Covestro adjusts earnings forecast due to low Rhine water level and intense competition

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Due to fierce competition, rising costs and capital provision, Covestro has decided to adjust the financial guidance for fiscal year 2018 as follows:

FY2018 core volumes are expected to achieve only low single-digit growth rates. In previous guidance, the company expected core volume growth in the low to mid-single digits for fiscal 2018. In the fourth quarter, core sales are still expected to grow slightly, although low water levels on the Rhine will bring some pressure.

EBITDA for fiscal year 2018 is expected to be slightly lower than in fiscal year 2017 (€3.44 billion in fiscal year 2017). Previous guidance expected EBITDA to be above last year's levels. The adjustment was mainly due to (1) more intense competition than expected; (2) lower profits due to lower water levels on the Rhine resulting in lower production and higher logistics costs; and (3) funding for the company's "Perspective" efficiency improvement program.
Free operating cash flow (FOCF) for the 2018 fiscal year is expected to be slightly lower than last year's level (2017: EUR 1.84 billion). Previous financial guidance expected FOCF to exceed €2 billion. The adjustment to this guidance is due to lower-than-expected EBITDA, higher-than-expected funding from working capital and increased corporate investment.

For fiscal year 2018, return on capital employed (ROCE) is expected to be slightly lower than the previous year's level (33.4% in 2017). We had previously expected ROCE to be close to 2017 levels.