Covestro Faces €160M Loss in Q1 but Stays on Track with €1B to €1.4B Full-Year Target

Covestro kicked off fiscal year 2025 with stable sales of €3.48 billion, nearly unchanged from last year. However, EBITDA dropped by 50% to €137 million, due mainly to a one-time charge linked to the closure of the PO11 facility in the Netherlands. Despite the dip, earnings landed at the top end of the company’s guidance and exceeded market expectations of €125 million.

The company posted a net loss of €160 million and free operating cash flow (FOCF) of -€253 million, reflecting the ongoing pressure on profitability in a tense economic and geopolitical environment. CEO Dr. Markus Steilemann emphasized that Covestro remains committed to its “Sustainable Future” strategy, arguing that bold decisions—not hesitation—will define tomorrow’s leaders.

In response to increased trade tensions and persistent geopolitical uncertainties, Covestro narrowed its full-year EBITDA guidance to €1.0–1.4 billion, trimming the top end from the previous €1.6 billion. Free cash flow is now forecast at €0–300 million, and ROCE over WACC is expected between -6 and -3 percentage points. The company reaffirmed its emission reduction targets, with expected workplace-related GHG emissions ranging from 4.2 to 4.8 million tons CO₂-equivalent.

Strategic steps continued in Q1, with the permanent closure of the PO11 joint venture plant—a move driven by global overcapacity and rising European energy costs. Covestro reaffirmed its commitment to the European market while doubling down on its STRONG transformation plan aimed at boosting efficiency and resilience.

The company also sharpened its energy goals: by 2030, Covestro plans to cut energy consumption per ton of product by 20%, equivalent to 550,000 tons of CO₂ reductions—a major milestone toward its goal of climate-neutral operations by 2035. A modernization project at its Dormagen TDI plant in Germany is already expected to eliminate 22,000 tons of CO₂ annually, thanks to innovative heat recovery systems.

In terms of business segments, Performance Materials held steady with sales of €1.7 billion. EBITDA plunged to just €13 million, affected by energy price surges and costs related to the PO11 plant closure. Adjusted EBITDA would have matched last year’s level if the one-off impacts were excluded.

The Solutions and Specialties unit posted a slight dip in sales to €1.7 billion, while EBITDA declined 13% to €181 million. Still, sequential growth was achieved, driven by strong demand in coatings and adhesives. EBITDA margin rose to 10.4%, and full-year earnings from the segment are projected to slightly exceed 2024 levels.