covestro warns earnings could halve as competition heats up - transparent polycarbonate
German chemical maker kositron said core profits could be halved this year as competitors increase production and customer demand in the Asian auto industry slows.
Shares of manufacturers of insulated foam and transparent polycarbonate plastic chemicals fell 5% in early trading on Monday.
The former Bayer subsidiary said that interest, taxes, depreciation and earnings before Amortization (EBITDA)
Could be between 1.
5 billion euros (£1. 3 billion)and 2.
This year's € 0, below € 3.
2018 2 billion.
"Profit margins have been unusually high over the past two years.
In 2019, we expect demand to continue to grow, but margins will fall sharply due to competitive pressures . "Fourth-
EBITDA fell twice in the quarter
The euro was 0. 293 billion euros, down from an average of 0. 314 billion euros expected by analysts surveyed by Reuters.
Cove Stroo says the economic environment is challenging and demand in the Asian auto industry has shrunk in the last quarter of 2018.
Markus Mayer, analyst at Baader Bank, said the result confirmed his view that car customers and users of polyurethane foam continued to reduce inventory.
"The visibility of the order book is still very low," he said . ".
Covestra shares fell by 3. 8% in 49.
Gmt is 0950 euros, one of the worst performing teams in the German Blue team
The chip DAX index rose 0. 4 percent.
The rapid growth in annual revenues over the past two years has been mainly due to supply shortages, and these chemicals are mainly used for applications such as insulation and mattresses, as suppliers underestimate the pace of demand growth.
However, companies including BASF, a Chinese Wanhua Chemical Company, and Sadala, a joint venture between Dow DuPont and Saudi Aramco, are increasing production, cove Stroo in the presentation slide
Despite the low income, Kosi is stepping up its investment efforts to prevent bottlenecks in future production growth and meet the challenges posed by competitor growth plans.
Still, the company said it would also ask shareholders to approve a new round of stock buybacks, although it will decide later whether to proceed with the transaction.
Covestroo returned last year.
Pay 7 billion euros to shareholders through repurchase and dividend.
The company said it will seek approval at its next annual meeting to buy back another 10% of its share capital.