International.
For Covestro, formerly Bayer MaterialScience, the IPO just a year ago marked the beginning of a new era as an independent company, and was a step that has allowed it to leverage its strengths more quickly, efficiently and flexibly in the face of a global competitive environment.
The first listing price for a Covestro security was €26 per share a year ago, an amount substantially higher than the €24 issue price. Since then, Covestro has performed well on the stock market: the current value of the shares exceeds 50 euros per share, more than double the issue price.
The increase in the share price reflects Covestro's excellent results. Over the past 12 months, the company has outperformed all stock indices where it is represented.
"All Covestro employees have good reason to be proud of this achievement," said Frank H. Lutz, Covestro's Chief Financial and Labor Officer.
The funds obtained from Covestro's initial public offering – which amounted to about 1,500 million euros – were mainly used to pay the debt with the Bayer group to achieve an investment rating grade. In June, the risk rating agency Moody's confirmed Covestro's Baa2 credit rating. Bayer's loans have been repaid in full and Covestro is listed on the STOXX Europe 600 and MDAX indices. Covestro has also managed to strengthen its already strong financial position with a bond issue in spring 2016 totalling €1.5 billion, a move that has provided it with even greater financial flexibility.
The company has already made use of this performance. Thus, and with the aim of responding to a growing demand, the company opened in July a large-scale facility in Shanghai, which will increase by 50,000 metric tons the annual production capacity of HDI, a raw material used in the manufacture of coatings and adhesives.
In addition, Covestro is using CO2 for the first time to produce plastics on an industrial scale and has invested around €15 million in its facilities in Dormagen (Germany) for the production of an innovative foam component containing 20% CO2, saving the corresponding amount of crude oil, the raw material traditionally used in the manufacturing process. For Covestro, this is an area with great potential in terms of improving sustainability.
Covestro's business operations also offer good news, as the company increased its estimates for the current fiscal year in July. The company continues to see potential possibilities for improvement. The company explained that so far it has not achieved all the objectives, especially in business processes and in some internal structures, explains Lutz.
The global economy is forecast to grow at an average annual rate of 2.5% through 2020 and demand in the areas in which Covestro operates is expected to increase at an annual average of 4%.
