Covestro cuts guidance as uncertainty linked to tariffs puts pressure on customers

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Due to the continued volatility caused by international trade tensions, Covestro has narrowed its full-year earnings guidance to the lower end of the range previously described. It points to the detrimental ripple effects of overall economic uncertainty on its major customer end markets.

The company, which reported a first-quarter net loss of € 0.16 billion on May 6 (a sharp increase from a net loss of € 35 million in the same period last year), said a major driver of its earnings decline was the one-time negative impact of € 88 million in March announced the permanent closure of its propylene oxide-styrene monomer (POSM) joint venture plant with LyondellBasell Industries NV in Maasvlakte. The Netherlands. The plant has an annual capacity of approximately 300,000 metric tons of propylene oxide and 650,000 metric tons of styrene.

Covestro's EBITDA in the first quarter was 0.137 billion euros, down nearly 50% year-on-year, especially affected by the write-down of 88 million euros POSM factory.

Christian Baier, Covestro's chief financial officer, said the quarter "once again demonstrated the volatility and challenging market environment, with trade conflicts and growing protectionism".

Covestro narrowed its full-year expected EBITDA to 1 billion to 1.4 billion euros from 1 billion to 1.6 billion euros released in February this year. EBITDA for the Characteristic Materials segment is expected to be between € 0.4 billion and € 0.7 billion for 2025, down from the previous 0.4 billion to € 0.8 billion, while expectations for EBITDA for its Solutions and Special Materials segment remain unchanged, "slightly above" its full-year 2024 level of € 0.74 billion.

The company also lowered its full-year sales guidance to 14.2 billion to 15.2 billion euros from the previous 14.5 billion to 15.5 billion euros. Covestro has annual sales of € 14.2 billion in 2024.

The company confirmed "high tens of millions of euros" of charges related to the closure and said it expected the sales impact to be in the middle of tens of millions of euros, "mainly due to styrene". However, it added that this would have a positive EBITDA effect in the low to medium amounts of tens of millions of euros from 2026 onwards.

 

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