Coatings, Adhesives, Specialties

Second quarter of 2019

In the second quarter of 2019, core volumes in the Coatings, Adhesives, Specialties segment were 4.7% lower than in the prior-year quarter because of weaker demand from the automotive and construction industries.

Segment sales decreased by 1.3% to €621 million (previous year: €629 million). Lower total volumes negatively affected sales by 4.5%, while the change in the selling price level amounted to minus 0.4%. Exchange rate movements increased sales by 2.2%. In addition, the step acquisition of shares of Japan-based DIC Covestro Polymer Ltd. had a positive effect on sales of 1.4%.

In the EMLA region, sales were down 7.4% to €277 million (previous year: €299 million). The drop in total volumes sold caused sales to decline considerably. In contrast, average selling prices remained largely stable at the previous year’s level. The effect of exchange rate movements was also neutral. In the NAFTA region, sales rose by 5.1% to €144 million (previous year: €137 million). Exchange rate movements had a significant positive effect, which more than compensated for the modest decrease in total volumes. The change in average selling prices also had a slightly positive impact on sales. The APAC region’s sales grew 3.6% to €200 million (previous year: €193 million). The aforementioned portfolio effect and changes in exchange rates boosted up sales slightly. Total volumes remained stable at the prior-year level, although average selling prices had a modestly negative effect on sales.

EBITDA in the Coatings, Adhesives, Specialties segment increased by 7.9% in the second quarter of 2019, rising to €150 million (previous year: €139 million). This was mostly due to the one-time gain from the remeasurement of previously held interest in Japan-based DIC Covestro Polymer Ltd., interest that had been accounted for under the equity method. In contrast, lower volumes adversely affected EBITDA performance.

EBIT rose 3.4% to €120 million (previous year: €116 million).

In the second quarter of 2019, free operating cash flow amounted to minus €2 million (previous year: €41 million). The improvement in EBITDA and freed-up working capital in receivables stood in contrast to higher cash outflows for additions to property, plant and equipment and an increase in cash tied up in liabilities.

First half of 2019

In the first half of 2019, core volumes in the Coatings, Adhesives, Specialties segment were 2.4% lower than in the prior-year period.

During the same period, sales of Coatings, Adhesives, Specialties rose 2.2% to €1,248 million (previous year: €1,221 million). Average selling prices had an effect on sales that amounted to 0.6%, whereas the decline in total volumes reduced sales by 1.7%. Exchange rate movements had a positive impact on sales of 2.6%. The step acquisition of shares of Japan-based DIC Covestro Polymer Ltd. resulted in a portfolio effect on sales of 0.7%.

In the first half of 2019, EBITDA improved by 7.6% compared with the prior-year period, growing to €296 million (previous year: €275 million), mostly on account of the previously mentioned one-time gain. Moreover, the change in selling prices also increased earnings. Lower volumes, however, had a negative effect.

EBIT increased 3.9% to €238 million (previous year: €229 million).

Free operating cash flow totaled minus €14 million in the first half of 2019 (previous year: €39 million). An increase in cash tied up in inventories and liabilities and higher cash outflows for additions to property, plant and equipment outweighed the increase in EBITDA and the cash freed up from receivables.