Q1 2025 Covestro AG Earnings Call

Overview

• Date & Time: May 06, 2025, 1:00 PM UTC
• Event: Q1 2025 Earnings Call
• Representatives:
  • Ronald Koehler, Head of IR
  • Christian Baier, CFO
  • Carsten Intveen, Investor Relations Director
• Analysts:
  • Christian Faitz, Kepler Cheuvreux
  • Sebastian Bray, Berenberg

Financial Highlights

• Sales: Stable at EUR 3.5 billion with flattish volumes.
• EBITDA: EUR 137 million, near upper guidance.
• Free Operating Cash Flow: Seasonal dip at minus EUR 253 million.
• EBITDA Guidance: Reduced upper range.

Regional and Industry Insights

• Global Sales Volume: Slightly declined by 0.4%.
• Regional Performance:
  • North America: Slight growth.
  • EMLA: Flattish.
  • APAC: Declined due to portfolio pruning.
• Industry Performance:
  • Construction & Furniture: Stable.
  • Automotive: Low single digit decline.
  • Electronics: Mid-single digit decrease.

Segment Analysis

• Solutions and Specialties:
  • Sales decline of 1.2% due to a 3% price decline.
  • Positive FX impact of 0.6%.
• Performance Materials:
  • Sales stable with a volume decline of 2%.
  • Negative pricing delta due to high energy costs.

Strategic Updates

• STRONG Transformation Program:
  • Costs of EUR 108 million, including closure of joint propylene oxide operation.
  • Expected savings of EUR 400 million by 2028.
• Cash Flow & CapEx:
  • Higher CapEx investments in efficiency and growth projects.
  • Net debt increase by EUR 315 million.

Economic and Market Outlook

• Global GDP: Forecast at 2.6%.
• Regional GDP:
  • EMLA: 1.7%
  • APAC: 3.9%
  • China: 4.5%
  • US: Down to 2.0%
• Industry Growth Expectations:
  • Furniture decline, electronics downgrade.
  • Automotive industry still expected to grow.

Guidance and Transactions

• EBITDA Guidance for FY 2025: Narrowed range, reduction of upper end by EUR 200 million.
• XRG Transaction: On track, aiming for closure by H2 2025.
  • Regulatory approvals at 67%.

Q&A Highlights

• Financial Liabilities: Increase due to reclassification of bonds and short-term funding in China.
• Electro/Electronics Industry: Forecast halved, affected by trade tariffs.
• Spread Developments: Recent price drops in MDI, TDI, polycarbonates, especially in Asia.
• Natural Gas/Energy Costs: Quick pass through into P&L, electricity more immediate than natural gas.

Closing Remarks

• Key Points:
  • Stable sales and EBITDA in line with guidance.
  • Continued focus on cost-saving initiatives through STRONG.
  • Monitoring market conditions and geopolitical impacts on business operations.
• Next Steps: Await Q2 results call.

Here's a summary focusing on North America's performance, based on the provided information:

In North America, Covestro experienced slight overall growth in Q1 2025. This was driven by significant increases in sales volume within the furniture/wood, electronics, and construction sectors. However, the automotive industry continued a negative trend, showing a significant decline.

The provided transcript indicates that Covestro experienced slight overall growth in North America during Q1 2025. This positive performance was primarily driven by strong growth in the furniture/wood, electronics, and construction sectors. Conversely, the automotive sector experienced a significant decline, continuing a negative trend from previous quarters. The transcript does not offer specific numerical data beyond this general description of growth and decline in these sectors. To get more precise details about the North American business, you would need to consult additional Covestro financial reports or press releases.