Polyurethanes Drive Strong 2Q Performance for Covestro as Expected; Shares Overvalued
We are maintaining our EUR 41 fair value estimate and no-moat rating for Covestro after reviewing second-quarter results. Core volume growth was down 1.6% from 2016. However, EBITDA of EUR 848 million was 57% higher than the prior-year period and above our expectations, due entirely to the polyurethanes division. The polycarbonates and coatings, adhesives, and specialties divisions were relatively soft with EBITDA up 3% and down 20% over the prior-year period, respectively. Covestro expects the ...Covestro AG is a global supplier of high-tech polymer materials and application solutions developed for these materials. Co. produces precursors for polyurethane foams and the high-performance plastic polycarbonate in addition to raw materials for coatings, adhesives and sealants as well as specialty products, including high-quality films. Other precursors such as chlorine and by-products like styrene are part of Co.'s range of products.
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