(Reuters) - German chemicals maker Covestro reported forecast-beating third-quarter profits on Tuesday, citing cost cuts and a recovery from a pandemic-induced slump driven by strength in its Asia-Pacific and furniture component units.
The group, whose main products include foam chemicals used in mattresses, furniture upholstery and car seats, saw demand from the furniture industry rise 6% year-on-year, led by Asia-Pacific, Chief Executive Markus Steilemann told a conference call.
A key driver behind the increase has been people refurbishing their homes with new sofas and mattresses instead of spending money to travel, Steilemann said.
“I think there is a stronger trend that we’re currently seeing, a societal trend that people are focusing more towards home,” the CEO said.
“I would believe that this trend will also last longer than one or two quarters, maybe longer than one and two years,” he added.
Covestro said net income for the three months ending Sept. 30 was 179 million euros ($212 million), compared with 147 million euros a year earlier and an average 112 million euros expected by analysts in a company-provided poll.
Its rebound should continue into the fourth quarter, finance chief Thomas Toepfer told Reuters.
“While our guidance is subject to the risk of a second massive lockdown, we do not expect that at the moment and see ourselves absolutely on track to reach the targets,” he said.
Recovery across all segments and regions, especially China, balanced out softer demand from the automotive industry, Toepfer said.
Covestro’s acquisition of Dutch peer DSM’s paint and coating component unit should also reduce its exposure to car production, Toepfer said, though he added he still expects to sell more products to carmakers long term.
The company confirmed the preliminary sales, earnings before tax, and guidance adjustments it announced at the beginning of the month.
($1 = 0.8461 euros)
Reporting by Zuzanna Szymanska in Gdansk; Editing by Rashmi Aich, Mike Harrison and Jan Harvey
Our Standards: The Thomson Reuters Trust Principles.