(Reuters) – German chemicals maker Covestro expects COVID-19 lockdowns in China to significantly affect business in the second quarter, its finance chief said on Tuesday, while its 2022 energy costs could also exceed earlier estimates. Chief Financial Officer Thomas Toepfer told Reuters the lockdown in Shanghai, which led the company to cut its full-year earnings […]
(Reuters) – German chemicals maker Covestro expects COVID-19 lockdowns in China to significantly affect business in the second quarter, its finance chief said on Tuesday, while its 2022 energy costs could also exceed earlier estimates.
Chief Financial Officer Thomas Toepfer told Reuters the lockdown in Shanghai, which led the company to cut its full-year earnings outlook on Monday, would have bigger and longer effects on the group than originally thought.
Toepfer said Covestro’s energy costs could more than double this year to between 1.7 billion and 2.0 billion euros ($1.8-$2.1 billion), against its previous 1.5 billion euro estimate. The group’s energy costs already increased by 67% in 2021.
“The logistics problems and the problems of the other suppliers have worsened so much that ultimately sales drop quite sharply,” Toepfer added on the second-quarter performance.
Soaring energy prices in the wake of Russia’s invasion of Ukraine have dealt a painful blow to the chemicals industry, which is among the more energy-intense sectors, while lockdowns in China have thrown global supply chains into disarray.
In 2021, China accounted for around 22% of Covestro’s sales.
Covestro shares fell 6.3% to 38.75 euros at 0815 GMT, their lowest level since August 2020.
($1 = 0.9527 euros)
(Reporting by Bartosz Dabrowski in Gdansk, additional reporting by Linda Pasquini; editing by Milla Nissi)
