Covestro to Cut Jobs
Covestro to cut 900 jobs in 350 million euros efficiency push
FRANKFURT (Reuters) – Germany’s Covestro (1COV.DE) plans to cut 900 jobs globally and reduce costs by 350 million euros (310 million pounds) per year from 2021, aiming to reign in an increase in expenses from an investment push to widen output capacity.
About 900 of globally 15,700 full-time positions will be reduced, including 400 in Germany, to be carried out in a “socially acceptable” manner that has already been agreed with the group’s German works council, the company said on Thursday.
Third-quarter earnings before interest, taxes, depreciation and amortisation (EBITDA) were flat at 859 million euros, it added, coming in above the average forecast in a Reuters poll of analysts of 830 million.
Rapid earnings growth over the last two years, driven by supply shortages across the industry, has been levelling off.
“We are seeing increasingly challenging economic conditions and also experienced limited product availability in Europe and Asia in the past quarter. Nonetheless, we were able to keep volumes stable,” said finance chief Thomas Toepfer, who reiterated that 2018 EBITDA would be flat.
The former Bayer (BAYGn.DE) subsidiary is in the process of stepping up annual investment expenditures to reach as much as 1.2 billion euros over the next three years, up from 507 million in 2017.
The main driver will be a new 1.5 billion euros plant in Texas to produce chemicals for rigid insulation foams, taking up a challenge posed by rivals’ growth plans.