Coatings, Adhesives, Specialties
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1st quarter 2019 |
1st quarter 2020 |
Change |
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€ million |
€ million |
% |
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Core volume growth1 |
–0.1% |
–5.2% |
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Sales |
627 |
572 |
–8.8 |
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Change in sales |
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Volume |
+1.1% |
–7.1% |
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Price |
+1.7% |
–3.9% |
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Currency |
+3.1% |
+1.1% |
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Portfolio |
0.0% |
+1.1% |
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Sales by region |
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EMLA |
294 |
279 |
–5.1 |
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NAFTA |
144 |
139 |
–3.5 |
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APAC |
189 |
154 |
–18.5 |
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EBITDA |
146 |
130 |
–11.0 |
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EBIT |
118 |
100 |
–15.3 |
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Operating cash flows |
12 |
40 |
>200 |
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Cash outflows for additions to property, plant, equipment and intangible assets |
24 |
25 |
+4.2 |
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Free operating cash flow |
(12) |
15 |
. |
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In the first quarter of 2020, core volumes in the Coatings, Adhesives, Specialties segment were 5.2% lower than in the prior-year quarter. This development was driven by weaker demand for coating precursors in all key customer industries, particularly the automotive industry.
The Coatings, Adhesives, Specialties segment’s sales were down 8.8% to €572 million in the first quarter of 2020 (previous year: €627 million). A decrease in total volumes sold and lower average selling prices due to changes in the competitive landscape negatively affected sales by 7.1% and 3.9%, respectively. However, exchange rate movements had a positive impact on sales amounting to 1.1%. In addition, the step acquisition of shares and subsequent full consolidation of Japan-based DIC Covestro Polymer Ltd. in the second quarter of 2019 also gave sales a 1.1% boost in the first quarter of 2020.
In the EMLA region, sales declined by 5.1% to €279 million (previous year: €294 million). Total volumes and average selling prices each put slight downward pressure on sales, while changes in exchange rates were neutral overall with respect to their effect on sales. Sales in the NAFTA region fell by 3.5% to €139 million (previous year: €144 million) on account of a moderate decline in total volumes and slightly lower average selling prices. Sales increased slightly due to the effect of exchange rate changes. The APAC region’s sales decreased by 18.5% to €154 million (previous year: €189 million) as a result of the effects of the coronavirus pandemic. The decrease in total volumes and lower selling price level had a significant adverse effect on sales. Conversely, exchange rate changes and the portfolio effect of the step acquisition of shares of Japan-based DIC Covestro Polymer Ltd. improved sales somewhat.
In the first quarter of 2020, EBITDA in the Coatings, Adhesives, Specialties segment decreased by 11.0% from the prior-year quarter, amounting to €130 million (previous year: €146 million). A negative effect of lower volumes and margins put downward pressure on earnings.
EBIT slid by 15.3% in the first quarter of 2020, down to €100 million (previous year: €118 million).
Free operating cash flow increased to €15 million in the first quarter of 2020 (previous year: minus €12 million). A year-over-year decrease in cash tied up in working capital, primarily in trade accounts receivables, more than compensated for the decline in EBITDA.