Covestro has had a successful start to fiscal year 2022 and benefited from continuing buoyant demand in the first three months of this year. The Group’s sales increased by 41.6 percent, compared with the prior-year quarter, to EUR 4.7 billion (previous year: EUR 3.3 billion), in particular off the back of higher average selling prices. EBITDA grew in the first quarter by 8.5 percent to EUR 806 million (previous year: EUR 743 million). This is in part due, among other factors, to positive currency effects and an increase in total volumes sold. A sharp rise in raw material and energy prices was largely offset by a higher selling price level. The free operating cash flow (FOCF) fell by 94.7 percent to EUR 17 million as a result of lower cash inflows from operating activities, which were due to a price-driven increase in cash tied up in working capital (previous year: EUR 318 million). Net income in the first quarter of 2022 increased by 5.9 percent to EUR 416 million (previous year: EUR 393 million). 

 

“We’ve got off to a successful start in the new fiscal year. However, we recognise there are increasing political and economic uncertainties, especially in view of the war in Ukraine,” said Dr. Markus Steilemann, CEO of Covestro. “Given the current situation, it is clear that – now more than ever – we have to reduce long term dependency on fossil raw materials. Covestro is part of the solution to that: Without the chemical industry, the transformation to a sustainable industry landscape isn’t possible.” 

 

Given the ongoing coronavirus-lockdown in China, particularly around the Shanghai region, further significantly increasing energy and raw material costs and an assumed lower than expected global economic growth, Covestro reduced its guidance for fiscal year 2022 on May 2, 2022. The Group now expects EBITDA will be EUR 2.0 billion to EUR 2.5 billion (previous: EUR 2.5 billion to EUR 3.0 billion) and the FOCF will be EUR 400 million to EUR 900 million for the full year (previous: between EUR 1.0 billion and EUR 1.5 billion). The Group anticipates a return on capital employed over weighted average cost of capital (ROCE over WACC) between one percentage point and five percentage points (previous: between five and nine percentage points). Covestro’s greenhouse gas emissions measured as CO2 equivalents are now projected to rise to between 5.5 million and 6.0 million metric tons (previous: between 5.6 and 6.1 million metric tons). The Group anticipates EBITDA for the second quarter will be EUR 430 million to EUR 530 million.

 

“We benefited from continuing high demand in the first quarter. Since the Ukraine war began, however, we have seen a significant increase in the risks to our energy supply and supply chains. That is compounded by a weakening global economy, as well as the challenges still posed by the impacts and restrictions related to the coronavirus pandemic, in particular in China,” stated Dr. Thomas Toepfer, CFO of Covestro. “We have consequently decided to adjust our guidance for the full year. We are continuously monitoring further developments so that we can steer Covestro as best as possible through these times.” 

 

After Covestro restructured its setup last year by reorganizing its three former reportable segments into the segments “Performance Materials” and “Solutions & Specialties,” the Group is reporting in its new control system for the first time in fiscal 2022. Instead of core volume growth as a KPI, Covestro has used EBITDA as a key indicator for growth since the beginning of the year. The company has also added a sustainability component for the first time, which is measured by direct and indirect (scope 1 and 2) greenhouse gas emissions.