Covestro generated strong results in 2018 despite challenges throughout. Core volumes increased 1.6%, and group sales rose by 3.4% to €14.6bn.
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Covestro generated strong results in 2018 despite
Covestro generated strong results in 2018
After a weaker fourth quarter, Covestro could not achieve earnings at the previous year’s levels. Despite the decline of selling prices coupled with declining margins in the second six months, Covestro generated EBITDA of €3.2bn, 6.8% below the record year of 2017.
Net income reached €1.8bn (-9.3%). Based on this business performance, Covestro plans to raise the dividend by around 9% to €2.40 per share.
CEO Dr Markus Steilemann said: "Demand for our high-tech materials remains intact. That is a strong foundation for our profitable growth in the long term, especially in an increasingly challenging market environment. We launched important strategic initiatives in 2018 to actively promote this growth path. These include investments in specific business segments with above-average demand potential and a stronger focus on efficiency."
In 2018 FOCF decreased €1.7bn due to increased investments. ROCE stood at 29.5%, well over the multi-year average. Net financial debt remained on a low level of €348m.
CFO Dr Thomas Toepfer added: "2018 was a successful year for Covestro, even though after a strong start to the year, we did not approach our record year of 2017 overall. The last two years were marked by unusually high margins. For 2019, we expect demand to continue to grow; however, margins will drop significantly due to competitive pressure."
Future focus
Covestro anticipates core volume growth in the low to mid-single-digit percentage range for 2019 and will step up the focus on effectiveness and efficiency going forward. Estimated cost savings by 2021are around €350m per year with the goal of limiting the increase in operational costs. This will be accomplished mainly through stepped up cross-division partnerships and increased use of digital solutions.
The company has consolidated all digital activities since 2017 in the ‘Digital@Covestro’ strategic program with the aim of advancing the digital transformation of the group. Initial successes have become evident in recent months with sales and marketing channels expanded and new online sales platforms developed.
