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Covestro sticks with ADNOC timeline despite sales falling short of expectations

Covestro, a German chemicals manufacturer, missed its second-quarter sales targets on Thursday due to the impact of U.S. tariffs on prices. However, it expressed confidence that ADNOC's acquisition by Abu Dhabi would still be completed this year in spite of an EU investigation into competition.

Covestro's products include foam chemicals that are used in mattresses, car seat and building insulation. The prospect of higher tariffs in the U.S. led to an oversupply in the U.S. market, especially from Asia-Pacific, which then caused a large drop in price.

The company's revenue fell by 8.4% in April-June to $3.86 billion, falling short of the average analyst estimate of $3.55 billion in a consensus provided by the company.

Christian Baier, Chief Financial Officer of the company, said in an interview that the demand at the moment is not strong enough to absorb the partial surplus.

Covestro has cut its earnings projection for the full year again this month. Covestro now expects to earn between 700 million and 1.1 billion euro before interest, tax, depreciation, and amortisation, down from the previously anticipated 1 billion to 1.4 billion euro.

ADNOC EXPECTATIONS REMAIN UNCHANGED

Baier stated that the 14.7 billion euro takeover of Covestro by the Abu Dhabi state oil company ADNOC would be completed in the second half. This is despite European Union regulators announcing on Monday they had launched an investigation into possible market distortions due to the deal.

Baier stated that he was "very confident" of completing the transaction by the end of the year.

Covestro's shares rose 0.5% to 60.56 Euros at 0835 GMT.

ADNOC signed the deal in October last year, making it its largest acquisition ever and one of the biggest foreign takeovers by a Gulf State of an EU-based company.

(source: Reuters)