Covestro (1COV) Q1 2025 earnings summary

Executive summary

• Q1 2025 sales were stable at €3.5 billion, with flat volumes and a -0.4% year-over-year change, reflecting a focus on profitable business and reduced low-margin activities; EBITDA reached €137 million, near the upper end of guidance, but was down nearly 50% due to one-time costs from the STRONG transformation program and the closure of the Maasvlakte site.

• Free operating cash flow was negative at €-253 million, mainly due to lower EBITDA, higher capex, and seasonal trends.

• Net income was negative at €-160 million, with EPS at €-0.85.

• STRONG transformation program progressing, targeting €400 million annual savings by 2028, with ~€150 million savings achieved by Q1 2025.

• XRG transaction advanced, with over 95% share ownership and regulatory approvals progressing, closing expected in H2 2025.

Financial highlights

• Group sales: €3,477 million (-0.9% year-over-year); negative pricing (-1.1%) and flat volumes offset by positive FX.

• EBITDA: €137 million, down nearly 50% year-over-year, impacted by €108 million in transformation costs, including €88 million for the closure of the joint propylene oxide operation.

• Free operating cash flow at €-253 million, mainly due to lower EBITDA and higher capex; working capital to sales ratio stable at 18.4%.

• Net financial debt increased by €315 million to €2,933 million as of March 31, 2025; net debt/EBITDA ratio at 3.4x.

• Moody’s Baa2 investment grade rating with stable outlook confirmed April 2025.

Outlook and guidance

• Full-year 2025 EBITDA guidance narrowed to €1.0–1.4 billion (previously up to €1.6 billion), with the upper end reduced due to persistent low margins.

• Q2 2025 EBITDA expected between €200–300 million; sales forecasted at €14.2–15.2 billion.

• Free operating cash flow guidance unchanged at €0–300 million; greenhouse gas emissions guidance remains stable.

• STRONG program to deliver €400 million annual savings by 2028, with one-time costs of €300 million in 2025.

• Guidance incorporates restructuring costs and closure of the propylene oxide JV.