Covestro says it cannot uphold the provided outlook and has outlined the following adjustments to 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 EUR700m (US$762m) and EUR1.2bn in 2020 (previously: between EUR1bn and EUR1.5bn). The adjustment is primarily due to declining core volumes
- Free operating cash flow (FOCF) is expected to be in the range between EUR-200m million and EUR300m in 2020 (previously between EUR0m and EUR400m).
- 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 EUR254m as a preliminary number of the Q1, 2020 Interim Statement. This preliminary result is within the published range of EUR200m to EUR280m. The full Q1, 2020 Interim Statement is scheduled to be published on 29 April, 2020
- The board of management increases the target for short-term cost savings to more than EUR300m in FY 2020 (previously: EUR200m) in addition to the ongoing ‘Perspective’ restructuring programme, which is expected to contribute savings of EUR100m in FY, 2020
- Capital expenditures (CAPEX) are reduced by around EUR200m and are now expected to amount to around EUR700m in FY, 2020 (previously: EUR900m)
- Covestro continues to maintain a strong balance sheet and has significant sources of liquidity. Presently, these include around EUR1.2bn in cash or cash equivalents as well as an undrawn revolving credit facility (RCF) of EUR2.5bn
The update takes into account the negative impact of the coronavirus pandemic as it is foreseeable on 15 April, 2020 and assumes a recovery of the current situation starting in Q3, 2020.
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As the pandemic is still evolving, further updates to the financial expectations may be necessary.
