Despite declining sales and a halved net profit for the fourth quarter of 2019, Covestro achieved its targets, said CEO Markus Steilemann. “We have a solid financial base,” he stressed, speaking at the annual financial press conference in Düsseldorf 19 February.
Fourth-quarter net income fell 53.2% to €37 million from last year's €79 million. EBITDA was €278 million, down 5.1% from €293 million last year. Group sales fell by 15.1% to approximately €12.4 billion, as selling prices remained low due to increased competitive pressure in all segments. Core volumes, however, were up 3.8%. The company plans to distribute a dividend of €2.40 per share, which is unchanged from last year.
“2019 was marked by a number of geopolitical and macroeconomic uncertainties. Nevertheless, demand for our materials remains intact, which confirms our view that plastics are more valuable for the future than ever before,” said CEO Dr. Markus Steilemann.
2020, he continued, will remain challenging, with anticipated low single-digit percentage growth in core volumes. The company has therefore accelerated the implementation of the multi-year effectiveness and efficiency program launched in October 2018, in addition, to putting a number of short-term measures in place, such as more efficient cost management and another review of all existing and planned investments. The focus in 2020 will therefore remain on increasing efficiency.
“However, we still see long-term demand for high-tech plastics to enable a more sustainable development across a wide range of different key technologies,” Steilemann said.
For Covestro, he added, ‘the focus on sustainability will provide long-term growth’, emphasizing that ‘Covestro has a clear commitment to thinking in circular system’.
In the 2019 fiscal year, Covestro launched a global strategic program to implement circular economy in all corporate divisions going forward. In particular, the company aims to use alternative raw materials, develop innovative recycling and establish broad-based partnerships and new business models. This programme, said Steilemann, is for ‘decades’ to come.
“We are consistently gearing our business towards circular economy," he said. “Circularity is our North Star.” Concretely, this has led, for example to the company’s signing in December, of a 10-year corporate power purchase agreement with Ørsted to buy the output of 100MW from the planned Borkum Riffgrund 3 offshore wind farm company - the largest corporate power purchase agreement (PPA) to date in the sector.
Covestro is also taking part in the Europe-wide research project “PUReSmart”, and is collaborating with Recticel on the development of more sustainable mattresses, particularly through new raw material technologies and putting in place circular end-of-life solutions, to ensuring the mattresses remain in the plastics loop. The company will continue to collaborate with partners in this area.
In the long term, Covestro will ‘renounce’ the use of oil in the production of its products and switch to renewable sources, he said. “That includes our work on the use of CO2 as a feedstock as well as our looking at biobased alternatives.”
Asked about further steps in the circularity programme going forward, Steilemann refrained from naming specific goals or numbers, saying it was too early for that. “We are focusing on getting going - and are still at the very beginning. We want this to be something the entire organization is involved in, across the board. More research is needed, as we examine the overall system in each case. It may take longer this way, but we are taking steady steps. We want to get to the summit but are still finding our way there.”