(Reuters) - German chemicals maker Covestro AG (1COV.DE) confirmed its full-year core profit outlook on Wednesday, saying it met its second-quarter targets despite challenging global economic conditions, competitive pressures and weakness in the automotive industry.
The company’s second-quarter earnings before interest, tax, depreciation and amortization (EBITDA) fell 53% to 459 million euros ($511 million), but were slightly above the 443 million euros expected on average by analysts in a company-provided consensus.
Covestro has enjoyed rapid earnings growth in recent years following supply shortages of chemicals used in foams. However, it has had to scale back expectations after rivals ramped up production and as demand from customers, including the car industry, softened.
The former Bayer unit, which makes chemicals for heat insulation foams and transparent polycarbonate plastics, stuck with its 2019 EBITDA target of between 1.5 billion euros and 2.0 billion euros, against the backdrop of darkening outlook for the German chemicals sector.
On July 9, a profit warning from rival BASF SE (BASFn.DE) following trade frictions between the United States and China, knocked down shares of Covestro and its peers.
Earlier this month, the German chemical industry association (VCI) reported a 6.5% drop in first-half production and cut its 2019 sector forecast for the second time this year, citing weakening industrial activity and market uncertainty due to trade conflicts.
Slowing sales in the global auto industry have pressured the sector this year.
“So far, the automotive industry has developed much weaker than expected, but the construction, wood and furniture industries improved,” Chief Financial Officer Thomas Toepfer said.
For the third quarter, Covestro said it expected core profit of about 410 million euros. Second-quarter revenue came in at about 3.2 billion euros, broadly in line with estimates.
Reporting by Zuzanna Szymanska; Editing by Tomasz Janowski and Shounak Dasgupta