Covestro’s business performance in the third quarter of 2022 was, as expected, strongly impacted by high energy and raw material prices in the face of the current European energy crisis however, Group sales grew 7.3 percent compared with the prior-year quarter to EUR 4.6 billion (previously EUR 4.3 billion) as a result of exchange rate movements and a considerably higher price level, especially in Europe.

EBITDA fell by 65 percent to EUR 302 million (previously EUR 862 million), meaning that Covestro met its EBITDA forecast for the third quarter. The main reasons for the decline in earnings were lower margins, since the Group was able to offset the sharp rise in raw material and energy prices only to a small extent by a higher selling price level. The fall in total volumes sold also reduced earnings.

The free operating cash flow (FOCF) fell by 91.3 percent to EUR 33 million (previously EUR 381 million), in particular due to the lower cash flows from operating activities. Net income in the third quarter was down by 97.5 percent to EUR 12 million (previously EUR 472 million).

“We will have to cope with this unprecedented environment for the time being. We’re therefore using all the levers available to us to steer Covestro through the current situation,” said Dr. Markus Steilemann, CEO, Covestro.

“In particular, the unparalleled price increases for fossil fuels show that Covestro’s strategic focus on becoming fully circular is the right path. Our products are vital in paving the way for a fossil-free future,” said Steilemann. 

"In view of the energy crisis in Europe and a weakening global economy, Covestro is systematically ensuring its economic ability to maneuver. The company is taking short- and medium-term cost-cutting measures, for example. Covestro has also initiated various measures to reduce its gas requirements in Germany and continues to work on making its processes even more energy-efficient. Technical optimization measures, for instance, are helping to improve energy efficiency in production. One example is the use of digital sensors to monitor steam traps, enabling Covestro to use steam as efficiently as possible in production," added Steilemann.

“The further significant weakening in overall economic conditions is also affecting our business performance. Despite the significant burdens from very high energy and raw material prices, we achieved our EBITDA forecast for the third quarter,” said Dr. Thomas Toepfer, CFO, Covestro.

“Based on these results, we still expect to achieve the targets we have set ourselves for the full year as well,” added Toepfer.

Covestro has narrowed the full-year guidance for 2022 that it issued on July 29, 2022, and now anticipates that EBITDA will be between EUR 1.7 billion and EUR 1.8 billion (previously between EUR 1.7 billion and EUR 2.2 billion) and that the FOCF will be between EUR 0 million and EUR 100 million (previously between EUR 0 million and EUR 500 million).

Return on capital employed over the weighted average cost of capital is expected to be between minus two percentage points and minus one percentage point (previously between minus two and plus two percentage points). GHG emissions measured as CO2 equivalents are projected to be between 5.0 million metric tons and 5.4 million metric tons (previously between 5.3 million metric tons and 5.8 million metric tons).

Sales in the Performance Materials segment in the third quarter of 2022 rose by 6.6 percent compared to the prior-year quarter and were EUR 2.3 billion (previously EUR 2.2 billion).

Sales in the Solutions & Specialties segment in the third quarter of 2022 rose by 6.1 percent compared with the prior-year quarter to EUR 2.2 billion (previously EUR 2.1 billion), mainly due to exchange rate movements and a higher selling price level. In contrast, the total volumes sold – due in particular to a downturn in demand – had a negative effect.