By Patricia Weiss and Bartosz Dabrowski

(Reuters) -Germany's Covestro on Tuesday cut its 2025 core profit expectations and said it would implement its strategy of production in the same region that it sells, as higher U.S. tariffs threaten to erode the chemical maker's earnings.

The company narrowed the range of its expected 2025 earnings before interest, tax, depreciation and amortisation to 1 billion to 1.4 billion euros ($1.13 billion to $1.59 billion). It had previously forecast EBITDA in a range of 1.0-1.6 billion euros.

Covestro said it continued to cut costs in the first quarter, permanently closing its Propylene Oxide Styrene and Monomer production unit at the Maasvlakte site in the Netherlands, together with LyondellBasell.

It had said last year that by the end of 2028, it hoped to save 400 million euros in material and personnel costs globally, with under half of that coming from Germany.

Domestic production in each region would mean savings, "because many of our products are difficult to travel across the oceans and are associated with relatively high transport costs," CFO Christian Baier told Reuters, with the regions of local production including Asia and the United States.

Following an unprecedented drop in order volumes amid soaring energy prices and high inflation since 2022, the energy-intensive chemicals sector faces possible U.S. import tariffs of at least 10%.

Covestro's EBITDA fell 50% to 137 million euros in the January-March period but surpassed analysts' average estimate of 125 million euros in a company-provided consensus.

Shares fell 1.1% in early trading.

In April, a regulatory filing on the European Commission website showed EU antitrust regulators would decide by May 12 whether to clear Abu Dhabi state oil giant ADNOC's 15.9 billion euro ($17.2 billion) planned takeover of Covestro.

($1=0.8831 euros)

(Reporting by Bartosz Dabrowski and Patricia Weiss; Editing by Eileen Soreng and Bernadette Baum)