Covestro cuts outlook on Shanghai lockdown, higher energy costs

FRANKFURT – German chemicals maker Covestro on Monday cut its 2022 outlook, citing the ongoing coronavirus-related lockdown in Shanghai, higher energy and raw materials prices as well as lower assumptions for global economic growth.

Soaring energy prices in the wake of the Ukraine war have dealt a painful blow to the chemicals industry, one of the energy-intense sectors, while lockdowns in China have thrown global supply chains into disarray.

Covestro now expects earnings before interest, tax, depreciation and amortisation (EBITDA) of 2 billion to 2.5 billion euros ($2.1 billion-$2.6 billion), compared with a previous outlook of 2.5 billion to 3 billion euros, it said.

Frankfurt-listed Covestro shares were 2% lower following the announcement, which comes just before the scheduled release of first-quarter results on May 3.

Free operating cash flow is seen at 400 million to 900 million euros, down from an earlier forecast range of 1 billion to 1.5 billion euros.

The group said first-quarter EBITDA came in at 806 million euros, a figure that is expected to drop off sharply in the second quarter, to 430 million to 530 million euros.

($1 = 0.9524 euros)