Company News
June 21, 2022
BASF Expects Downturn
BASF’s business to face downturn in second half – CEO says
Tue, 21 June 2022 at 12:24 pm·1-min read
FRANKFURT (Reuters) – Chemicals group BASF will be likely to face a considerable downturn early in the second half of the year because inflation will begin to weigh on consumer demand and competitors are expected to reinstate crippled supply chains, its CEO said.
“Speaking for my business, we are able pass along higher prices because there is no arbitrage trade because supply chains don’t work,” Chief Executive Martin Bruedermueller said at a German industry event.
But inflation and, in its wake, lower consumer demand was “knocking on the front door”, he said. He added that rivals would soon be able to improve their supply chains, which are battered by the coronavirus pandemic and global shortages.
“That means no more pricing power and then we will struggle to generate margins on top of the high energy prices. That’s when it gets really difficult,” he added.
(Reporting by Ludwig Burger. Editing by Jane Merriman)
https://uk.finance.yahoo.com/news/basfs-business-face-downturn-second-162417650.html
June 16, 2022
Covestro Interview
High energy prices to boost sustainability megatrend – Covestro CFO
Joseph Chang
24-May-2022Full storyRelated newsRelated contentContact us SHARE THIS
NEW YORK (ICIS)–Germany-based Covestro sees higher oil and gas prices driving not only the energy transition to electric vehicles (EVs) and renewable power but also greater use of insulation to enhance energy efficiency, making it well positioned to capitalise on these trends, its chief financial officer (CFO) said.
“Energy prices going up in the mid-to-long term is a positive for us as energy efficiency programmes become more important. MDI [methylene diphenyl diisocyanate] is the best insulation used in refrigerators and buildings, and EVs use 3-5 times more polycarbonate (PC) versus traditional cars,” said Covestro CFO Thomas Toepfer in an interview with ICIS in New York.
Covestro also produces polyurethane coatings and composites for wind turbine blades to make them lower cost and more durable, he noted.
“If we can increase the lifetime of an offshore wind turbine by 2-3 years, there is a huge difference in investment returns,” said Toepfer.
PC is used in EV battery packaging systems for thermal management as well as electric powertrain parts and other light-weighting applications.
“The move to renewable energy, EVs and energy efficiency is helpful because we provide the products that enable this transition. It is a growth multiplier for our business,” said Toepfer.
ENERGY IMPACT AND DEMAND
Covestro, like all chemicals producers in Europe, is experiencing higher energy and raw materials costs, especially after Russia’s invasion of Ukraine. However, in Q1 it was able to pass on over 90% of these costs to customers on strong demand, and it sees demand momentum carrying into Q2, he pointed out.
Potential EU sanctions on oil imports from Russia would have minimal impact on the company as it buys key raw materials such as toluene and benzene on world markets, he said.
“On the Russian gas question, it is much less on the agenda politically but if this is curtailed in Germany the entire industry would be affected, including Covestro. German policy does not support this because the economic impact would be very negative,” said Toepfer.
For 2022, Covestro expects energy costs to jump to €1.5bn-2bn from €1.0bn in 2021 but the CFO sees this as manageable amid solid demand growth.
“In Q1 over 90% of these costs were passed on. As long as there is demand strength, and that’s what we see, there will be a flow-through,” said Toepfer.
Aside from China, which has been hampered by COVID lockdowns, demand growth is generally strong in Europe and North America as well as the rest of Asia, he noted.
Covestro in early May took down its 2022 guidance for earnings before interest, tax, depreciation and amortisation (EBITDA) by €500m to €2.0bn-2.5bn, on the China lockdowns, higher energy and raw materials costs and lower global economic growth projections.
“About 50% of this was due to the China effect, and the other half linked to lower GDP projections. But as of the beginning of Q2, we’re not seeing margins going down so the momentum is continuing,” said Toepfer.
AUTOMOTIVE OUTLOOK
However, pockets of demand weakness include automotive, which continues to be constrained by the semiconductor shortage, as well as the furniture market in North America, which was one area cited by US big-box retailers in contributing to massive inventory build-ups in Q1.
