Company News
September 29, 2021
Hexion to Split Into Two Companies
Hexion Holdings Corporation Announces Plan to Separate Into Two Independent Companies
Hexion Holdings Corporation Plans to be Listed Publicly on the NYSE; Plans to Execute a Spinoff of its Coatings & Composites Businesses to Current Shareholders
Creates Two Focused Companies Poised to Drive Long-Term Shareholder Value September 29, 2021 09:25 AM Eastern Daylight Time
COLUMBUS, Ohio–(BUSINESS WIRE)–Hexion Holdings Corporation (“Hexion Holdings” or the “Company”) today announced its plan to separate into two independent companies. The two companies will be “Hexion Holdings,” composed of the Company’s Adhesives and Versatic Acids™ and Derivatives product lines, and “Hexion Coatings and Composites (US) Inc.” (“HCC”), composed of Hexion Holdings’ former epoxy-based Coatings and Composites products. HCC will be renamed at a later date.
“Today marks the beginning of an exciting new chapter in Hexion’s 122-year history, and continues our strategy of narrowing our focus, improving the Company’s financial flexibility and driving long-term value creation for our shareholders”Tweet this
Hexion Holdings anticipates that the HCC separation transaction will be in the form of a distribution of 100% of the stock of HCC, a new and independent company to current holders of Hexion Holdings common stock and warrants. Upon completion of the HCC spin, current Hexion Holdings shareholders will own shares of both Hexion Holdings and HCC. As previously disclosed, Hexion Holdings will file a registration statement on Form S-1 with the U.S. Securities and Exchange Commission for a proposed initial public offering on the New York Stock Exchange.
“Today marks the beginning of an exciting new chapter in Hexion’s 122-year history, and continues our strategy of narrowing our focus, improving the Company’s financial flexibility and driving long-term value creation for our shareholders,” said Craig Rogerson, Hexion Chairman, President and Chief Executive Officer. “With our recent strong performance, and after a comprehensive evaluation of strategic actions aimed at unlocking the value of our businesses, our Board and management team have determined that now is the right time to pursue a separation through an IPO and spinoff. The transaction will provide each company with significant liquidity, a sharper strategic focus and appropriately capitalized balance sheets while we continue to serve our customers’ needs. It is a testament to our people and our focus on operational execution that we have reached this successful milestone where our businesses are ideally positioned to be two strong standalone companies.”
The Company believes that this separation will result in material benefits to the standalone companies, including:
- Distinct strategic and management focus on specific operational, R&D and growth priorities, including the analysis of macroeconomic trends and the implementation of financial targets that best fit each business;
- A capital structure, dividend policy and capital deployment strategy tailored to specific business models and growth strategies. Both businesses are expected to have direct access to the debt and equity capital markets to fund their respective growth strategies; and
- An investor base that is aligned with the streamlined value proposition for each company.
Hexion Holdings Building on Strong Momentum and Aligned with Growing Demand for Environmentally Preferred Building and Coatings Materials
Following the separation, Hexion Holdings will consist of the Company’s existing Adhesives and Versatic Acids™ and Derivatives product lines. Hexion Holdings will continue to build on its strong momentum, driven primarily by strong new residential construction and remodeling demand in North America, continued capacity expansion progress and gains from innovative new products, as well as the need for more sustainable building and coatings materials. As a standalone company, Hexion Holdings is expected to have favorable cash flow attributes and a stronger financial profile.
Hexion Holdings generated historical net sales of $2.5 billion and pro forma net sales of approximately $1.4 billion for the year-ended December 31, 2020. Hexion is expected to maintain appropriate debt levels going forward.
HCC Well Positioned to Expand Leadership and Global Presence
HCC will consist of Hexion Holdings’ former base and specialty epoxy resins product lines. HCC will remain a leading global supplier of epoxy resins and systems. As a standalone company, HCC will have greater ability to grow and expand its leadership position in attractive global markets. Importantly, HCC is also focused on addressing customers’ demands for more environmentally preferred solutions, and providing innovative solutions for the wind energy and automotive industries.
