Covestro sees lower 2023 profit, cash flow as macro challenges prevail
Published On :
By Bartosz Dabrowski and Andrey Sychev
(Reuters) -German chemicals maker Covestro said on Thursday it expected lower core profit and lower free cash flow in 2023 as economic challenges persist, after a global “polycrisis” caused a sharp rise in energy and raw material prices last year.
Covestro’s shares were down around 4% at 0910 GMT after it said ongoing impairments from the coronavirus pandemic in China, high inflation and an overall slowdown in global economic growth continued to weigh on its earnings.
It forecast annual core earnings (EBITDA) and free cash flow below the 1.62 billion euros ($1.72 billion) and 138 million euros it reported for 2022, respectively, confirming preliminary numbers from January.
This much-weaker FY23 FCF guidance will be the key focus of the market this morning and might result in the stock underperforming today,” JPMorgan analyst Chetan Udeshi wrote in a note. He added the EBITDA forecast was 20% below a consensus estimate provided by the company.
Covestro, whose main products include foam chemicals used in mattresses, car seats and insulation for buildings, expects first-quarter EBITDA of between 100 million and 150 million euros, against 806 million a year earlier.
Dramatic swings in forecasts for European gas prices in 2023 have left companies and governments struggling to plan ahead as uncertainties for the outlook persist, ranging from the pace of China’s economic recovery to the impact of the war in Ukraine.
Covestro’s gas requirements for raw material production make up 50% of its total gas consumption.
German inflation rose more than anticipated at 9.3% in February, data from the federal statistics office showed on Wednesday, pointing to no let-up in stubborn price pressures.
Covestro said it would propose no dividend for 2022. It had distributed 3.40 euros per share last year, the highest in the group’s history.
($1 = 0.9398 euros)
(Reporting by Bartosz Dabrowski and Andrey Sychev in Gdansk; Editing by Milla Nissi & Simon Cameron-Moore)
Uma Rajagopal has been managing the posting of content for multiple platforms since 2021, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune. Her role ensures that content is published accurately and efficiently across these diverse publications.
-
-
NEWS3 days ago
Oil slips on US gasoline stocks buildup; traders eye weekend OPEC+ meet
-
-
-
NEWS3 days ago
UK’s Direct Line surges after rejecting Aviva’s $4.16 billion takeover offer
-
-
-
NEWS3 days ago
ASML and peers climb on hopes for less severe US curbs on China chips
-
-
-
BUSINESS2 days ago
KIXY & BRITISH WRESTLING PIN PARTNERSHIP TO EMPOWER COMMUNITIES
-