Covestro to cut up to 10% jobs globally in cost saving plan

LONDON (ICIS)–Covestro is to reduce its 16,500-strong workforce by up to 10% as the German chemicals major seeks to save costs, a spokesperson told ICIS on Friday.

It added the job cuts would include redundancies and early retirements.

Covestro employed 16,501 people as of 31 December 2020, already a lower figure than the 17,201 workers it employed by the end of 2019.

The total workforce could be cut by up to 1,700 jobs, said the spokesperson; around 950 of the positions would go in its home market of Germany.

The spokesperson said a final decision on numbers has yet to be taken.

It added the company was already in consultations with trade unions in Germany and other countries about the cost cutting plan.

Covestro produces polyurethanes (PU), polycarbonates (PC), coatings and adhesives, among other petrochemicals-intensive materials.

EARNINGS BOOM
Covestro’s profitability has boomed in the past months; in April, it upgraded its earnings forecast for the year, which was again upgraded in July.

The company said earnings would be higher due to healthier-than-expected profit margins as well as the positive effect from the acquisition of Netherlands’ producer DSM’s resins and functional materials division, closed in April.

Covestro expects its earnings before interest, taxes, depreciation, and amortisation (EBITDA), a key metric to measure a company’s financial strength, at €2.7-3.1bn in 2021, up from €1.47bn in 2020.

In an interview with ICIS, its CEO Markus Steilemann said earlier in August the booming business environment is set to persist for a few more months.

On Friday, however, the spokesperson said that while business is currently booming “that situation will not last forever” and the company needed to be financially sound for when that happens.

“We need to make sure that we look at costs structures at all times,” it added.

Front page picture: Covestro’s headquarters in Leverkussen
Source: Friedemann Vogel/EPA-EFE/Shutterstock