Deep Dive on EUR Chems & Autos: Winners & Losers

Executive Summary

• In this deep dive report on European Chemicals, we analyse in detail the exposure of companies to the auto sector, in combination with the nature of their businesses and geographies.
• The companies that are most exposed to risks in the auto sector are BASF and Covestro, as well as Polynt and Syensqo.
• The winners in our coverage include Italmatch and Synthomer (low exposure to cyclical parts of auto), Kem One and Nobian and agri-focused companies K+S, OCI, and Syngenta (low exposure).
• Other names with high, though more manageable exposure to autos, include Akzo Nobel, Air Liquide and Linde, INEOS Group, and Solvay. We see moderate exposure for Arkema, INEOS Quattro, and Sika.

Relative Value

In this deep dive report, we analyse the exposure of companies in our European chemicals coverage (across IG and HY) to the automotive industry. We assess each company’s risks in the auto sector based on their exposure (estimated contribution to group sales), in combination with their businesses and their geographies. Indeed, dynamics in the auto sector could vary depending on segments and regions. The geographical breakdown of sales and assets in our European coverage is available in the following primer report: EUR Chemicals Primer: Elementary FAQ.

Based on our analysis, the companies that are most exposed to risks in the auto sector are BASF and Covestro, as well as Polynt and Syensqo; this mainly reflects their high exposure to cyclical parts of auto (new vehicles). Polynt and Syensqo’s risks appear better mitigated than BASF and Covestro due to their higher exposure to North America than Europe. From a credit perspective