With its senior management team based in Rotterdam, the Netherlands, HCC expects to maintain a significant global presence. Stafford, Texas, will serve as its primary U.S. office and HCC will also maintain an executive office in Shanghai, China. In addition, HCC will continue to operate world-scale epoxy plants in Pernis and Deer Park, Texas, as well as additional manufacturing operations in the United States, Germany, Spain and South Korea.
HCC generated total sales of approximately $1.1 billion for the year-ended December 31, 2020. HCC is expected to maintain appropriate debt levels going forward.
Experienced and Proven Leadership
Craig Rogerson will continue to lead Hexion Holdings as Chairman, President and Chief Executive Officer. George Knight will continue in his role at Hexion Holdings as Executive Vice President and Chief Financial Officer. Ann Frederix, currently Senior Vice President, Coatings & Composites, Hexion Holdings, is expected to serve as Chief Executive Officer of HCC. Joost Vierhout, currently Senior Finance Director, Global Epoxy and Versatics, Hexion Holdings, is expected to serve as Chief Financial Officer of HCC.
Additional Details
Hexion Holdings and HCC are expected to enter into a Shared Services Agreement, which will provide for Hexion Holdings to provide to HCC, on a transitional basis, certain services or functions that the companies historically have shared, and one or more commercial agreements relating to the ownership, management, maintenance, support and use of certain shared operations services by Hexion Holdings to HCC.
The HCC separation transaction is currently targeted to be completed in the fourth quarter 2021, subject to final approval by the Board of Directors, customary regulatory approvals and tax and legal considerations.
Advisors
Moelis & Company LLC and Morgan Stanley & Co. LLC are serving as strategic advisors in connection with the strategic review, and Paul, Weiss, Rifkind, Wharton & Garrison LLP and Davis Polk & Wardwell LLP are serving as offering and M&A counsel to Hexion.
This press release is not an offer to sell securities.
About Hexion Holdings Corporation
Based in Columbus, Ohio, Hexion Holdings Corporation (“Hexion Holdings”), is the indirect parent of Hexion Inc. (“Hexion”). Hexion is a global leader in thermoset resins. Hexion serves the global adhesive and industrial markets through a broad range of thermoset technologies, specialty products and technical support for customers in a diverse range of applications and industries. Additional information about Hexion, its products and sustainability is available at www.hexion.com.
September 29, 2021
Hexion to Split Into Two Companies
Hexion Holdings Corporation Announces Plan to Separate Into Two Independent Companies
Hexion Holdings Corporation Plans to be Listed Publicly on the NYSE; Plans to Execute a Spinoff of its Coatings & Composites Businesses to Current Shareholders
Creates Two Focused Companies Poised to Drive Long-Term Shareholder Value September 29, 2021 09:25 AM Eastern Daylight Time
COLUMBUS, Ohio–(BUSINESS WIRE)–Hexion Holdings Corporation (“Hexion Holdings” or the “Company”) today announced its plan to separate into two independent companies. The two companies will be “Hexion Holdings,” composed of the Company’s Adhesives and Versatic Acids™ and Derivatives product lines, and “Hexion Coatings and Composites (US) Inc.” (“HCC”), composed of Hexion Holdings’ former epoxy-based Coatings and Composites products. HCC will be renamed at a later date.
“Today marks the beginning of an exciting new chapter in Hexion’s 122-year history, and continues our strategy of narrowing our focus, improving the Company’s financial flexibility and driving long-term value creation for our shareholders”Tweet this
Hexion Holdings anticipates that the HCC separation transaction will be in the form of a distribution of 100% of the stock of HCC, a new and independent company to current holders of Hexion Holdings common stock and warrants. Upon completion of the HCC spin, current Hexion Holdings shareholders will own shares of both Hexion Holdings and HCC. As previously disclosed, Hexion Holdings will file a registration statement on Form S-1 with the U.S. Securities and Exchange Commission for a proposed initial public offering on the New York Stock Exchange.
