Covestro raises profit forecast

The plastics group Covestro is confident of an even stronger profit recovery in 2021 than before. According to a statement on Tuesday evening, CEO Markus Steilemann calculates earnings before interest, taxes, depreciation and amortization (Ebitda) of 2,2 to 2,7 billion euros for the current year. So far, the manager had promised between 1,7 and 2,2 billion euros.

The free operating cash inflow, which is also important for the dividend, is now expected to be between 1,3 and 1,8 billion euros after the previously targeted 1,4 billion euros.

Investors took the news positively. The shares rose in the evening on the Tradegate trading platform compared to the Xetra close.

According to preliminary figures, the Leverkusen-based Dax group achieved an operating profit of 743 million euros in the first quarter. In the second quarter of the year it should be 730 to 870 million euros. Covestro will present the final figures for the first quarter on April 28.

In February, the top management had already shown confidence for the new year after a final spurt in the Corona year 2020. Business in hard plastics (polycarbonates) as well as soft and rigid foams (polyurethanes) for the automotive and construction industries as well as with manufacturers of electronic and household appliances are doing well.

The takeover of the sustainable coating resins business from competitor DSM is also expected to provide a tailwind in 2021. The acquisition, which was completed at the beginning of April, is intended to strengthen Covestro's smallest CAS division for everything to do with pre-products for coatings, adhesive raw materials and special applications.

Thanks to the takeover, management expects - unchanged - volume growth in the core business of between 10 and 15 percent in 2021, without the purchase it would be six percentage points less. Even with that, Covestro would return to growth after a decline of 5,6 percent in 2020.