Covestro on the Capital Market

Performance of Covestro shares versus market in fiscal year 2021

€ (Covestro shares)

Volatile Stock Markets Trend Upward

As in the previous year, the stock markets felt the effects of the global coronavirus pandemic in fiscal 2021, although the impact was considerably less severe. Year-over-year improvements in real economic factors represented a positive basis of assessment for the stock markets despite bottlenecks in global supply chains. Stock markets in Europe were therefore able to continue on their upward trajectory started in mid-2020. The European benchmark index EURO STOXX 50* outperformed its pre-pandemic level as early as the end of the first quarter of 2021. By the end of fiscal 2021, the stock markets saw positive performance amid volatility and closed out the year up significantly. The EURO STOXX 50 ended fiscal 2021 at 4,306 points, 20.6% higher than in the previous year, whereas the DAX finished the year at 15,885 points, an increase of 15.8% year over year.

European chemical stocks continued to follow the upward trend that had started in the second half of 2020, outpacing the market as a whole. As of December 31, 2021, the STOXX Europe 600 Chemicals** index was up 24.8% from its level at the beginning of the year. At a Xetra closing price of €54.20, Covestro’s share price also finished fiscal 2021 up, although the gain was moderate at 7.4% over December 31, 2020. Whereas the company raised its earnings guidance three times during the fiscal year, Covestro’s share price largely made sideways moves. Covestro’s share price marked its low for the year on November 30, 2021, closing at €49.84. The high for the year was €62.48 on March 2, 2021.

Including the 2020 fiscal year dividend of €1.30 per share paid out on April 21, 2021, Covestro’s stock performance (with dividend reinvestment) for fiscal 2021 was 9.9% compared with the 2020 year-end closing price of €50.48.

Dividend performance

Dividend per share carrying dividend rights (€)

At the end of the reporting period, Covestro’s market capitalization stood at €10.5 billion based on the capital stock of 193.2 million shares. The average daily Xetra trading volume was 0.9 million shares.

New Dividend Policy

When it published its 2020 financial statements, Covestro also announced in February 2021 that it would put its dividend policy on a new footing and thus create a stronger link to the Group’s overall business situation. Covestro’s current dividend policy stipulates a distribution to shareholders of between 35% and 55% of the Group’s net income. The aim is for the payout ratio to be around the lower end of the scale in years with strong earnings and around the higher end in challenging years.

Moody’s Confirms Covestro Rating and Lifts Outlook

On March 31, 2021, Moody’s Investors Service, London (United Kingdom), confirmed Covestro’s Baa2 investment-grade rating and lifted the outlook from negative to stable. Covestro intends to continue to maintain financing structures and financial ratios that support a solid investment-grade rating in the future.

Virtual Annual General Meeting Held on April 16, 2021

Covestro AG’s 2021 Annual General Meeting (AGM) was held on April 16, 2021. Due to the ongoing coronavirus pandemic, the company had decided early on to hold a virtual AGM as in the previous year to avoid exposing those present to additional health risks.

The AGM approved the dividend of €1.30 per share for the fiscal year 2020 proposed by the Board of Management and Supervisory Board. With a total distribution of €251 million to the shareholders of Covestro AG in April 2021, Covestro’s payout ratio amounted to 55%.

Furthermore, Lise Kingo was elected by the AGM as a new member of the Supervisory Board. She succeeded Ferdinando Falco Beccalli, who resigned effective at the end of the 2021 AGM. Among other things, Lise Kingo is an independent member of the Board of Directors at Sanofi SA, Paris (France), and until June 2020 was Chief Executive Officer (CEO) and Executive Director of the United Nations Global Compact, the world’s largest corporate sustainability initiative.

Euro Bond Repaid

On July 7, 2021, the euro bond placed in the year 2016 with a total volume of €500 million and maturing in October 2021 was fully repaid at par value ahead of schedule.

ADR Program Successful for Fifth Year

Since December 1, 2016, the American Depositary Receipt (ADR) program has granted global investors simplified access to Covestro shares. Covestro ADRs are traded over the counter in the United States under the COVTY ticker symbol. At the end of fiscal 2021, the total number of outstanding ADRs reached 3.6 million (previous year: 2.2 million).

Majority of Analysts Issue Buy Recommendation for Covestro Shares

At the end of the year 2021, Covestro was covered by 24 securities brokers. Of these, 17 analysts issued buy recommendations and six were neutral. One analyst recommended selling Covestro shares. The average share price target was approximately €69 at the reporting date.