“Today marks the beginning of an exciting new chapter in Hexion’s 122-year history, and continues our strategy of narrowing our focus, improving the Company’s financial flexibility and driving long-term value creation for our shareholders,” said Craig Rogerson, Hexion Chairman, President and Chief Executive Officer. “With our recent strong performance, and after a comprehensive evaluation of strategic actions aimed at unlocking the value of our businesses, our Board and management team have determined that now is the right time to pursue a separation through an IPO and spinoff. The transaction will provide each company with significant liquidity, a sharper strategic focus and appropriately capitalized balance sheets while we continue to serve our customers’ needs. It is a testament to our people and our focus on operational execution that we have reached this successful milestone where our businesses are ideally positioned to be two strong standalone companies.”
The Company believes that this separation will result in material benefits to the standalone companies, including:
- Distinct strategic and management focus on specific operational, R&D and growth priorities, including the analysis of macroeconomic trends and the implementation of financial targets that best fit each business;
- A capital structure, dividend policy and capital deployment strategy tailored to specific business models and growth strategies. Both businesses are expected to have direct access to the debt and equity capital markets to fund their respective growth strategies; and
- An investor base that is aligned with the streamlined value proposition for each company.
Hexion Holdings Building on Strong Momentum and Aligned with Growing Demand for Environmentally Preferred Building and Coatings Materials
Following the separation, Hexion Holdings will consist of the Company’s existing Adhesives and Versatic Acids™ and Derivatives product lines. Hexion Holdings will continue to build on its strong momentum, driven primarily by strong new residential construction and remodeling demand in North America, continued capacity expansion progress and gains from innovative new products, as well as the need for more sustainable building and coatings materials. As a standalone company, Hexion Holdings is expected to have favorable cash flow attributes and a stronger financial profile.
Hexion Holdings generated historical net sales of $2.5 billion and pro forma net sales of approximately $1.4 billion for the year-ended December 31, 2020. Hexion is expected to maintain appropriate debt levels going forward.
HCC Well Positioned to Expand Leadership and Global Presence
HCC will consist of Hexion Holdings’ former base and specialty epoxy resins product lines. HCC will remain a leading global supplier of epoxy resins and systems. As a standalone company, HCC will have greater ability to grow and expand its leadership position in attractive global markets. Importantly, HCC is also focused on addressing customers’ demands for more environmentally preferred solutions, and providing innovative solutions for the wind energy and automotive industries.
With its senior management team based in Rotterdam, the Netherlands, HCC expects to maintain a significant global presence. Stafford, Texas, will serve as its primary U.S. office and HCC will also maintain an executive office in Shanghai, China. In addition, HCC will continue to operate world-scale epoxy plants in Pernis and Deer Park, Texas, as well as additional manufacturing operations in the United States, Germany, Spain and South Korea.
HCC generated total sales of approximately $1.1 billion for the year-ended December 31, 2020. HCC is expected to maintain appropriate debt levels going forward.
Experienced and Proven Leadership
Craig Rogerson will continue to lead Hexion Holdings as Chairman, President and Chief Executive Officer. George Knight will continue in his role at Hexion Holdings as Executive Vice President and Chief Financial Officer. Ann Frederix, currently Senior Vice President, Coatings & Composites, Hexion Holdings, is expected to serve as Chief Executive Officer of HCC. Joost Vierhout, currently Senior Finance Director, Global Epoxy and Versatics, Hexion Holdings, is expected to serve as Chief Financial Officer of HCC.
Additional Details
Hexion Holdings and HCC are expected to enter into a Shared Services Agreement, which will provide for Hexion Holdings to provide to HCC, on a transitional basis, certain services or functions that the companies historically have shared, and one or more commercial agreements relating to the ownership, management, maintenance, support and use of certain shared operations services by Hexion Holdings to HCC.
