© Reuters. Covestro logo is seen displayed in this illustration taken, May 3, 2022. REUTERS/Dado Ruvic/Illustration
(Reuters) – German chemicals maker Covestro on Tuesday cut its 2022 core earnings guidance for the third time this year, blaming soaring and raw material prices in the face of the current European energy crisis.
The company, whose main products include foam chemicals used in mattresses, car seats and insulation for buildings, said it was only able to offset the sharp rise in raw material and energy prices to a small extent by higher prices.
Covestro now sees 2022 earnings before interests, taxes, depreciation and amortisation (EBITDA) in a range of 1.7 and 1.8 billion euros ($1.7-$1.8 billion), compared to a previous forecast of 1.7-2.2 billion.
The profit warning comes after earlier this month Germany outlined plans to spend almost 100 billion euros to try and ease pressure on consumers, including industrial customers, from surging gas prices.
Chemical companies are among the hardest hit by the energy crisis because they use gas both as a raw material for production and as an energy source.
“We will have to cope with this unprecedented environment for the time being. We’re therefore using all the levers available to us to steer Covestro through the current situation,” said chief executive Markus Steilemann in a statement.
Covestro said in August replacing gas as a raw material was not yet possible, and options for replacing it as an energy source were also limited, though the company was testing where it could replace the fuel with oil.
($1 = 1.0121 euros)
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