Covestro AG · VIE:1COV
Covestro — Q3 2016 Earnings Presentation
17 slides from Covestro's earnings presentation, Oct 25, 2016
Slide 1: Strong free cash flow – Financial Highlights Q3 2016
Strong free cash flow Financial Highlights Q3 2016 covestro.com October 25, 2016 │ Q3 2016 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: Q3 2016 Key Highlights
Q3 2016 Key Highlights Strong free cash flow Continued dynamic core volume growth (9.1% Y/Y) Adj. EBITDA above previous year’s quarter (22% Y/Y) Strong free operating cash flow generation (>100% Y/Y) FY 2016 guidance increased slightly Share price more than doubled at our first anniversary on the st
Slide 4: Q3 2016 Sales & Earnings
Q3 2016 Sales & Earnings Strong volume growth with significant earnings and FOCF leverage Core Volumes1 Adj. EBITDA Net Income FOCF in kt in € million in € million in € million 646 1,233 1,130 574 471 259 251 160 Q3 2015 Q3 2016 Q3 2015 Q3 2016 Q3 2015 Q3 2016 Q3 2015 Q3 2016 +9.1% +21.9% +61.9% +15
Slide 5: 9M 2016 Sales & Earnings
9M 2016 Sales & Earnings Reaching FY 2015 levels already after 9M Core Volumes1 Adj. EBITDA Net Income FOCF in kt in € million in € million in € million 3,658 3,374 1,624 1,385 960 671 571 427 9M 2015 9M 2016 9M 2015 9M 2016 9M 2015 9M 2016 9M 2015 9M 2016 +8.4% +17.3% +57.1% +68.1% Change vs. prior
Slide 6: Q3 2016 and 9M 2016 – Sales per Region
Q3 2016 and 9M 2016 – Sales per Region Strong rebound in China Growth significantly above GDP in Q3 2016 Strong growth in 9M 2016 in € million / Core volume growth Y/Y in € million / Core volume growth Y/Y China China 553 1,498 Vol. Vol. +25%% +18%% APAC APAC 918 2,573 Vol. +15% EMLA Vol. +13% EMLA
Slide 7: 9M 2016 – Cyclical business on structural upward trend
9M 2016 – Cyclical business on structural upward trend Significant proportion of sales generated with resilient businesses Sales by Segments Highlights % of group sales MDI/TDI – Oversupply gradually absorbed Others • Mid-term demand growth of ~4% above 5% supply additions ~2-3%1 MDI • Volatile marg
Slide 8: Q3 2016 – Sales Bridge
Q3 2016 – Sales Bridge Dynamic volume growth Sales Bridge Highlights in € million Dynamic volume development • Core volume growth (in kt) of 9.1% Y/Y +191 -154 3,020 -35 3,022 • Sales volumes (in €) expansion of 6.3% Y/Y Volume Price FX • Core volume growth above sales volume expansion due to declin
Slide 9: Q3 2016 – Adj. EBITDA Bridge
Q3 2016 – Adj. EBITDA Bridge Positive volume leverage and pricing delta Adj. EBITDA Bridge Highlights in € million Pricing Delta Positive volume leverage +€80m +234 -55 • Mainly driven by MDI and PCS 574 +86 -154 Other items Improving cash margin 471 -8 FX Volume • Positive pricing delta predominant
Slide 10: Q3 2016 – Group Results
Q3 2016 – Group Results Continued margin expansion Net Sales and Core Volume Growth Q3 2016 Highlights in € million / changes Y/Y +3.0% +9.1% • Dynamic core volume growth of 9.1% Y/Y +1.7% +8.5% +7.7% +6.7% -0.6% driven by PUR and PCS • Stable sales as higher volumes could compensate lower raw mater
Slide 11: Q3 2016 – Results of PUR Segment
Q3 2016 – Results of PUR Segment Polyurethanes – Solid development Net Sales and Core Volume Growth Q3 2016 Highlights in € million / changes Y/Y +4.6% +10.4% +9.0% +9.0% • Core volume growth of 9.0% Y/Y -0.4% +5.8% predominantly driven by MDI -2.7% • Selling prices declined by 6.2% Y/Y 1,554 1,637
Slide 12: Q3 2016 – Results of PCS Segment
Q3 2016 – Results of PCS Segment Polycarbonates – Steady high margin business Net Sales and Core Volume Growth Q3 2016 Highlights in € million / changes Y/Y +9.1% +8.5% +8.5% +11.6% • Broad based dynamic development by +5.4% +5.4% regions and industries, with lower volumes in +0.5% low-margin optica
Slide 13: Q3 2016 – Results of CAS Segment
Q3 2016 – Results of CAS Segment Coatings, Adhesives, Specialties – Solid results Net Sales and Core Volume Growth Q3 2016 Highlights in € million / changes Y/Y +6.3% +6.5% • Phase out of trading product burdened core -0.2% +3.5% -2.4% -2.8% -1.8% volume growth; underlying business of CAS delivered
Slide 14: 9M 2016 – Total Net Debt
9M 2016 – Total Net Debt Total net debt almost unchanged Total net debt – end of Q3 2016 in € million 3,673 1,624 Free Operating Cash Flow (709) 3,579 +€960m 1,408 (259) (143) 18 Net 2,211 61 (32) (250) Financial Net Others Changes in Others Interest Dividends Debt Financial (216) Provisions for Tax
Slide 15: Guidance 2016
Guidance 2016 On track to deliver FY 2015 Old guidance FY 2016 New guidance FY 2016 9M 2016 Mid- to high-single-digit Core Volume Growth +2.7% Unchanged +8.4% increase Y/Y FOCF €964m Around last year’s level Above last year’s level €960m ROCE 9.5% Above last year’s level Significantly above last yea
Slide 16: Q3 2016 – Summary
Q3 2016 – Summary Covestro fully on track Strong volume growth in a focused portfolio despite a challenging market environment Solid earnings and cash flow generation supported by a stable demand/supply balance and a focus on profitability Robust financial profile with an investment grade rating (Ba
Slide 17: Upcoming IR Events
Upcoming IR Events Find more information on investor.covestro.com Reporting dates • October 25, 2016 Q3 2016 Interim Report • February 20, 2017 Annual Report 2016 • April 25, 2017 Q1 2017 Interim Report Annual General Meeting • May 3, 2017 Annual Stockholders' Meeting, Bonn Broker conferences • Nove