The HCC separation transaction is currently targeted to be completed in the fourth quarter 2021, subject to final approval by the Board of Directors, customary regulatory approvals and tax and legal considerations.
Advisors
Moelis & Company LLC and Morgan Stanley & Co. LLC are serving as strategic advisors in connection with the strategic review, and Paul, Weiss, Rifkind, Wharton & Garrison LLP and Davis Polk & Wardwell LLP are serving as offering and M&A counsel to Hexion.
This press release is not an offer to sell securities.
About Hexion Holdings Corporation
Based in Columbus, Ohio, Hexion Holdings Corporation (“Hexion Holdings”), is the indirect parent of Hexion Inc. (“Hexion”). Hexion is a global leader in thermoset resins. Hexion serves the global adhesive and industrial markets through a broad range of thermoset technologies, specialty products and technical support for customers in a diverse range of applications and industries. Additional information about Hexion, its products and sustainability is available at www.hexion.com.
September 29, 2021
Covestro Update
Covestro raises investment in sustainable growth
Investor Conference 2021: transformation toward a successful future
- Sustainability trends boost demand at Covestro
- New world-scale MDI plant: investment resumed
- EUR 1 billion for circular economy projects over ten years
- Mid-cycle EBITDA to rise to EUR 2.8 billion in 2024
- Expansion of sustainable portfolio: 45 products based on alternative raw materials already commercialized
Covestro is laying the groundwork for sustainable growth in the future. As part of its new “Sustainable Future” strategy, the Group is continuing to focus on the circular economy and the structurally increasing demand for sustainable solutions. Political initiatives to reduce greenhouse gases, such as in China, Europe and the United States, are driving demand, especially in the fields of energy-efficient construction and electromobility.
In this context, Covestro expects global demand growth for the rigid foam precursor MDI and the flexible foam precursor TDI to increase to 6 percent per year until 2025. For MDI in particular, demand is meeting an already high utilization of industry-wide capacities. At its Investor Conference this year, the Group announced that it would resume the investment project for the construction of a world-scale MDI plant, which was temporarily suspended at the beginning of 2020. Covestro plans to deploy the energy efficient AdiP technology, which is already used at its Brunsbuettel site in Germany. The technology can reduce steam by up to 40 percent and electricity by 25 percent per ton of product in an MDI plant, cutting CO2 emissions by up to 35 percent. The company is exploring building the new world-scale MDI plant in either the United States or China. A final decision is expected to be taken after the current project stage. Commissioning of the plant is planned for 2026.
“There is growing demand for sustainable solutions worldwide and that offers us significant additional market potential. Our high-tech plastics already enable sustainable innovations in many industries,” stated Dr. Markus Steilemann, CEO of Covestro. “On our path to becoming fully circular, we are increasing our capital spending selectively and are enabling our customers to become more sustainable with tailored solutions.”
Expansion of production capacities
Covestro aims to generate sustainable growth and in the future will align investments and acquisitions even more consistently to the aspects of profitability and sustainability.
“We’re now in very good economic shape. But we must not be content,” said Dr. Thomas Toepfer, CFO of Covestro. “In order to achieve our ambitious objectives and become fully circular, we are planning targeted capex spending of around EUR 1 billion on circular economy projects over the next ten years.”
In addition, organic growth will continue to play a central role. Covestro will invest around EUR 800 million in 2021 but capital expenditure is to raise substantial in subsequent years. Capital expenditure thus grows on average at or slightly above the level of depreciation and amortization. In the “Performance Materials” segment, the planned construction of the new world-scale MDI plant will significantly increase capital expenditures, particularly in the years 2024 to 2026. To meet the growth in demand for TDI as well, Covestro will expand its production capacities for TDI at the German site in Dormagen as early as 2023 through debottlenecking.