Automotive weakness is more supply driven, and could set the stage for a stronger 2023 and 2024, he said.
“If you want to buy a new car in Germany, the waiting time can be one year. In the US it can be several months, and they are charging above list price which is pretty extraordinary. So the growth rate [this year] will be lower than initially expected but pent-up demand is building up, so 2023 and 2024 could be strong years,” said Toepfer.
Thus far, it is “difficult to tell” when auto supply-chain issues will ease, as many expected this in 2022 and it is not happening so far, he added.
On overall logistics and supply-chain constraints, Covestro is far less impacted than many other chemicals companies as it primarily produces for local markets, the executive said.
“We are producing in regions for the regions, not depending much on ocean freight, so our local-for-local strategy is potentially much more successful during these times,” said Toepfer.
Interview article by Joseph Chang
June 16, 2022
Covestro Interview
High energy prices to boost sustainability megatrend – Covestro CFO
Joseph Chang
24-May-2022Full storyRelated newsRelated contentContact us SHARE THIS
NEW YORK (ICIS)–Germany-based Covestro sees higher oil and gas prices driving not only the energy transition to electric vehicles (EVs) and renewable power but also greater use of insulation to enhance energy efficiency, making it well positioned to capitalise on these trends, its chief financial officer (CFO) said.
“Energy prices going up in the mid-to-long term is a positive for us as energy efficiency programmes become more important. MDI [methylene diphenyl diisocyanate] is the best insulation used in refrigerators and buildings, and EVs use 3-5 times more polycarbonate (PC) versus traditional cars,” said Covestro CFO Thomas Toepfer in an interview with ICIS in New York.
Covestro also produces polyurethane coatings and composites for wind turbine blades to make them lower cost and more durable, he noted.
“If we can increase the lifetime of an offshore wind turbine by 2-3 years, there is a huge difference in investment returns,” said Toepfer.
PC is used in EV battery packaging systems for thermal management as well as electric powertrain parts and other light-weighting applications.
“The move to renewable energy, EVs and energy efficiency is helpful because we provide the products that enable this transition. It is a growth multiplier for our business,” said Toepfer.
ENERGY IMPACT AND DEMAND
Covestro, like all chemicals producers in Europe, is experiencing higher energy and raw materials costs, especially after Russia’s invasion of Ukraine. However, in Q1 it was able to pass on over 90% of these costs to customers on strong demand, and it sees demand momentum carrying into Q2, he pointed out.
Potential EU sanctions on oil imports from Russia would have minimal impact on the company as it buys key raw materials such as toluene and benzene on world markets, he said.
“On the Russian gas question, it is much less on the agenda politically but if this is curtailed in Germany the entire industry would be affected, including Covestro. German policy does not support this because the economic impact would be very negative,” said Toepfer.
For 2022, Covestro expects energy costs to jump to €1.5bn-2bn from €1.0bn in 2021 but the CFO sees this as manageable amid solid demand growth.
“In Q1 over 90% of these costs were passed on. As long as there is demand strength, and that’s what we see, there will be a flow-through,” said Toepfer.
Aside from China, which has been hampered by COVID lockdowns, demand growth is generally strong in Europe and North America as well as the rest of Asia, he noted.
Covestro in early May took down its 2022 guidance for earnings before interest, tax, depreciation and amortisation (EBITDA) by €500m to €2.0bn-2.5bn, on the China lockdowns, higher energy and raw materials costs and lower global economic growth projections.
“About 50% of this was due to the China effect, and the other half linked to lower GDP projections. But as of the beginning of Q2, we’re not seeing margins going down so the momentum is continuing,” said Toepfer.
AUTOMOTIVE OUTLOOK
However, pockets of demand weakness include automotive, which continues to be constrained by the semiconductor shortage, as well as the furniture market in North America, which was one area cited by US big-box retailers in contributing to massive inventory build-ups in Q1.
Automotive weakness is more supply driven, and could set the stage for a stronger 2023 and 2024, he said.
“If you want to buy a new car in Germany, the waiting time can be one year. In the US it can be several months, and they are charging above list price which is pretty extraordinary. So the growth rate [this year] will be lower than initially expected but pent-up demand is building up, so 2023 and 2024 could be strong years,” said Toepfer.
