Covestro (Leverkusen, Germany; www.covestro.com) said it does not expect an economic recovery for the remainder of the year as it disclosed second-quarter EBITDA – the core operating profit – which declined nearly 30% to EUR 385 mn, slightly above the midpoint of the guidance the plastics manufacturer had previously specified.

In May, Covestro had anticipated second-quarter EBITDA of between EUR 330 mn and EUR 430 mn. Both second quarter net income and sales fell 77% year-on-year to EUR 46 mn, and 21% to EUR 3.7 bn, respectively.

The first-half net income dropped 96.7% to EUR 20 mn, EBITDA plunged 50.4% to EUR 671 mn and sales fell 20.5% to EUR 7.5 bn due to lower demand and selling prices. Covestro expects the third-quarter EBITDA to be around EUR 240 mn-EUR 340 mn compared with the EUR 302 mn in the same quarter last year.

Related: Covestro tweaks 2023 financial guidance

The German plastics manufacturer updated in April the 2023 profit guidance, with EBITDA at EUR 1.1 bn as the lower end of the range and EUR 1.6 bn at its upper level. But now it said that “against the backdrop of an anticipated economic downturn in the further course of the year, Covestro currently expects results to be rather in the lower half of the specified ranges for all key performance indicators”.

CFO Thomas Toepfer said, “We currently still do not anticipate an economic recovery in the remainder of the year.” 

The Performance Materials segment sales fell 27.3% to EUR 1.8 bn due to weak demand worldwide, combined with availability constraints, especially in the EMLA region. EBITDA declined 17.7% to EUR 302 mn.

Sales in the Solutions & Specialties segment contracted 13.5% to EUR 1.9 bn. EBITDA rose 3.8% to EUR 221 mn, mainly due to lower fixed costs, and the sale of the Additive Manufacturing business in April.

In the meantime, Klaus Schäfer, Covestro’s chief technology officer, left the group at the end of the second quarter and retired. Thorsten Dreier has been his successor since 1 July 2023. He has assumed responsibility for the corporate functions, Process Technology, Engineering, Group Health, Safety & Environment, and Group Procurement.