The Group is also investing in the “Solutions and Specialties” segment. Around EUR 300 million will be invested in additional capacities in the Coatings & Adhesives entity by 2025 to enable further growth. Covestro is expanding its compounding capacities for the global production of its highly differentiated polycarbonate. Future plans will focus entirely on this growth market in the area of polycarbonates. The company also sees growing demand for its Specialty Films products, particularly in the medical sector and for holographic films. To meet this demand, Covestro is investing around EUR 200 million in additional capacities by 2025.
Substantial increase in mid-cycle EBITDA up to 2024
Under its new strategy, Covestro reorganized its business into the two segments “Solutions and Specialties” and “Performance Materials” in July 2021. As part of that, the Group gave more entrepreneurial responsibility to the business entities and integrated all operational activities throughout the value chain that are critical to success directly into these new entities. As a result, it can better address the requirements of the specific markets and customers’ individual needs. In both segments, the Group expects an increase in core volumes sold by 2025. This is also expected to impact earnings: Whereas margins in the Performance Materials segment are highly supply-and-demand-driven, margins in the Solutions and Specialties segment are to be raised to 17 percent by 2024.
On the basis of the organizational realignment, the successful integration of the “Resins & Functional Materials” business acquired from DSM in April 2021, and sustainability-driven growth in demand, Covestro expects mid-cycle EBITDA to rise from its current level of EUR 2.2 billion to EUR 2.8 billion in 2024.
At the same time, the new Group structure offers significant efficiency potential that Covestro will leverage by 2023. The goal is to create the right basis for the long-term corporate development. As already announced, the company is currently reviewing all activities and processes worldwide to ascertain whether they fit with its vision and strategy. Overall, fixed costs in 2023 are to remain at the 2020 level.
Expansion of the sustainable product portfolio
On its path to becoming fully circular, Covestro is continuing its unwavering commitment to future technologies and constantly increasing its sustainable product portfolio. For example, the company has already successfully commercialized around 45 products based on alternative raw materials and is pressing ahead with almost 90 associated research products.
Key milestones on this path were achieved in 2021. The company now offers mass-balanced sustainable products from three sites (Antwerp in Belgium, Shanghai in China, and Krefeld-Uerdingen in Germany) that have been awarded ISCC Plus certification. This “International Sustainability and Carbon Certification” means Covestro can offer its customers high-performance plastic polycarbonate and the rigid foam precursor MDI both made from alternative raw materials in the same good quality as fossil-based counterparts. Covestro is thereby helping its customers reduce their carbon footprint.
https://www.covestro.com/investors/news/covestro-raises-investment-in-sustainable-growth/
September 29, 2021
Covestro Update
Covestro raises investment in sustainable growth
Investor Conference 2021: transformation toward a successful future
- Sustainability trends boost demand at Covestro
- New world-scale MDI plant: investment resumed
- EUR 1 billion for circular economy projects over ten years
- Mid-cycle EBITDA to rise to EUR 2.8 billion in 2024
- Expansion of sustainable portfolio: 45 products based on alternative raw materials already commercialized
Covestro is laying the groundwork for sustainable growth in the future. As part of its new “Sustainable Future” strategy, the Group is continuing to focus on the circular economy and the structurally increasing demand for sustainable solutions. Political initiatives to reduce greenhouse gases, such as in China, Europe and the United States, are driving demand, especially in the fields of energy-efficient construction and electromobility.
In this context, Covestro expects global demand growth for the rigid foam precursor MDI and the flexible foam precursor TDI to increase to 6 percent per year until 2025. For MDI in particular, demand is meeting an already high utilization of industry-wide capacities. At its Investor Conference this year, the Group announced that it would resume the investment project for the construction of a world-scale MDI plant, which was temporarily suspended at the beginning of 2020. Covestro plans to deploy the energy efficient AdiP technology, which is already used at its Brunsbuettel site in Germany. The technology can reduce steam by up to 40 percent and electricity by 25 percent per ton of product in an MDI plant, cutting CO2 emissions by up to 35 percent. The company is exploring building the new world-scale MDI plant in either the United States or China. A final decision is expected to be taken after the current project stage. Commissioning of the plant is planned for 2026.
