Organization and Business Model
Organization
Covestro is one of the leading global suppliers of high-tech polymer materials and application solutions developed for these materials. Covestro AG, the parent company of the Covestro Group, is headquartered in Leverkusen (Germany). It is listed on the stock exchange in Germany and is included in the DAX, Germany’s leading index. Covestro has two reportable segments, Performance Materials (PM) and Solutions & Specialties (S & S). The segments comprise seven business entities. These are set up according to their respective success factors. All mission-critical operations along the value chain are incorporated into these business entities. Covestro has thus focused its businesses perfectly on the requirements of individual markets and aligned them with its customers’ needs.
- See “Group Strategy.”
- See note 4 “Segment and Regional Reporting” in the Notes to the Consolidated Financial Statements.
The Performance Materials segment forms a separate business entity comprising Covestro’s standard urethane components, standard polycarbonates, and base chemicals businesses. The focus here is on reliably delivering standard products at competitive cost. The Solutions & Specialties segment comprises six business entities: Engineering Plastics, Coatings & Adhesives, Tailored Urethanes, Thermoplastic Polyurethanes, Specialty Films, and Elastomers. In this segment, Covestro combines sophisticated products with a high pace of innovation and application technology services.
In addition, the Group has established central corporate functions which work toward the further long-term development of Covestro (Build), for instance permanently ensuring the Group’s competitiveness and supporting efficient corporate governance (Run).
Group structure
As of December 31, 2022, the Covestro Group comprised 60 consolidated companies in 21 countries in addition to Covestro AG, and employed 17,985 people*.
*The number of permanent or temporary employees is stated in full-time equivalents (FTEs). Part-time employees are included on a pro-rated basis in line with their contractual working hours.
The Board of Management of Covestro AG runs the company on its own responsibility with the goal of sustainably increasing the company’s enterprise value, and determines and pursues its corporate objectives. It defines the company’s portfolio, allocates resources, and decides on both the financial and nonfinancial steering and reporting of the Covestro Group.
Covestro’s Chief Executive Officer (CEO) is Dr. Markus Steilemann. His area of responsibility includes the corporate Strategy; Sustainability & Public Affairs; Group Innovation; Corporate Audit; Human Resources; and Communications functions.
Sucheta Govil is Covestro’s Chief Commercial Officer (CCO). She is in charge of the seven business entities, including all business-related processes and areas of production, from procurement and application technology to sales. In addition, she is responsible for the three regional Supply Chain & Logistics units, which handle internal and external supply chains worldwide.
Dr. Klaus Schäfer is the company’s Chief Technology Officer (CTO). He is responsible in that role for the corporate functions of Process Technology; Engineering; Group Health, Safety and Environment; and Group Procurement. He also coordinates the rollout of and compliance with global processes and standards and the rollout of initiatives in Covestro’s production network. Dr. Klaus Schäfer will leave Covestro’s Board of Management as of June 30, 2023, and hand the office of Chief Technology Officer (CTO) to Dr. Thorsten Dreier as of July 1, 2023.
Dr. Thomas Toepfer is Covestro’s Chief Financial Officer (CFO) and additionally holds the position of Labor Director. His responsibilities comprise the corporate functions of Accounting; Controlling; Finance & Insurance; Information Technology & Digitalization; Investor Relations; Law, Intellectual Property & Compliance; Portfolio Development; and Taxes. Dr. Thomas Toepfer is also responsible for country-specific topics in the United States and China.
The Supervisory Board oversees and advises the Board of Management. The Supervisory Board has 12 members, half of whom are shareholder representatives and half employee representatives pursuant to the German Codetermination Act. Dr. Richard Pott is the Supervisory Board Chair and Petra Kronen is Vice Chair.
Business Model
In its core business, Covestro produces precursors for polyurethane foams and the high-performance plastic polycarbonate as well as precursors for coatings, adhesives, sealants, and specialty products, including films. Other noncore precursors in Covestro’s product portfolio include chlorine and by-products like styrene.
The company’s materials are used in many areas of modern life. Covestro offers its clientele innovative and sustainable solutions that enable improved performance on the one hand and help reduce carbon footprints on the other. The array of products ranges from insulation for refrigerators and entire buildings, laptop and smartphone cases, and medical technology to scratch-resistant and fast-drying vehicle coatings and film coverings for personal identification cards. Covestro therefore covers a wide variety of sectors: The company’s main customers are from the automotive and transportation; construction; furniture and wood processing; and electrical, electronics, and household appliances industries. The products are also used in sectors such as sports and leisure, cosmetics and health, as well as in the chemical industry itself. In addition, materials by Covestro are used to manufacture medical equipment, safety barriers, and sneeze and splash guards used to combat and control the spread of the coronavirus pandemic.
Global megatrends play a considerable role in this process: Advancing climate change, the growing global population, increasing urbanization, and new forms of transportation are changing the lives of billions of people. Consequently, the polymer industry will have to develop as well. Companies like Covestro are facing new challenges and playing a part in developing innovative solutions as a result. For this reason, Covestro fully aligns its entire production and product range – and ultimately the company itself – to the circular concept in the long term. As part of that, we intend to accelerate transformation to a climate-neutral and resource-conserving economy. The focus here is on alternative raw materials, renewable energy, innovative recycling, and joint solutions. Covestro’s aim is to pave the way and support these trends with its materials. By replacing traditional materials with durable, light, environmentally compatible and cost-effective materials, Covestro makes significant contributions in areas such as lightweight construction in the automotive industry, increasing the energy efficiency of living spaces through the use of new insulating materials, promoting sustainable energy with specialty materials, and improving the shelf-life of food through better insulation along the entire refrigeration chain. Covestro is continually increasing its share of alternative raw materials in production to replace conventional materials, some of which require large amounts of raw materials from nonrenewable sources.
- See “Circular Economy.”
- Additional information is available at: solutions.covestro.com/en/industries
Covestro monitors developments in its sales and consumer markets and orients its activities to support customers’ growth. Together with customers as well as with business and scientific partners, the company works continuously to further advance products, technologies, and application solutions. Covestro’s main competitors are BASF, Dow Chemical, Huntsman, Mitsubishi, Saudi Basic Industries Corporation (SABIC), and Wanhua Chemical.
Segments
Performance Materials
The Performance Materials segment focuses on developing, producing, and reliably supplying high-performance materials such as standard polyurethanes and polycarbonates, as well as base chemicals. These include diphenylmethane diisocyanate (MDI), toluylene diisocyanate (TDI), long-chain polyols, and polycarbonate resins. Those materials are used in sectors such as the furniture and wood processing industry, the construction industry as well as the automotive and transportation industry. These materials are used in roof structures, insulation for buildings and refrigerators, mattresses, and car seats, among other applications.
Solutions & Specialties
The Solutions & Specialties segment consolidates Covestro’s solutions and specialties businesses, and combines chemical products with application technology services. A fast pace of innovation is a key success factor since customer requirements change quickly. Covestro’s Solutions & Specialties business comprises a variety of polymer products including polycarbonates, precursors for coatings and adhesives, MDI specialties and polyols, thermoplastic polyurethanes, specialty films, and elastomers. They are used in sectors such as the automotive and transportation industry; the electrical, electronics and household appliances industry; the construction industry; and the healthcare industry. These materials include composite resins for wind turbine rotor blades; precursors for coatings and adhesives; laptop cases; floodlights; and high-quality specialty films.