Thus far, it is “difficult to tell” when auto supply-chain issues will ease, as many expected this in 2022 and it is not happening so far, he added.
On overall logistics and supply-chain constraints, Covestro is far less impacted than many other chemicals companies as it primarily produces for local markets, the executive said.
“We are producing in regions for the regions, not depending much on ocean freight, so our local-for-local strategy is potentially much more successful during these times,” said Toepfer.
Interview article by Joseph Chang
June 16, 2022
Mattress Slowdown
Corsicana Mattress closing LaPorte plant meant to employ up to 350 just months after opening
- Joseph S. Pete
- May 25, 2022 Updated May 25, 2022
One of the most hyped recent economic development projects in Northwest Indiana has met a sudden, swift and unexpected end.
Texas-based Corsicana Mattress Co. recently opened a new $8.6 million bed-in-a-box factory that would have employed up to 350 workers in LaPorte and was described as “one of this year’s most exciting announcements.” The company took over an abandoned warehouse where it planned to make 1,500 boxed-bed mattresses a day to allow for same-day shipping nationwide.
A ribbon-cutting celebration just took place in March.
But employees were told this week Corsicana was closing two plants, including the newly opened factory at the Midwest Manufacturing Supercenter at 755 South 500 West in LaPorte.
“This is upsetting news, that’s for sure,” LaPorte County Commissioner Shelia Brillson Matias posted on social media. “Sad news that employees were told yesterday that Corsicana LaPorte would be closing and from what we are hearing, this is one of two plants being closed in the U.S. due to loss of demand, high material costs and difficulty finding employees.”
She said the community needs to help displaced workers “find good family-wage jobs.”
Matias also noted no public money has been lost or put at risk.
“On the positive side, this long-vacant 180,000 square-foot facility — empty and dilapidated for 20-plus years — has been updated, modernized and is ready for another manufacturer to set up shop.”
Matias, LaPorte County Council President Randy Novak and Economic Development Director Tony Rodriguez talked to the Corsicana CEO on the phone.
Corsicana is reconsidering its industry footprint after acquiring rival Symbol Mattress of Virginia in April in a deal that creates the nation’s largest manufacturer of mattresses under $1,000. The merged companies planned to employ 1,300 at 16 manufacturing sites nationwide.
“While sharing my concerns, the conversation was detailed regarding their current business outlook and focused on the industry-specific facts that have negatively affected this plant. Corsicana LaPorte is impacted by the recent sale of the entire company, a corporate reorganization, and reduced consumer spending,” Matias posted. “The CEO had great things to say about our workforce; it’s clear we cannot change their business-driven decision but we now need to focus on these employees. We will work on helping these folks to find good jobs here in LaPorte County.”
Corsicana and the public relations firm it commissioned to help promote the ribbon-cutting did not immediately respond to messages seeking comment. The company had hired only about 45 workers, Rodriguez said.
“While it was a highly unfortunate decision, it’s just fortunate it happened in this economic environment where almost all of the advanced manufacturing employees who were displaced will be able to find work as quickly as possible,” he said. “Our key going forward is to see that they are treated as appropriately as possible. We’re still in discussions with the company and the specifics and possible consideration of future investment.”
LaPorte County also will be able to market the recently renovated property to other companies at a time when such inventory is in short supply, Rodriguez said.
“It’s a 180,000-square-foot modern manufacturing facility that’s been fully renovated and could become available on the market soon,” he said. “We’ll look to find a new business ASAP, which shouldn’t be hard in this market. Manufacturers are seeking to make investments, which bodes well for the remarketing of that property. COVID has ignited an investment boom in American manufacturing as a result of the supply chain issues, and that bodes extremely well for the future of that property.”
Corsicana also has a 100,000 square-foot flat-packed mattress factory in Aurora.
The Indiana Economic Development Corp. gave Corsicana $2.3 million in conditional tax breaks for the LaPorte factory in exchange for the job creation and investment. The tax breaks were structured to be contingent on hiring and continued employment, so the company would not reap the benefits if it falls short of its employment goals.