“There is growing demand for sustainable solutions worldwide and that offers us significant additional market potential. Our high-tech plastics already enable sustainable innovations in many industries,” stated Dr. Markus Steilemann, CEO of Covestro. “On our path to becoming fully circular, we are increasing our capital spending selectively and are enabling our customers to become more sustainable with tailored solutions.”
Expansion of production capacities
Covestro aims to generate sustainable growth and in the future will align investments and acquisitions even more consistently to the aspects of profitability and sustainability.
“We’re now in very good economic shape. But we must not be content,” said Dr. Thomas Toepfer, CFO of Covestro. “In order to achieve our ambitious objectives and become fully circular, we are planning targeted capex spending of around EUR 1 billion on circular economy projects over the next ten years.”
In addition, organic growth will continue to play a central role. Covestro will invest around EUR 800 million in 2021 but capital expenditure is to raise substantial in subsequent years. Capital expenditure thus grows on average at or slightly above the level of depreciation and amortization. In the “Performance Materials” segment, the planned construction of the new world-scale MDI plant will significantly increase capital expenditures, particularly in the years 2024 to 2026. To meet the growth in demand for TDI as well, Covestro will expand its production capacities for TDI at the German site in Dormagen as early as 2023 through debottlenecking.
The Group is also investing in the “Solutions and Specialties” segment. Around EUR 300 million will be invested in additional capacities in the Coatings & Adhesives entity by 2025 to enable further growth. Covestro is expanding its compounding capacities for the global production of its highly differentiated polycarbonate. Future plans will focus entirely on this growth market in the area of polycarbonates. The company also sees growing demand for its Specialty Films products, particularly in the medical sector and for holographic films. To meet this demand, Covestro is investing around EUR 200 million in additional capacities by 2025.
Substantial increase in mid-cycle EBITDA up to 2024
Under its new strategy, Covestro reorganized its business into the two segments “Solutions and Specialties” and “Performance Materials” in July 2021. As part of that, the Group gave more entrepreneurial responsibility to the business entities and integrated all operational activities throughout the value chain that are critical to success directly into these new entities. As a result, it can better address the requirements of the specific markets and customers’ individual needs. In both segments, the Group expects an increase in core volumes sold by 2025. This is also expected to impact earnings: Whereas margins in the Performance Materials segment are highly supply-and-demand-driven, margins in the Solutions and Specialties segment are to be raised to 17 percent by 2024.
On the basis of the organizational realignment, the successful integration of the “Resins & Functional Materials” business acquired from DSM in April 2021, and sustainability-driven growth in demand, Covestro expects mid-cycle EBITDA to rise from its current level of EUR 2.2 billion to EUR 2.8 billion in 2024.
At the same time, the new Group structure offers significant efficiency potential that Covestro will leverage by 2023. The goal is to create the right basis for the long-term corporate development. As already announced, the company is currently reviewing all activities and processes worldwide to ascertain whether they fit with its vision and strategy. Overall, fixed costs in 2023 are to remain at the 2020 level.
Expansion of the sustainable product portfolio
On its path to becoming fully circular, Covestro is continuing its unwavering commitment to future technologies and constantly increasing its sustainable product portfolio. For example, the company has already successfully commercialized around 45 products based on alternative raw materials and is pressing ahead with almost 90 associated research products.
