By Bartosz Dabrowski and Patricia Weiss
(Reuters) -German chemicals maker Covestro missed second-quarter sales expectations on Thursday as U.S. trade policies weighed on prices, but expressed confidence its takeover by Abu Dhabi’s ADNOC would be sealed this year despite an EU competition probe.
Covestro, whose products include foam chemicals used in mattresses, car seats and insulation for buildings, said the prospect of U.S. higher tariffs had led to a huge oversupply of products to the market there, particularly from the Asia-Pacific region, which had then caused by a big drop in prices.
The company’s revenues fell 8.4% to 3.38 billion euros ($3.86 billion) in April-June, missing analysts’ average estimate of 3.55 billion euros in a company-provided consensus.
“At the moment, demand is too weak to absorb the partial oversupply,” Chief Financial Officer Christian Baier told Reuters in an interview.
Earlier this month, Covestro cut its full-year earnings forecast for the second time this year. It now sees earnings before interest, taxes, depreciation and amortisation within a range of 700 million euros to 1.1 billion euros, down from a previously expected 1 billion euros to 1.4 billion euros.
ADNOC EXPECTATIONS UNCHANGED
Baier said Covestro’s 14.7-billion-euro takeover by Abu Dhabi state oil giant ADNOC should be finalised in the second half of the year, despite European Union regulators saying on Monday that they had opened an investigation into potential market distortions from the deal due to foreign subsidies.
“We are very confident that we will implement the transaction in the second half of the year,” Baier said.
At 0835 GMT, Covestro shares were up 0.5% at 60.56 euros.
ADNOC struck the deal last October, marking its biggest ever acquisition and one of the largest foreign takeovers of an EU company by a Gulf state.
($1 = 0.8751 euros)
(Reporting by Bartosz Dabrowski and Patricia Weiss. Editing by Mrigank Dhaniwala and Mark Potter)
