Covestro reduces its forecast for earnings outlook for 2022

Covestro reduces its forecast for EBITDA, free operating cash flow (FOCF), return on capital employed over weighted average cost of capital (ROCE over WACC) and greenhouse gas emissions, measured via CO2 equivalents, for fiscal year 2022, said the company.

This is a consequence of a recent significant further increase in energy costs and a further weakening global economy.

Covestro adjusts its forecast for fiscal year 2022 as follows: EBITDA is expected to be between EUR 1,700 million and EUR 2,200 million. The previous forecast projected EBITDA between EUR 2,000 million and EUR 2,500 million. The consensus expected this figure to be EUR 2,342 million.

Free operating cash flow (FOCF) is expected to be between EUR 0 million and EUR 500 million. The previous forecast projected FOCF between EUR 400 million and EUR 900 million. The consensus expected this figure to be EUR 598 million.

Return on capital employed over weighted average cost of capital (ROCE over WACC) is expected to be between -2 and +2 percentage points. The previous forecast projected ROCE over WACC between +1 and +5 percentage points.

Greenhouse gas emissions, measured via CO2 equivalents, are expected to be between 5.3 million tons and 5.8 million tons. The previous forecast projected greenhouse gas emissions between 5.5 million tons and 6.0 million tons.
In the second quarter 2022, Covestro EBITDA was EUR 547 million, which is slightly above the previous forecast between EUR 430 million and EUR 530 million. This was supported by a faster than expected normalization of the lockdown-burdened supply chain situation in China. The consensus expected this figure to be EUR 509 million. Second quarter 2022 FOCF was EUR -462 million. This included the bonus pay-out for the fiscal year 2021 of EUR 475 Mio.

Third quarter 2022 EBITDA is expected to be between EUR 300 million and EUR 400 million. The financial report for the second quarter 2022 will be published on August 2, 2022.

As per MRC, Neste, Covestro and South Korean petrochemical company SK geo centric are cooperating to enable the production of a major polyurethane raw material based on renewable raw materials via mass balance. The cooperation will see Neste provide SK geo centric with renewable Neste RE, an ISCC certified feedstock for polymers and chemicals made from 100% renewable raw materials such as waste and residue oil and fats.
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U.S. oil refiner Valero Energy Corp plans to operate its 14 refineries between 90%-93% of their combined total processing capacity in the third quarter, said Hydrocarbonprocessing, citing Bhullar, vice president of investor relations, during a conference call.

The top end of the company's operational plans are near the 94% the company's refineries operated at in the second quarter when Valero saw billions in profits on increased demand because of the recovery from the coronavirus pandemic amidst reduced global refining capacity. Gary Simmons, executive vice president and chief commercial officer, said demand for motor fuels continued at a record pace in June.

"There's really no indication of any demand destruction, Simmons during the conference call to discuss second quarter results. "In June, we actually set sales records. We sold 911,000 barrels a day (of motor fuels) in the month of June, which surpassed our previous record in August of '18 where we did 904,000 barrels a day." Lane Riggs, Valero's chief operating officer, said the company has shifted production to increase diesel output, as have other refiners, to make up for a diesel shortfall.

Third quarter production is planned to between 2.84 million bpd, or 90%, and 2.95 MMbpd, or 93%, of total combined throughput capacity, Bhullar said. The company's seven U.S. Gulf Coast refineries will operate at between 1.72 MMbpd, or 93%, and 1.77 MMbpd, or 95%, in combined capacity, he said.

Mid-continent refineries in the Texas panhandle, Oklahoma and Tennessee, are planned to run between 420,000 bpd, or 87% and 440,000 bpd, or 91%, in combined throughput. Two refineries in California will operate up to 90% of combined capacity. Refineries in Quebec and Wales are planned to run up to 92% of combined capacity.

As per MRC, Valero Energy Corp has issued an all-clear after a fire at its 205,000-bpd Houston, Texas, refinery and said the facility has been returned to routine operations, according to a community alert message. The fire has been extinguished. All personnel has been accounted for.
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Privately-backed CapturePoint LLC has submitted an application to build a carbon capture storage facility in Rapides Parish, Louisiana, roughly 90 miles north of Lafayette, according to a filing with the Environmental Protection Agency, said Reuters.

The application, a so-called "Class VI well permit" required to permanently sequester carbon, was filed in June, a company spokesperson said, declining to comment on the size or scope of the project. The development is one of several proposed in Louisiana, which would take emissions from refineries and industrial facilities and store them underground.

Many energy companies have viewed carbon capture as a way to lower greenhouse gas emissions, but the projects also face resistance from environmental groups, which would rather see a move away from fossil fuels altogether. Several other carbon capture projects are proposed for Louisiana, including one by Occidental Petroleum in Allen, and a joint venture between TotalEnergies, a unit of Sempra Energy, Mitsui & Co, and Mitsubishi Corporation at the Cameron LNG facility.

Louisiana is in the process of obtaining enforcement authority for Class VI wells from the EPA, which would speed up the approval of projects. The state does not currently have a time estimate for when that might be granted, a spokesperson for Louisiana's Department of Natural Resources said. The EPA only has two active Class VI well permits, both for Archer Daniels Midland in Illinois, and around two dozen pending permits. Allen, Texas-based CapturePoint currently has enhanced oil recovery operations, which injects carbon into old wells to boost production, and carbon pipelines.

