A tale of two stocks

25 October 2016 By Olaf Storbeck

Plastics maker Covestro’s share price has doubled in the past year whereas that of its former parent is heavily weighed down by the pricey acquisition of U.S. seed maker Monsanto. Their divergent destinies are a lesson in how focus can beat a restless hunger for mega-deals.

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German plastics maker Covestro, on Oct. 25 reported better-than-expected earnings for the third quarter, boosted by growth in China and by rivals' production outages. Adjusted for special items, the group’s EBITDA rose 22 percent from a year earlier to 574 million euros, above the 506 million euros expected on average in a Reuters poll of analysts.

Covestro is now targeting 2016 adjusted EBITDA of around 1.9 billion euros, up from 1.64 billion euros in 2015 and above its previous guidance of at least 1.78 billion. The Leverkusen-based plastics maker was spun out of German chemical giant Bayer a year ago. Bayer still owns 69 percent of Covestro’s shares but plans to reduce its stake further.

Shares in Covestro were down 1.67 percent to 52.47 euros by 1037 BST on Oct 25.

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