Covestro’s lower than average selling prices and decreased sales volumes, resulting from weak global demand, led to a decline in Group sales in 2023. Compared to the previous year, 2023 saw a decrease in sales by € 3.6 billion (–20%) to € 14.4 billion (previous year: € 18 billion). EBITDA fell by € 537 million (–33.2%) to € 1.1 billion (previous year: € 1.6 billion).

The performance in fiscal year 2023 was significantly affected by a challenging economic environment. While geopolitical crises had a lasting negative impact on global demand and selling prices, energy and raw material costs, especially in Europe, remained well above the historical average.

Although net income in fiscal year 2023 remained negative at € –198 million, it nevertheless improved slightly compared to the previous year (€ –272 million). In addition, thanks to consistent working capital management, Covestro again generated a positive free operating cash flow (FOCF) of € 232 million (previous year: € 138 million). ROCE above WACC was –6.1 percentage points (previous year: –5 percentage points). Greenhouse gas emissions for Scope 1 and 2 rose slightly to 4.9 million metric tons of CO2 equivalents (previous year: 4.7 million metric tons). This is among others due to a more emission-intensive energy mix for purchased power and steam in the United States and Germany last year.

“2023 was one of the most difficult years for the chemical industry in recent decades with ongoing geopolitical tensions, an ailing global economy and high energy prices, especially in Europe. In addition, there are a number of structural problems, especially in Germany. The overall weak demand for our core industries is reflected accordingly in our earnings,” says Dr. Markus Steilemann, Chief Executive Officer of Covestro.

“That is why we have been even more resolute in driving the implementation of our strategy “Sustainable Future” in the past year. For this, we are relying on four key levers: We are permanently getting more out of our facilities, we are boosting sales volumes and optimizing capacity utilization, we are focusing on high-margin demand and, last but not least, we will continue to be cost-conscious. In doing so, we continue to put all our energy into Covestro’s transformation in 2024.”

With a negative net income in 2023, the Covestro Board of Management made the decision not to distribute any dividend for the fiscal year 2023. This decision was made in keeping with the Group’s dividend policy, which calls for a payout ratio of between 35% and 55% of net income. Covestro has created a stronger link to the Group’s overall business situation.

Meanwhile, the company has expanded the foundation for sustainable growth.

“2023 was again defined by a weak global economy. As a result, although we closed the fiscal year in line with our estimates, we want to get back on track for growth, particularly with regard to our volumes and EBITDA performance,” says Christian Baier, CFO of Covestro. “To that end, in 2023, as part of our growth strategy, we implemented important principles: We are cutting costs, continuing to invest in the right places, ensuring that our plants have the right capabilities to deliver, and leveraging efficiencies. We are therefore taking the right steps to position ourselves for long-term sustainable growth.”

Despite the very challenging environment in 2023, Covestro has continuously worked on optimizing its production processes in the past fiscal year. For example, the company improved the energy efficiency of its production facilities in Shanghai, China, and Dormagen, Germany. In addition, the Group reduced its fixed costs by a mid three-digit million euro amount in 2023.

At the same time, Covestro invested in the expansion of its sustainable product range and production capacities, which also included commissioning a polycarbonate compounding plant for mechanical recycling at its site in Shanghai, China last year. Covestro will thus be able to supply more than 60,000 metric tons of high-quality polycarbonates made from mechanically recycled materials annually in the Asia-Pacific region by 2026.

Covestro expects economic conditions to remain challenging in 2024. The company will therefore pay special attention to leveraging its own potential in 2024 to achieve even greater efficiency. Against this backdrop, the Group expects EBITDA of between € 1 billion and €1.6 billion for fiscal year 2024.