Corsicana Mattress was founded in 1971 and is now one of the largest U.S. manufacturers in the mattress industry. It makes memory foam, innerspring and hybrid mattresses, such as the NightsBridge, Early Bird, Renue, American Bedding and Sleep Inc. brand names.
June 16, 2022
Mattress Slowdown
Corsicana Mattress closing LaPorte plant meant to employ up to 350 just months after opening
- Joseph S. Pete
- May 25, 2022 Updated May 25, 2022
One of the most hyped recent economic development projects in Northwest Indiana has met a sudden, swift and unexpected end.
Texas-based Corsicana Mattress Co. recently opened a new $8.6 million bed-in-a-box factory that would have employed up to 350 workers in LaPorte and was described as “one of this year’s most exciting announcements.” The company took over an abandoned warehouse where it planned to make 1,500 boxed-bed mattresses a day to allow for same-day shipping nationwide.
A ribbon-cutting celebration just took place in March.
But employees were told this week Corsicana was closing two plants, including the newly opened factory at the Midwest Manufacturing Supercenter at 755 South 500 West in LaPorte.
“This is upsetting news, that’s for sure,” LaPorte County Commissioner Shelia Brillson Matias posted on social media. “Sad news that employees were told yesterday that Corsicana LaPorte would be closing and from what we are hearing, this is one of two plants being closed in the U.S. due to loss of demand, high material costs and difficulty finding employees.”
She said the community needs to help displaced workers “find good family-wage jobs.”
Matias also noted no public money has been lost or put at risk.
“On the positive side, this long-vacant 180,000 square-foot facility — empty and dilapidated for 20-plus years — has been updated, modernized and is ready for another manufacturer to set up shop.”
Matias, LaPorte County Council President Randy Novak and Economic Development Director Tony Rodriguez talked to the Corsicana CEO on the phone.
Corsicana is reconsidering its industry footprint after acquiring rival Symbol Mattress of Virginia in April in a deal that creates the nation’s largest manufacturer of mattresses under $1,000. The merged companies planned to employ 1,300 at 16 manufacturing sites nationwide.
“While sharing my concerns, the conversation was detailed regarding their current business outlook and focused on the industry-specific facts that have negatively affected this plant. Corsicana LaPorte is impacted by the recent sale of the entire company, a corporate reorganization, and reduced consumer spending,” Matias posted. “The CEO had great things to say about our workforce; it’s clear we cannot change their business-driven decision but we now need to focus on these employees. We will work on helping these folks to find good jobs here in LaPorte County.”
Corsicana and the public relations firm it commissioned to help promote the ribbon-cutting did not immediately respond to messages seeking comment. The company had hired only about 45 workers, Rodriguez said.
“While it was a highly unfortunate decision, it’s just fortunate it happened in this economic environment where almost all of the advanced manufacturing employees who were displaced will be able to find work as quickly as possible,” he said. “Our key going forward is to see that they are treated as appropriately as possible. We’re still in discussions with the company and the specifics and possible consideration of future investment.”
LaPorte County also will be able to market the recently renovated property to other companies at a time when such inventory is in short supply, Rodriguez said.
“It’s a 180,000-square-foot modern manufacturing facility that’s been fully renovated and could become available on the market soon,” he said. “We’ll look to find a new business ASAP, which shouldn’t be hard in this market. Manufacturers are seeking to make investments, which bodes well for the remarketing of that property. COVID has ignited an investment boom in American manufacturing as a result of the supply chain issues, and that bodes extremely well for the future of that property.”
Corsicana also has a 100,000 square-foot flat-packed mattress factory in Aurora.
The Indiana Economic Development Corp. gave Corsicana $2.3 million in conditional tax breaks for the LaPorte factory in exchange for the job creation and investment. The tax breaks were structured to be contingent on hiring and continued employment, so the company would not reap the benefits if it falls short of its employment goals.
Corsicana Mattress was founded in 1971 and is now one of the largest U.S. manufacturers in the mattress industry. It makes memory foam, innerspring and hybrid mattresses, such as the NightsBridge, Early Bird, Renue, American Bedding and Sleep Inc. brand names.
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