By Zuzanna Szymanska and Anneli Palmen
-German chemicals maker Covestro reported a better than expected final second-quarter profit on Friday as it maintained selling prices above raw material costs thanks to a continued demand recovery.
All industries including chemicals have been heavily affected by recent raw material price inflation, but Covestro, which makes foams and plastics for products including car seats and phone cases, said it was largely successful passing on the costs to customers in the second quarter.
"We produce things that are extremely important for our customers, such as adhesives or coatings, but which only account for a small part of the total cost of the product. This explains why they are willing to pay very high prices," financial chief Thomas Toepfer told Reuters, adding Covestro was still far from the 2017-2018 historic selling price highs.
Asked about risks from the spread of the more contagious delta coronavirus variant, the CFO said Covestro's product mix should help it resist the pressure as it did in late 2020.
"The high demand for such products as wind turbine coatings or light materials for electric cars is driven by sustainability trends that haven't really been affected by the pandemic," Toepfer said.
He added chip shortages in the automotive industry, which accounts for 20% of Covestro's sales, have not hurt Covestro's growth thanks to its solid order book.
"Since late 2020, we have been completely sold out as far as our production capacities are concerned, so getting fewer orders from automakers is almost a relief for us," he said.
Covestro said its second-quarter net income came in at 449 million euros ($530.76 million), compared to the 433 million euros expected on average by analysts in a company-provided poll, and confirmed the preliminary core earnings and 2021 forecast it announced on July 12.
($1 = 0.8460 euros)
