(Adds company, analyst comments, updates shares)
By Zuzanna Szymanska
July 9 (Reuters) - Covestro’s preliminary second-quarter net loss and earnings before taxes have come in above the market’s consensus expectations due to higher demand for its products in June, the German chemicals group said on Thursday.
The global coronavirus crisis had hurt Covestro’s first-quarter numbers and 2020 outlook as key customers from the automotive and electronics industries had to shut down factories because of the pandemic.
“The (consensus) beat is attributable to higher demand in June of this year, especially in the last weeks,” Covestro’s spokesman said.
The former Bayer subsidiary said its preliminary net loss came in at around 60 million euros ($67.95 million) versus a loss of 107 million expected on average by analysts in a Vara Research consensus published on July 8.
Analysts in the Vara Research consensus expected the company to recover gradually after making a loss for two consecutive quarters, but their estimate for the period ending on June 30 had included a much wider loss.
The situation is still not clear enough to say that Covestro’s third quarter is also going to be much better than the market’s expectations, Covestro’s spokesman said.
Covestro shares were up 5.2% at 1315 GMT.
JP Morgan analysts said Covestro’s second-quarter volumes implied a single-digit percentage decline in June, an improvement from the slump of about one third that the company experienced in April and May.
The consensus beat is driven by a strong core profit in Covestro’s polycarbonate division, JP Morgan said.
Polycarbonates are a type of hard plastic that manufacturers use for car interiors, electronic equipment and toys.
JP Morgan analysts said commodity polycarbonate spreads in China improved thanks to lower raw material prices in the second quarter, which should have helped Covestro.
The company generates over 20% of revenues and holds more than 30% of its assets in China.
Preliminary earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to 124 million euros in the second quarter versus consensus forecasts for EBITDA of 80 million euros, Covestro said.
The company is due to report half-year earnings on July 23.
$1 = 0.8830 euros Reporting by Zuzanna Szymanska in Gdansk; editing by Jason Neely and Jane Merriman