Report on Economic Position – Performance of the Segments

Performance Materials

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Performance Materials key data1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4th quarter 20202

 

4th quarter 2021

 

Change

 

20202, 3

 

20213

 

Change

 

 

€ million

 

€ million

 

%

 

€ million

 

€ million

 

%

Core volume growth4

 

 

 

–0.8%

 

 

 

 

 

+0.3%

 

 

Sales (external)

 

1,594

 

2,259

 

+41.7

 

5,468

 

8,142

 

+48.9

Intersegment sales

 

257

 

596

 

>100

 

947

 

2,195

 

>100

Sales (total)

 

1,851

 

2,855

 

+54.2

 

6,415

 

10,337

 

+61.1

Change in sales (external)

 

 

 

 

 

 

 

 

 

 

 

 

Volume

 

 

 

+0.5%

 

 

 

 

 

+1.6%

 

 

Price

 

 

 

+37.6%

 

 

 

 

 

+48.1%

 

 

Currency

 

 

 

+3.6%

 

 

 

 

 

–0.8%

 

 

Portfolio

 

 

 

0.0%

 

 

 

 

 

0.0%

 

 

Sales by region (external)

 

 

 

 

 

 

 

 

 

 

 

 

EMLA

 

759

 

1,039

 

+36.9

 

2,572

 

3,878

 

+50.8

NA

 

340

 

582

 

+71.2

 

1,347

 

1,926

 

+43.0

APAC

 

495

 

638

 

+28.9

 

1,549

 

2,338

 

+50.9

EBITDA5

 

465

 

590

 

+26.9

 

896

 

2,572

 

>100

EBIT5

 

321

 

445

 

+38.6

 

323

 

2,003

 

>500

Cash flows from operating activities

 

327

 

665

 

>100

 

674

 

1,875

 

>100

Cash outflows for additions to property, plant, equipment and intangible assets

 

169

 

168

 

–0.6

 

498

 

488

 

–2.0

Free operating cash flow

 

158

 

497

 

>200

 

176

 

1,387

 

>600

1

Reference information calculated based on the organizational and reporting structure as of July 1, 2021.

2

Reference information based on fiscal 2019 is not presented here due to the new organizational structure.

3

Values calculated retroactively due to a change in market-rate compensation for transactions between the Performance Materials and Solutions & Specialties segments as of October 1, 2021; reference information restated accordingly.

4

Calculated on the basis of the definition of the core business effective March 31, 2021.

5

EBITDA and EBIT include the effect on earnings of intersegment sales.

The Performance Materials segment generated year-over-year of 0.3% in fiscal 2021. Volumes were positively affected mainly by the electrical, electronics and household appliances industry, particularly in the region. In the furniture and wood processing industry, however, core volumes sold were down across all regions. Solid global demand was offset by limited product availability, e.g., due to the impact of unplanned, weather-related production stoppages in the region in the first quarter of 2021. This limited the growth potential of the segment.

Sales in the Performance Materials segment were up 48.9% to €8,142 million in fiscal 2021 (previous year: €5,468 million). Driven by a still advantageous competitive situation, average selling prices increased sales by 48.1%. An increase in total volumes sold also had a positive effect on sales amounting to 1.6%. Exchange rate movements reduced sales by 0.8% in contrast.

In the region, sales grew by 50.8% to €3,878 million (previous year: €2,572 million) on account of a substantial increase in average selling prices. Sales were not noticeably affected by the changes in total volumes sold or in exchange rates. In the NA region, sales rose by 43.0% to €1,926 million (previous year: €1,347 million), with average selling prices exerting a strong positive effect. However, exchange rate movements had a slightly negative impact on sales. Total volumes sold had a neutral effect on sales overall. In the APAC region, sales climbed by 50.9% to €2,338 million (previous year: €1,549 million). Higher selling prices also gave sales a substantial boost in this case. At the same time, the expansion of total volumes sold had a significant positive effect on sales. In addition, changes in exchange rates increased sales slightly.

Performance Materials
Quarterly sales

€ million

Performance Materials Quarterly sales (bar chart)

Performance Materials
Quarterly EBITDA

€ million

Performance Materials Quarterly EBITDA (bar chart)

in the Performance Materials segment grew over the prior-year period to €2,572 million (previous year: €896 million). The key driver of this trend was the significant increase in margins due to an advantageous competitive situation. The higher margins were the result of a higher selling price level, which more than offset the rise in raw material prices. However, higher provisions for short-term variable compensation had a negative effect on earnings.

increased more than sixfold, amounting to €2,003 million (previous year: €323 million).

grew to €1,387 million (previous year: €176 million). This is due mainly to higher EBITDA. In contrast, an increase in funds tied up in working capital had a negative effect.

Core volume growth
Core volume growth refers to the core products in the Performance Materials and Solutions & Specialties. It is calculated as the percentage change in externally sold volumes compared with the prior year. Covestro also takes advantage of business opportunities outside its core business, for example the sale of precursors and by-products such as hydrochloric acid, sodium hydroxide solution, and styrene. These transactions are not included in core volume growth.
APAC
Comprises all countries in the Asia and Pacific region.
NA
Region comprising Canada, Mexico, and the United States.
EMLA
Comprises all countries in Europe, the Middle East, Africa and Latin America (excluding Mexico).
EBITDA/earnings before interest, taxes, depreciation and amortization
EBIT plus depreciation and amortization of property, plant, equipment, and intangible assets
EBIT/earnings before interest and taxes
Income after income taxes plus financial result and income tax expense
FOCF/free operating cash flow
Operating cash flows (pursuant to IAS 7) less cash outflows for additions to property, plant, equipment and intangible assets