Covestro AG · VIE:1COV
Covestro — Q2 2019 Earnings Presentation
20 slides from Covestro's earnings presentation, Jul 24, 2019
Slide 1: Q2 on expectations, FY guidance confirmed
Q2 on expectations, FY guidance confirmed Financial highlights Q2 2019 covestro.com July 24, 2019 │ Q2 2019 Investor Conference Call
Slide 2: Forward-looking statements
Forward-looking statements This presentation may contain forward-looking statements based on current assumptions and forecasts made by Covestro AG. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situati
Slide 3: Financial highlights Q2 2019
Financial highlights Q2 2019 +1.1% €459m €-55m Core Volume EBITDA FOCF Growth €1.03 FY 19 Guidance EPS confirmed 2 July 24, 2019 │ Q2 2019 Investor Conference Call
Slide 4: Solid growth despite difficult environment
Solid growth despite difficult environment Q2 2019 – Regional split Sales and Core Volume Growth Core Volume Growth Y/Y in € million / changes Y/Y • APAC: double-digit growth in wood/furniture and China solid growth in electronics compensate negative 625 growth in automotive Vol. +1.7% EMLA 1,379 •
Slide 5: Sales driven by lower prices
Sales driven by lower prices Q2 2019 – Sales bridge in € million Highlights -16.9% 3,863 +33 Positive volume development • Sales volume expansion (in €) by +0.8% Y/Y +68 Negative pricing 3,211 -29 • Lower selling prices negatively impacted sales by -724 -18.7% Y/Y, driven by competitive pressure in
Slide 6: Negative prices partly counterbalanced by strict costs discipline
Negative prices partly counterbalanced by strict costs discipline Q2 2019 – EBITDA bridge in € million Highlights -53.4% Pronounced decline in contribution margin 985 +5 • Negative pricing delta in PUR and PCS mainly resulting from higher competitive pressure Other items • Lower costs • Positive imp
Slide 7: Stabilizing margin since start of the year
Stabilizing margin since start of the year Group results – Q2 2019 Highlights Sales and Core Volume Growth Highlights in € million / changes Y/Y • Core Volume Growth of +1.1% Y/Y 0.0% 4.4% 0.2% 1.7% 1.1% • Solid Core Volume Growth Y/Y in TDI and PCS, -1.8% declining volumes in MDI and CAS • Sequenti
Slide 8: Polyurethanes – earnings below mid-cycle
Polyurethanes – earnings below mid-cycle PUR segment results – Q2 2019 Highlights Sales and Core Volume Growth Highlights in € million / changes Y/Y • Stable core volumes of +0.7% Y/Y, with strong growth in TDI negatively impacted by MDI, while 3.9% 2.3% polyether polyols remained flat -1.0% -0.2% 0
Slide 9: Polycarbonates – solid growth despite automotive weakness
Polycarbonates – solid growth despite automotive weakness PCS segment results – Q2 2019 Highlights Sales and Core Volume Growth Highlights in € million / changes Y/Y • Solid Core Volume Growth of +4.4% Y/Y based on sales increase in most industries except 2.7% 5.3% 2.6% 1.6% 4.4% automotive -6.3% •
Slide 10: Coatings, Adhesives, Specialties – weaker demand
Coatings, Adhesives, Specialties – weaker demand CAS segment results – Q2 2019 Highlights Sales and Core Volume Growth Highlights in € million / changes Y/Y • Decline in core volumes of -4.7% Y/Y, due to weak demand broad-based in all industries 0.2 5.8% 7.2% -0.1% 0.15 0.1 • Sales decreased by -1.3
Slide 11: FOCF burdened by phasing effects
FOCF burdened by phasing effects Historical FOCF development – 6M 2019 in € million Highlights 728 530 • Cash out for bonus payments amounted to ~€350m 314 in Q2 2019 • Limiting seasonal working capital increase by specific countermeasures -100 • Working capital to sales ratio(b) seasonally high at
Slide 12: Seasonal peak of total net debt
Seasonal peak of total net debt June 30th 2019 – Total net debt in € million Highlights 259 3,308 • Dividends(a) of €438m paid out in Q2 2019 55 642 • Application of IFRS 16 increased net financial debt by €642m(b) 438 1,604 • Pension provisions increased by €259m mainly resulting from lower discoun
Slide 13: FY guidance confirmed in a challenging environment
FY guidance confirmed in a challenging environment FY 2019 guidance FY 2018 Guidance FY 2019 Core Volume Growth +1.6% Low- to mid-single-digit percentage increase Y/Y FOCF €1,669m €300 – 700m ROCE 29.5% 8% – 13% Additional financial expectations FY 2018 Guidance FY 2019 EBITDA FY €3,200m €1,500 – 2,
Slide 14: Q2 on expectations, FY guidance confirmed
Q2 on expectations, FY guidance confirmed Highlights Q2 2019 Solid growth across industries except in automotive in a continuously challenging environment Sequentially stable EBITDA based on broadly flat selling prices Solid Operating Cash Flow as a result of selective working capital measures compe
Slide 15: Appendix
Appendix covestro.com July 24, 2019│ Q2 2019 Investor Conference Call 14
Slide 16: Growth in other industries compensate weak automotive
Growth in other industries compensate weak automotive HY 2019 – Regional split Sales and Core Volume Growth Core Volume Growth Y/Y in € million / changes Y/Y • APAC: negative growth in automotive and China construction counterbalanced by double-digit 1,216 growth in wood/furniture and solid growth i
Slide 17: Negative price effects decrease sales
Negative price effects decrease sales HY 2019 – Sales bridge in € million Highlights -16.4% 7,642 +67 Stable volumes • Sales volume expansion (in €) by +0.9% Y/Y +158 • Product mix effects led to better sales volumes (in 6,386 €) compared to core volumes (in kt; -0.4% Y/Y) -1,414 -66 Negative pricin
Slide 18: HY earnings with pronounced negative pricing delta
HY earnings with pronounced negative pricing delta HY 2019 – EBITDA bridge in € million Highlights -56.0% Pronounced decline in contribution margin +38 2,048 • Negative pricing delta in PUR and PCS mainly resulting from higher competitive pressure Other items • Lower costs • Positive impact of €62m
Slide 19: IFRS 16 impact on main KPIs in HY 2019
IFRS 16 impact on main KPIs in HY 2019 Changes in accounting as a result of the initial application of IFRS 16(a) Balance Sheet P&L Cash Flow (as of June 30, 2019) Net debt +642m EBITDA €+62m FOCF €+61m EBIT €+5m Financing CF €-61m Financial result €-10m Income after €-4m income taxes 18 July 24, 20
Slide 20: Upcoming IR events
Upcoming IR events Find more information on investor.covestro.com Reporting dates • October 28, 2019 Q3 2019 Interim Statement • February 19, 2020 Annual Report 2019 • April 29, 2020 Q1 2020 Interim Statement Broker conferences • August 7, 2019 Jefferies Industrials Conference, New York • August 27,