FRANKFURT (dpa-AFX) - A surprise annual loss exacerbated the recent slide in Covestro shares on Monday - but only briefly. After four days of losses in a row, the securities of the plastics group initially slumped by around five percent in early trading, but quickly recovered and even turned noticeably positive in the late morning.

According to experts, it had already become apparent that Covestro would no longer be able to achieve its operating profit forecast and would even post a loss below the line due to write-downs. Investors are also hoping that the worst is now behind the company.

Covestro shares recently rose by almost 2 percent to 41.11 euros. The leading German index, the Dax, was moderately up.

Valuation allowances on deferred tax assets and high write-downs on fixed assets had pushed Covestro into the red in 2022. The company also performed worse than expected in its day-to-day business due to high gas and energy costs and weak demand. Shortly before the end of the year, there was also damage to the group's chlorine electrolysis plant in Uerdingen, Germany, which affected production of rigid plastics and the rigid foam precursor MDI.

Because of the 2022 loss, the dividend could now wobble. Analyst Chetan Udeshi of U.S. bank JPMorgan pointed out that the payout is based on net profit and is therefore likely to be omitted for 2022 and 2023. In sum, the expert fears a further significant correction of market expectations.

Georgina Fraser from the U.S. investment bank Goldman Sachs, however, emphasized that Covestro had already hinted at the risk of write-downs and the dividend risk. Beyond that, the expert was also quite confident: The opening of China after the Corona pandemic and a possible restocking by Covestro customers from the second quarter onwards would certainly give cause for a certain optimism.

Analyst Geoff Haire from the major Swiss bank UBS also expressed a rather relaxed view. He said the plastics group's key figures for 2022 were a "reality check" for investors, but not a surprise. Cash inflow even exceeded expectations, he said, and the cash flow yield was a support for the shares.

Analyst Peter Spengler of DZ Bank also drew a rather positive conclusion. "Even if the reported figures are disappointing, we might have reached the bottom of the business development."

Covestro papers have gained almost twelve percent since the beginning of the year. The Dax "only" managed a gain of eight and a half percent in this period. In 2022, they were nevertheless among the biggest losers in the leading index, with a price loss of around one-third.

From a chart perspective, Covestro shares have found support at the 21-day average line, which describes the short-term trend. Additional support has been provided since the beginning of the year by the 50-day and 200-day lines, which run slightly below the current price./la/mis/jha