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NEWS

Covestro cancels dividend after lower earnings in challenging 2023

(Reuters) -German chemicals maker Covestro on Thursday said it decided not to pay dividends for 2023 after its annual core earnings dropped by a third in a challenging year marked by high energy prices and a weak global economy.

“The year 2023 was one of the most difficult for the chemical industry in recent decades,” chief executive Markus Steilemann said in a statement.

The group, whose main products include foam chemicals used in mattresses, car seats and insulation for buildings, said earnings before interests, taxes, depreciation and amortisation (EBITDA) fell to 1.1 billion euros ($1.19 billion) in 2023, down 33% from 2022, but in line with analysts’ average estimates.

Covestro’s key automotive, construction and furniture end markets, which comprise roughly half of its sales, remained weak during the year, especially in Europe, weighing on the company.

Its sales dropped by 15% year-on-year to 3.3 billion euros in the fourth quarter of 2023, while EBITDA rose to 132 million euros, up from a loss of 38 million euros in the same period of 2022.

The group said the quarterly core earnings improvement came on the back of a mid-three-digit million euro amount fall in fixed costs in 2023.

Covestro forecasts 2024 EBITDA between 1 and 1.6 billion euros, and between 180-280 million euros for the first quarter of 2024.

The company is in open-ended talks with bidder Abu Dhabi National Oil Co (ADNOC) over a potential takeover, after a report said ADNOC submitted a preliminary offer of around 60 euros per share.

The Abu Dhabi oil firm was itching toward a higher bid after the talks had stalled recently, Bloomberg reported last week. The German chemicals maker did not comment on the talks in its press release.

($1 = 0.9230 euros)

(Reporting by Andrey Sychev and Ozan Ergenay in Gdansk, Patricia Weiss in Frankfurt; Editing by Miranda Murray and Janane Venkatraman)

 

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