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Investing.com -- Covestro (ETR:1COVG) on Tuesday lowered its full-year earnings and sales guidance after reporting weaker-than-expected first-quarter results in its performance materials unit, offset only partially by stronger margins in solutions & specialties.
The company maintained that its planned transaction with Abu Dhabi National Oil Company (Adnoc) is on track to close in the second half of the year.
The German chemicals group posted first-quarter EBITDA of €137 million, topping the €125 million consensus by 10%.
EBITDA margins declined 380 basis points from the prior year. Group sales came in at €3.48 billion, short of the consensus figure of €3.59 billion.
Organically, sales fell 1.5%, driven by a 0.4% drop in volumes and a 1.1% decline in price and mix, while currency effects contributed a 0.6% gain.
Covestro revised its full-year 2025 EBITDA guidance to a range of €1 billion to €1.4 billion, narrowing from the previously expected €1 billion to €1.6 billion.
The company now anticipates full-year sales of €14.2 billion to €15.2 billion, down from a prior range of €14.5 billion to €15.5 billion.
The mark-to-market estimate for full-year EBITDA currently stands near the low end of the range, at around €1 billion.
For the second quarter, Covestro expects EBITDA between €200 million and €300 million, well below the consensus forecast of €354 million.
The underperformance in the performance materials division drove much of the weakness. EBITDA in that unit was €13 million, 82% lower than the €70 million consensus.
EBITDA margins in the division fell 530 basis points year-on-year. Sales in the segment totaled €1.677 billion, also below expectations, with the consensus at €1.776 billion.
On an organic basis, sales in the division declined 1.3%, with volumes down 2%, price and mix up 0.7%, and a 0.6% boost from currency.
In contrast, Solutions & Specialties outperformed. The division posted EBITDA of €181 million, 35% above the consensus of €138 million.
EBITDA margins, however, fell 140 basis points from a year ago. Sales in the segment reached €1.745 billion, slightly below the €1.809 billion consensus.
Sales fell 1.8% organically, with volumes rising 1.2% and price/mix declining 3%. Currency effects again added 0.6%.
The "Other" segment reported a loss of €57 million in EBITDA, narrower than the consensus loss of €84 million.
Operating cash flow for the quarter was negative €73 million, compared with negative €23 million in the same period last year.
Free operating cash flow stood at negative €253 million, down from negative €129 million in the prior-year quarter. Net financial debt increased to €2.933 billion, equating to a net debt to EBITDA ratio of 3.1.