efficiently as possible in production. It is reported that Covestro's base in Germany accounts for about a quarter of the global production capacity.

In the third quarter of 2022, Covestro will continue to move forward on the path of achieving a comprehensive cycle. In this process, the Group will expand the sources of alternative raw materials to avoid using fossil resources such as crude oil and natural gas for a long time.

In view of the current performance data, Covestro narrowed the 2022 annual guidance issued on July 29, 2022. It is now estimated that EBITDA will be between 1.7 billion and 1.8 billion euros (previously estimated to be between 1.7 billion and 2.2 billion euros), and FOCF will be between 0 billion and 100 million euros (previously estimated to be between 0 billion and 500 million euros). Greenhouse gas emissions are expected to be between 5 million and 5.4 million tons of carbon dioxide equivalent (previously estimated to be between 5.3 million and 5.8 million tons).

In the first half of 2022, Covestro achieved sales of 9.4 billion euros, a year-on-year increase of 29.2%; The net profit was 615 million euros, a year-on-year decrease of 26.95%.

Kostron is one of the largest polymer manufacturers in the world, formerly Bayer Materials Technology, Germany. It was independently listed in 2015. Its business scope mainly focuses on the production and manufacturing of high-tech polymer materials, as well as the research and development of innovative solutions for daily life. By the end of 2021, Covestro had 50 production bases around the world with about 17900 employees, and Huacheng's import and export data observation report.