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MarketScreener Homepage  >  Equities  >  Xetra  >  Covestro AG    1COV   DE0006062144

COVESTRO AG

(1COV)
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Covestro sees lower earnings, weaker volume growth in 'challenging' 2020

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02/19/2020 | 05:41am EDT
The logo of German chemicals maker Covestro is pictured outside its headquarters in Leverkusen

German chemicals maker Covestro forecast lower first-quarter and 2020 core profit on Wednesday after missing fourth-quarter revenue expectations, citing the impact of the coronavirus outbreak, increased competition and lower prices for its key products.

The former Bayer unit forecast earnings before interest, tax, depreciation and amortisation (EBITDA) between 1.0 billion euros (£830 million) and 1.5 billion euros in 2020, including 200 million euros to 280 million euros in the first quarter. It reported core profit of 442 million euros in the first quarter last year and 1.6 billion euros in 2019.

The first-quarter guidance includes a negative effect of 60 million euros from the coronavirus epidemic, which has restricted the company's production facilities in China, Chief Financial Officer Thomas Toepfer said in a conference call.

The company expects some of the negative effects to fade in March as production returns to normal in certain areas of China, he added.

This year "will remain challenging for us, although we still see the long-term need for high-tech plastics for sustainable development across a variety of key technologies," Chief Executive Markus Steilemann said.

Covestro shares were up 3.4% at 0900 GMT, topping Germany's blue-chip DAX index, but down 1.7% so far this year, lagging the sector and the broader market.

The group, whose main products include foam chemicals and clear plastics, said it planned additional 200 million euros of cost savings this year as part of its ongoing efficiency push.

A company spokesman said job cuts would not form part of the savings, which would instead come from more efficient management of administrative, procurement and maintenance expenses as well as a review of all existing and planned investments.

JP Morgan and Berenberg analysts have said the company will benefit from cutting its investment budget to focus on the most promising shorter-term projects if it wants to maintain high dividend payouts.

Covestro reported fourth-quarter revenue at 2.86 billion euros, 3.7% below analysts' average expectations in a company-provided poll.

EBITDA fell 5.1% to 278 million euros in the three months, broadly in line with the 277 million euros expected on average by a poll of analysts provided by the company.

"From our conversations with investors over the past weeks, we got the impression their expectations were even lower than consensus," Baader Helvea analysts said, adding that in-line results and outlook could provide a positive trigger for the company's shares.

By Zuzanna Szymanska

Stocks mentioned in the article
ChangeLast1st jan.
BASF SE 3.33% 42.455 Delayed Quote.-39.00%
BAYER AG 3.97% 52.68 Delayed Quote.-30.41%
COVESTRO AG 0.63% 27.37 Delayed Quote.-34.38%
DAX 1.90% 9815.97 Delayed Quote.-27.30%
WANHUA CHEMICAL GROUP CO., LTD. -3.10% 40 End-of-day quote.-26.51%
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Financials (EUR)
Sales 2020 11 406 M
EBIT 2020 404 M
Net income 2020 190 M
Debt 2020 1 283 M
Yield 2020 8,21%
P/E ratio 2020 28,0x
P/E ratio 2021 12,4x
EV / Sales2020 0,55x
EV / Sales2021 0,57x
Capitalization 5 005 M
Chart COVESTRO AG
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Covestro AG Technical Analysis Chart | 1COV | DE0006062144 | MarketScreener
Technical analysis trends COVESTRO AG
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Income Statement Evolution
Consensus
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Buy
Mean consensus OUTPERFORM
Number of Analysts 22
Average target price 39,98  €
Last Close Price 27,37  €
Spread / Highest target 82,7%
Spread / Average Target 46,1%
Spread / Lowest Target -12,3%
EPS Revisions
Managers
NameTitle
Markus Steilemann Chief Executive Officer
Richard Pott Chairman-Supervisory Board
Thomas Toepfer Chief Financial Officer & Labor Director
Klaus Schäfer Chief Technology Officer
Petra Kronen Vice Chairman-Supervisory Board
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