Pandemic forces Covestro to update 2020 estimates

Covestro has been actively executing its crisis management plans in response to the global spread of the coronavirus pandemic and adjusting business operations according to local developments. The Board of Management has taken early and decisive actions to adapt the company to the current conditions, to protect the health of all Covestro employees, to ensure the ability to deliver to customers and to secure its strong liquidity position.

As a consequence of the coronavirus pandemic and the increasingly adverse business environment, the provided outlook cannot be upheld. The Board of Management therefore provides the following adjustments to the Group financial guidance for 2020:

- core volume growth is expected to be negative for 2020 compared to 2019 (previously: positive low-single-digit-percentage range); preliminary core volume growth in Q1 2020 was -4.1%;

- Ebitda is expected to be in the range between 700 million and 1,200 million euros in 2020 (previously: between 1,000 million and 1,500 million euros); this adjustment is primarily due to declining core volumes;

- free operating cash flow (FOCF) is expected to be in the range between -200 million and 300 million euros in 2020 (previously between 0 million and 400 million euros);

- in 2020, the return on capital employed (ROCE) is projected between -1 and 4% (previously: between 2 and 7%);

- the company publishes a Group Ebitda of 254 million euros as a preliminary number of the first quarter 2020 Interim Statement; this preliminary result is within the published range of 200 to 280 million euros;

- the Board of Management increases the target for short-term cost savings to more than 300 million euros in fiscal year (previously: 200 million euros) in addition to the ongoing “Perspective” restructuring program that is expected to contribute savings of 100 million euros in fiscal year 2020;

- capital expenditures (CAPEX) are reduced by around 200 million euros and are now expected to amount to around 700 million euros in fiscal year 2020 (previously: 900 million euros);

- Covestro continues to maintain a strong balance sheet and has significant sources of liquidity.; presently, these include around 1.2 billion euros in cash or cash equivalents as well as an undrawn revolving credit facility (RCF) of 2.5 billion euros.

This update takes into account the negative impact of the coronavirus pandemic as it was foreseeable on April 15, 2020, and assumes a recovery of the current situation starting in third quarter 2020. As the pandemic is still evolving, further updates to the financial expectations may be necessary.