As expected, the COVID-19 had a significant impact

2022-09-20
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Kesichuang's second quarter performance: COVID-19 had a significant impact as expected

kesichuang's second quarter performance: COVID-19 had a significant impact as expected

July 23, 2020

• core business sales fell by 22.7%

• Group sales totaled about 2.2 billion euros (-32.9%)

• achieve EBITDA of 125 million euros

• net profit of negative 52 million euros

• free operating cash flow rose to 24 million euros

• adhere to crisis management measures to ensure liquidity

• accelerate the transformation to a circular economy

due to the further spread of COVID-19 in Europe and the North United States, covestro's second quarter performance was seriously affected as expected. As the epidemic has led to a sharp decline in the demand of major customer industries, after the monthly core business sales, the refrigerant will transfer heat to the 4-week medium through isothermal heat exchange with the 4-week medium through the condenser, with a year-on-year decrease of 22.7%. Among them, the sales volume in April has the greatest impact, but it has improved since mid May. The group's sales of coatings belonging to the open-loop control system decreased by 32.9% to about 2.2 billion euros (the same period last year: 3.2 billion euros). Due to the time lag in the impact of the epidemic on various regions, the sales of EMLA (Europe, the Middle East, Africa and Latin America except Mexico) and North America decreased more than that of the Asia Pacific region during the reporting period. The group's profit before interest, tax, depreciation and amortization (EBITDA) in the second quarter was 125 million euros (-72.8%), which was announced through the performance forecast on July 9, 2020, higher than the market expectation at that time. This is mainly due to the accelerated recovery of demand in June, especially in the polycarbonate sector. The net profit of the group in the second quarter was negative EUR 52 million (same period last year: EUR 189 million). In sharp contrast to the decline in EBITDA, free operating cash flow (focf) rose to € 24million due to strict liquidity management measures (same period last year: negative € 55million)

"as expected, the global COVID-19 epidemic had a significant impact on our performance in the second quarter." Dr. Markus steilemann, CEO of covestro, said, "we have taken timely and correct measures to protect our employees, maintain the production and supply chain and ensure continuous supply to customers. So far, we have been very successful and will continue to resolutely lead covestro through this crisis."

the company confirmed the revised annual financial guidelines in April this year. However, there is still great uncertainty about the impact of COVID-19 on economic development

adhere to crisis management and strengthen liquidity

covestro continued to strengthen liquidity by taking further financing measures in the second quarter. In June 2020, there were only six kinds of European bonds listed in cutting-edge new materials. On the 5th, costron placed a total amount of 1billion euros of European bonds in the capital market. The bonds will expire in February 2026 and June 2030, with a coupon rate of 0.875% and 1.375% respectively. Investors' demand is extremely strong, with more than 10 times oversubscribed

"although covid-19 has had a significant impact on our performance, our continuous actions have produced results." Dr. Thomas Toepfer, chief financial officer and Labor Director of covestro, said, "2020 is still a special year, and we still can't fully predict the progress of the situation. This is another reason why we insist on focusing on efficiency, cost awareness and ensuring liquidity. This is our clear line."

in view of this special situation, the board of directors, board of supervisors and employees of covestro are also united to help enhance the resilience and resilience of the company in the current environment through their respective contributions. For kostron's company in Germany, the board of directors and employee representatives have reached an agreement to reduce the working hours and corresponding salaries of all employees by the end of November 2020. All companies of covestro group outside Germany implement similar cost saving measures according to the specific situation of each country

new company vision: accelerate the transformation to circular economy

costron put forward a new long-term vision in May 2020, hoping to make all fields, including production, products and solutions, fully comply with the circular concept in the long term. The strategic plan, launched in 2019, aims to implement the concept of circular economy in all areas of the company in a holistic manner. At present, the plan is being implemented step by step, and will be accompanied by specific and measurable goals. Its focus includes four areas: alternative raw materials, innovative recycling, joint solutions and renewable energy

affected by the COVID-19, the sales of all business segments fell

affected by the epidemic, the core business sales of the polyurethane business segment in the second quarter of 2020 fell sharply by 25.9% year-on-year (year-on-year: an increase of 0.7%), and all its major customer industries were also affected. Due to the decrease of total sales volume and the decrease of average sales price, the sales volume decreased by 38.7% to 913million euros. Affected by the decline in sales and profit margins, EBITDA decreased to negative EUR 24million (same period last year: EUR 172 million)

the core business sales of polycarbonate business segment in the second quarter decreased by 14.4% year-on-year (year-on-year: increased by 4.4%). Although the sharp decline in demand in the automotive and transportation industries has led to a reduction in sales, the overall impact has been mitigated by the slowdown in sales in the electronics, electrical and household appliance industries and the growth in sales in the construction industry. Due to the decrease of total sales volume and average sales price, the sales volume of this sector decreased to 648million euros (-27.8%). EBITDA also fell 37.7% to EUR 96 million

the sales volume of the core business of the coatings, adhesives and special chemicals business segment decreased by 25.3% year-on-year (the same period last year: -4.7%). The COVID-19 has led to a sharp reduction in the demand of major customer industries, especially in the automotive and transportation industries. Due to the decline of total sales volume and average sales price, the sales volume of this sector decreased by 28.7% to 443million euros. Affected by the decline in sales volume and profit margin, EBITDA decreased by 60.0% to € 60million

COVID-19 affects the performance in the first half of 2020

as expected, COVID-19 has had a significant impact on the performance in the first half of 2020. In the first half of the year, the core business sales fell by 13.6% year-on-year, and the Group sales fell by 22.7% to about 4.9 billion euros (the same period last year: 6.4 billion euros). This is mainly due to the decrease of total sales volume and the decline of sales price level. EBITDA also fell 57.9% to 379million euros, while net profit was negative 32million euros (same period last year: 368million euros). In the first half of 2020, free operating cash flow fell to negative 225million euros (same period last year: negative 100million euros)

about covestro:

covestro is one of the largest polymer manufacturers in the world, with sales of 12.4 billion euros in 2019. Its business scope mainly focuses on the production and manufacturing of high-tech polymer materials in this utilization, as well as the research and development of innovative solutions for many fields of daily life. The main service fields include automobile, construction, wood processing and furniture, electrical and electronic industries, and other fields include sports and leisure, cosmetics, medical treatment and the chemical industry itself. By the end of 2019, covestro had 30 production bases and about 17200 employees worldwide (calculated by full-time employees)

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