Key milestones on this path were achieved in 2021. The company now offers mass-balanced sustainable products from three sites (Antwerp in Belgium, Shanghai in China, and Krefeld-Uerdingen in Germany) that have been awarded ISCC Plus certification. This “International Sustainability and Carbon Certification” means Covestro can offer its customers high-performance plastic polycarbonate and the rigid foam precursor MDI both made from alternative raw materials in the same good quality as fossil-based counterparts. Covestro is thereby helping its customers reduce their carbon footprint.
https://www.covestro.com/investors/news/covestro-raises-investment-in-sustainable-growth/
September 28, 2021
Covestro MDI Expansion Plans
Higher costs drive re-examination of Covestro MDI plant location plans – CEO
Author: Tom Brown
2021/09/28
LONDON (ICIS)–A significant increase in construction costs in the US has become a factor in Covestro moving to re-examine the potential location of its planned flagship methylene diphenyl diisocyanate (MDI) plant, with China mooted as an alternative.
The company announced on Tuesday that it intends to proceed with work on a world-scale MDI plant, after suspending plans to build a unit in the US in early 2020.
The producer had announced in January 2020 that it would halt work on its planned 500,000 tonne/year MDI plant at its Baytown, Texas, production complex, in the face of challenging global market conditions.
A substantial increase in construction costs in the US, both in terms of labour and materials, since the project was first announced in 2018 could result in a lower return on capital employed (ROCE) than originally anticipated, prompting the re-examination of the location for the investment.
“Construction costs in the US have significantly increased, leading to a lower return on capital employed versus our original plan,” said Covestro CEO Markus Steilemann, speaking on an investor call.
“In China, construction costs have remained relatively flat, with attractive ROCE. Strong demand growth in China and Asia creates the need for another plant in Asia,” he added.
The company targets a return of at least seven percentage points above its cost of capital, according to CFO Thomas Toepfer, meaning a target ROCE of around 15%.
“That is certainly a challenge for a greenfield investment. But we think that we will be at least close to that, and therefore, this is also why we’re critically looking into all the options with respect to locations,” he said.
The company’s existing MDI assets are fully utilised at present, according to Steilemann, with a project to increase capacity at its Tarragona, Spain, plant, still underway but expected by 2025 instead of the initial estimate of 2022 when the project was first announced at the end of 2017.
“We are only able to grow below demand growth until the start-up of a new plant,” he said.
Covestro had originally guided for capital expenditure of $1.5bn for its new world-scale plant, but that figure may be set to rise irrespective of its final location in China or the US.
“I would say it’s not a secret that there has been significant cost inflation since [the project was announced], especially for materials like steel but also for labour, especially in the US, so this is one of the reasons why we are looking into all the options we have,” Steilemann said.
“Relative to the $1.5bn, there would be a slight increase to that in China, but there would certainly be a significant increase in the US,” he added.
A decision will be announced at the next stage of project development, he added, with the plant expected to be commissioned in 2026, two years after the original forecast start date for the Baytown project. The plant capacity is also likely to be around the originally forecast 500,000 tonnes/year, but the final figure is still to be determined.
OTHER INVESTMENTS
The firm is also planning to expand its toluene diisocyanate (TDI) production by de-bottlenecking facilities in Dormagen, Germany, expected to be complete by 2023. The unit currently has a production capacity of 250,000 tonnes/year, according to ICIS data.
Also earmarked for investment are coatings and adhesives, and specialty films, with planned expenditure of €300m and €200m apiece by 2025, while the firm is planning more investment in the circular economy.
“In order to achieve our ambitious objectives and become fully circular, we are planning targeted capex spending of around €1bn on circular economy projects over the next ten years,” Toepfer said.
Covestro is planning to increase capital spending over the next few years, with an estimated €800m of investment this year expected to expand substantially in the near future, he added.
On the back of new investments, the realignment of the business into solutions and specialties and performance materials in mid-2021, and the acquisition of DSM’s resins and functional materials business, Covestro expects to increase mid-cycle earnings before interest, taxes, depreciation and amortisation (EBITDA) from €2.2bn to €2.8bn by 2024, the company added.
(update re-leads, adds CEO, CFO comment)
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