(New: Share price updated)

LEVERKUSEN (dpa-AFX) - The plastics group Covestro remains cautious about future business development in a difficult industry environment. There are positive signs, but the trees will not grow into the sky in the second quarter, Group CEO Markus Steilemann told the news agency dpa-AFX on Tuesday on the occasion of the publication of the figures for the first quarter of the year. In view of the confirmed annual targets, a business upturn is expected in the second half of the year. Meanwhile, there is still no news on the possible takeover of the DAX-listed company by the Arab oil group Dhabi National Oil (Adnoc).

The Covestro share price fell by around two percent to EUR 46.57 by the afternoon. The share price had risen to almost EUR 55 by December 2023 due to the prospect of a possible takeover by Adnoc. At least in the past, an informal offer of just over 60 euros per share was being discussed, which would total more than 11.3 billion euros. However, Covestro is not making any specific comments on this and continues to speak of open-ended talks.

The prospects of a business recovery are also likely to play a role here. In the first quarter, earnings before interest, taxes, depreciation and amortization (EBITDA) fell by 4.5 percent year-on-year to EUR 273 million - with sales down by a good 6 percent to EUR 3.5 billion. However, the bottom line was a minus of 35 million euros - compared to minus 26 million a year ago.

In an initial reaction, analyst Chetan Udeshi from the bank JPMorgan spoke of a good development of the operating profit in the first quarter, while the outlook for the second quarter was somewhat below expectations. Covestro is forecasting EBITDA of EUR 270 to 370 million, which would in any case be less than in the same period last year.

The plan for the full year 2024 is still EUR 1.0 to 1.6 billion. In the best-case scenario, this would be as much as in 2022, after a slump of a third to just under EUR 1.1 billion in 2023.

Covestro had felt the effects of the slump in the Chinese real estate sector as well as the weakness of the construction industry and the reluctance of many people to buy consumer electronics, household appliances and furniture. If these sectors weaken, demand for Covestro's rigid and flexible foam precursors, which are processed into insulating materials, upholstery and similar products, also slows. Hard plastics, polycarbonates, for example for laptop and smartphone housings, will also be less in demand.

Analyst Konstantin Wiechert from Baader Bank also pointed out that there would have to be an upturn in the third quarter of 2024 for the current market expectation for earnings before interest, taxes, depreciation and amortization to be reached in 2024. This currently stands at 1.35 billion euros./mis/nas/stk