We remind, U.S. crude oil stockpiles fell last week, driven by a surge in exports to an all-time high due to the big discount for U.S. crude when compared with international benchmark Brent. Crude inventories dropped 4.5 MM barrels to 422.1 MM barrels in the week ended July 22, compared with analysts' expectations in a Reuters poll for a 1 MM-barrel drop, the U.S. Energy Information Administration said on Wednesday. The decline was in large part the result of a surge in crude exports to a record 4.5 MMbpd in the latest week.
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The Chemours Company (Wilmington, Del.) announced that it will be expanding its Chemours Opteon YF (HFO-1234yf) capacity to help meet customer needs as they continue transitioning to lower GWP refrigerants, said the company.

The Opteon YF and YF blends refrigerants are now used in millions of vehicles and thousands of retail stores around the world, with zero ozone depletion potential (ODP) and global warming potential (GWP) that is significantly lower than the legacy refrigerants.

Chemours considers the USD80 million capacity expansion project a critical growth investment that supports market demands and aligns with Chemours corporate responsibility targets, delivering high returns and delivering on our purpose. When Chemours opened the facility in June 2019, it more than tripled the company’s capacity of Opteon™ YF, making it one of the world’s largest HFO-1234yf production facilities, a distinction it will retain with this project. This investment, along with on-going de-bottlenecking projects, will further increase site capacity by approximately 40%.

“This expansion demonstrates Chemours’s devotion to our customers, the communities in which we live and work, and the health and sustainability of the planet,” said Alisha Bellezza, president of Thermal & Specialized Solutions at Chemours. “Opteon YF is a game-changing refrigerant solution accelerating global sustainability initiatives. As demand increases, we are proud to make the investment that will help our customers navigate the complex regulatory landscape while supporting their bottom line with a high-performing, readily available product."

The refrigerants manufactured by Chemours in Ingleside, Tex.—which is 20 minutes outside of Corpus Christi—will be delivered to a rapidly growing base of customers around the world. In the mobile air conditioning market, the number of vehicles on U.S. roads using HFO-1234yf is estimated to be at least 80 million. Since the opening of the production facility, several equipment manufacturing companies have also selected Opteon products for residential and commercial HVAC applications. By 2025, Chemours estimates that its low-GWP product line will eliminate an estimated 325 million tons of carbon dioxide equivalent globally.

We remind, Chemours is partnering with corporate, academic and government experts to develop a sustainable way of recovering titanium dioxide (TiO2) and polymers from plastic products. The three-year project, which is called Remove2Reclaim, aims to develop larger detection and extraction recycling technologies to separate TiO2 and polymers from plastic products so they can be re-used. As a result, there can be greater applications and a wider range of end-use products made from recycled plastic. The project has already led to innovations in identifying and sorting plastic waste that contains TiO2 and solvent-based methods of removing TiO2.
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Petrobras' Brazil-listed shares jumped almost 7% on Friday, hitting a 12-year high, after the state-run oil company smashed quarterly profit estimates and announced a record dividend payment, said Reuters.

The company announced a USD17 B dividend payout, the largest ever, sending the firm's shares up some 3.3% in intraday trade. After the market close, the firm posted a second-quarter profit of 54.33 B reais, well above analysts' estimates, buoyed by higher margins in its fuel business. The company was on track for its fifth straight day in the black, with accumulated gains this week coming to 16%.

Petrobras' share performance illustrates how the street has been wooed by a generous dividend policy, solid profits and high demand for the company's products given the supply crunch provoked by the War in Ukraine, even as the firm has spent much of 2022 in a management crisis. The company has had four chief executives this year, and is set to replace its board in August. Should former leftist president Luiz Inacio Lula da Silva win the October election - which polls indicate is likely - a major strategy shift would almost certainly ensue.

In a note to clients, analysts at Brazil's Itau BBA called Petrobras' dividend payment "very positive," saying it exceeded even the bank's "bullish" estimate. In a call with analysts on Friday, executives said they expected the company's high refinery utilization rates to continue through the rest of 2022. Utilization rates hit 99% this week, said downstream chief Rodrigo Costa e Lima, and they should average 86% through the second half of the year.

Executives also sought to assuage any concerns provoked by a recent policy change allowing the board to review domestic fuel pricing, saying board members have no veto power over executives' pricing decisions. On the call, executives also said that the company's ambitious divestment program was still full-steam ahead. In particular, the company was positively surprised by the interest Petrobras had received for a number of refineries it still has on the block, said Chief Financial Officer Rodrigo Araujo. Preferred shares in the company were up 6.5% in afternoon trade, while the nation's benchmark Bovespa equities index had climbed 1.1%.

As per MRC, Petrobras’ PBR eligibility committee recently stated that two of the Brazilian government's seven nominees for a refurbished board at the company did not meet the requirements to hold the position. Brazilian President Jair Bolsonaro picked the two ineligible nominees – Jonathas Assuncao Salvador Nery de Castro and Ricardo Soriano de Alencar. Both of them, however, are not qualified to become the board members of PBR based on the company’s internal bylaws, the committee established, per the minutes of its last meeting.

As per MRC, Petrobras’ PBR eligibility committee recently stated that two of the Brazilian government's seven nominees for a refurbished board at the company did not meet the requirements to hold the position. Brazilian President Jair Bolsonaro picked the two ineligible nominees – Jonathas Assuncao Salvador Nery de Castro and Ricardo Soriano de Alencar. Both of them, however, are not qualified to become the board members of PBR based on the company’s internal bylaws, the committee established, per the minutes of its last meeting.
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