Covestro (1COV) Q2 2024 earnings summary

Executive summary

• Q2 2024 saw a 9.3% year-over-year increase in sales volumes, driven by improved demand and internal availability, but lower prices and FX led to stable sales at €3.7 billion.

• EBITDA for Q2 2024 was €320 million, down 17% year-over-year, at the midpoint of guidance, mainly due to negative pricing delta.

• Free operating cash flow was negative €147 million in Q2, and negative €276 million for H1 2024, reflecting seasonal effects, bonus payouts, and lower EBITDA.

• The STRONG transformation program was launched, targeting €400 million annual savings by 2028, with about €300 million in restructuring costs.

• Negotiations with ADNOC are ongoing for a potential transaction at €62 per share, with due diligence underway and no further details disclosed.

Financial highlights

• Q2 2024 sales were €3.7 billion, stable year-over-year as volume gains offset a 9.7% price decline and minor FX headwinds.

• EBITDA decreased 17% year-over-year to €320 million, mainly due to negative pricing delta.

• Free operating cash flow for H1 2024 was negative €276 million, with Q2 contributing negative €147 million.

• Net debt increased by €441 million since end-2023, reaching €2,928 million, mainly due to negative free cash flow.

• Equity rose by €56 million to €6,674 million, mainly due to actuarial gains and FX effects, despite the net loss.

Outlook and guidance

• Full-year 2024 EBITDA guidance narrowed to €1.0–1.4 billion, with mark-to-market EBITDA at €1.2 billion.

• Free operating cash flow guidance adjusted to €-100 million to €100 million for 2024.

• Q3 2024 EBITDA expected between €250–350 million; high single-digit volume growth forecasted for Q3 and FY 2024.

• ROCE above WACC narrowed to -7 to -4 percentage points.

• Sales expected between €14.0–15.0 billion; capex around €800 million; income tax €250–350 million.