Polyurethanes

Second quarter of 2020

In the second quarter of 2020, core volumes in Polyurethanes decreased by 25.9%. Core volumes fell substantially in all main customer industries as a result of the coronavirus pandemic, but particularly in the furniture and wood processing industry as well as the automotive and transportation industry.

Sales in the Polyurethanes segment amounted to €913 million, down by 38.7% from the prior-year quarter (previous year: €1,489 million). This was mainly due to a downturn in total volumes, which reduced sales by 24.8%. Lower average selling prices had an additional negative effect on sales amounting to 12.3%, principally due to competition pushing down selling prices in the prior year and lower raw material prices overall in the second quarter of 2020. At the same time, exchange rate changes and the portfolio effect from the sale of the European systems house business in the fourth quarter of 2019 reduced sales by 0.4% and 1.2%, respectively, in the second quarter of 2020.

In the EMLA region, sales fell by 44.2% to €359 million (previous year: €643 million). Considerably lower total volumes and a steep decline in average selling prices had a negative effect on sales. The aforementioned portfolio effect reduced sales nominally, whereas exchange rate movements had no notable effect on sales. Sales in the NAFTA region slid by 40.1% to €266 million (previous year: €444 million), primarily due to a substantial decline in total volumes sold. Lower selling prices put slight downward pressure on sales, whereas changes in exchange rates were neutral overall with respect to sales. In the APAC region, sales decreased by 28.4% to €288 million (previous year: €402 million), mainly on account of a sharp drop in selling prices and a significant decline in total volumes sold. During the same period, exchange rate movements and the aforementioned portfolio effect had no noticeable effect on sales.

In the second quarter of 2020, EBITDA in the Polyurethanes segment was down from the prior-year quarter to minus €24 million (previous year: €172 million). The downturn in total volumes sold adversely affected earnings. Lower selling prices offset the effect of reduced raw material prices and led to a decrease in margins.

EBIT declined to minus €130 million (previous year: €72 million).

Free operating cash flow fell to minus €77 million (previous year: minus €22 million). This development is attributable chiefly to the decline in EBITDA, which stood in contrast to lower cash outflows for property, plant and equipment, and reduced funds tied up in working capital.

First half of 2020

In the first half of 2020, core volumes in Polyurethanes decreased by 14.9%. Core volumes in all main customer industries were down sharply, principally due to lower demand from the furniture and wood processing industry as well as the automotive and transportation industry.

Sales in the segment dropped by 26.2% in the same period to €2,187 million (previous year: €2,965 million). In this context, a decline in total volumes cut sales by 13.7%, a decrease in average selling prices by 11.5%, and the aforementioned portfolio effect by 1.1%. In addition, exchange rate movements had a positive effect on sales of 0.1%.

EBITDA tumbled by 92.1% in the first half of 2020, dropping to €26 million (previous year: €329 million). Lower raw material prices were unable to offset a decline in selling prices and, with margins down, this reduced earnings. The sharp drop in volumes additionally had a negative impact on EBITDA.

EBIT declined to minus €181 million (previous year: €129 million).

Free operating cash flow fell to minus €247 million (previous year: minus €120 million). EBITDA declined, whereas cash outflows for additions to property, plant, equipment and intangible assets decreased, and cash tied up in working capital was down.