Steilemann explains reasons for Covestro’s hard momentum

The Rheinische Post has published today a long interview to Markus Steilemann, head of German chemical group Covestro. Covestro last November announced a profit warning and its shares declined from €95 to €43 over few months (Frankfurt). This difficult momentum, similarly to other chemical groups, is due to the global economy slowing down, automotive industry crisis–especially in Germany–and construction industry crisis. Additionally, the company must face problems due to very low water levels in the Rhine, used to carry raw materials and to supply with water MDI and TDI manufacturing sites, which are now experiencing issues in being fully operational.

All these negative factors have led the group to announce 900 job cuts, 400 of which in Germany, especially in Leverkusen. Steilemann is confident that the group will receive a new boost through a severe cost cut plan, a €1.5bn-worth share repurchase program and acquisitions for at least €1bn. Finally, Steilemann has ruled out the possibility that Covestro becomes an acquisition target, considering that it is highly valued–its revenues are €14bn, 19% of which from customers operating in the automotive industry.

(Source Rheinische Post)