So far, so good for new firm Covestro

FRIEDRICHSHAFEN, Germany—Covestro A.G. has entered a new world that's curious, courageous and colorful.

Those are the three core values adopted by the new firm, which came into existence Sept. 1 when Bayer A.G. spun off its Bayer MaterialScience unit into a separate company. The new firm is a major global supplier of polycarbonate, polyurethane and other specialty materials.

“We like this focus, and we like the arena we work in,” CEO Patrick Thomas said at an Oct. 15 news event at Fakuma 2015. “There's not another polymer that we want to go out and add to our portfolio.”

Leverkusen, Germany-based Covestro generates 47 percent of its sales from Europe, the Middle East, Africa and Latin America; 26 percent from North America and 15 percent from China.

Automotive is the new firm's largest end market with a 22 percent share. That's closely followed by construction at 19 percent and furniture at 18 percent. Covestro employs 14,200 worldwide and posted sales of $13.2 billion in 2014.

Covestro officials are confident of a rebound in the PC market, which has struggled in recent years. That struggle was due in part to a major reduction in the optical media market, which included compact discs and DVDs.

Global PC demand is set to grow at a 4.6 percent annual rate between 2014-20, officials said, driven by global needs for lower-emission vehicles, food preservation and affordable housing. PC margins currently are at trough levels, but are on an upward trajectory because of increasing utilization rates, according to Rainer Rettig, who heads commercial PC operations in the Europe/Middle East/Africa/Latin America region.

Many PC makers stopped adding capacity during the recession, leading to expected annual capacity growth of only 1.9 percent from 2014-20. But Covestro continued to add capacity and as a result is well-positioned, officials said.

“We're getting into an interesting phase where (PC) demand is catching up with supply,” Thomas added.

The automotive market also holds great potential for Covestro in the form of self-driving cars and stronger-yet-lighter composites. “In mobility, the age of plastics has just begun,” Rettig said. “If vehicles are using more plastics, I'm super-convinced there will be more polycarbonate.”

Covestro already has seen benefits from operating as an independent company separate from Bayer. Thomas said the firm was able to close an outdated Brazilian plant making PU feedstock MDI. Previously, the plant remained open to avoid a strike at a Bayer crop protection unit at the same site.

“In the past, it was difficult to make choices on plant optimization because of conflicts of interest,” Thomas added. “Now we're on our own two feet and can make decisions much faster.”

Products in focus for Covestro at Fakuma 2015 included:

• Bayblend-brand PC/ABS for e-bike batteries, as well as for lithium-ion rechargeable batteries. The lithium-ion batteries are made under the GreenPack trade name by Constin GmbH of Berlin.

• Bayblend grades for lightweight decorative components in vehicles.

• Makrofol-brand PC films with a variety of matte levels.

• Carbon fiber-reinforced PU composites for reducing vehicle weight

• TPU and other high-performance polymers for 3D printing.

• A range of color grades of Makrolon-brand PC.

In addition to Thomas—a 36-year chemicals veteran who joined Bayer in 2006—Covestro is led by chief financial officer Frank Lutz, production and technology head Klaus Schaefer and innovation head Markus Steilemann. Those four also make up Covestro's management board.