Annual Report 2022

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Report on Future Perspectives and on Opportunities and Risks – Report on Future Perspectives

Forecast for the Covestro Group and Covestro AG

Covestro Group

The following forecast for the 2023 fiscal year is based on the business development described in this Annual Report and takes into account the potential opportunities and risks.

In view of the continuing challenging economic conditions, the Board of Management of Covestro AG expects the key management indicators to change as presented below.

Forecast for key management indicators

 

 

 

 

 

 

 

2022

 

Forecast 2023

EBITDA1

 

€1,617 million

 

Significantly down on previous year

Free operating cash flow2

 

€138 million

 

Significantly down on previous year

ROCE above WACC3, 4

 

–5.0% points

 

Significantly down on previous year

Greenhouse gas emissions5

 

4.7 million metric tons of CO2 equivalents

 

Similar to previous year6

1

EBITDA: EBIT plus depreciation, amortization, and impairment losses; less impairment loss reversals on intangible assets and property, plant and equipment.

2

Free operating cash flow (FOCF): cash flows from operating activities less cash outflows for additions to property, plant, equipment and intangible assets.

3

ROCE: ratio of EBIT after imputed income taxes to capital employed. Since the year 2022, imputed income taxes have been calculated by mutliplying an imputed tax rate of 25% (previously: effective tax rate) by EBIT.

4

WACC: weighted average cost of capital reflecting the expected return on the company’s equity and debt capital. A figure of 7.6% has been taken into account for the year 2023 (2022: 7.0%).

5

GHG emissions (Scope 1 and 2, GHG Protocol) at main production sites (responsible for more than 95% of our energy usage).

6

This may entail a variance in the single-digit percentage range.

As for EBITDA of the Covestro Group and the Performance Materials segment, we expect a figure well below that of the year 2022. In the Solutions & Specialties segment, we project an EBITDA on a level with the year 2022.*

We anticipate that FOCF will be significantly below the 2022 figure for both the Covestro Group and the Performance Materials segment. In the Solutions & Specialties segment, however, we project FOCF to be significantly higher than the amount of the year 2022.

We forecast ROCE above WACC to be well down on the year 2022.

We anticipate that the Covestro Group’s GHG emissions, measured in CO2 equivalents, will be similar to those recorded for the year 2022.*

*This may entail a variance in the single-digit percentage range.

Covestro AG

The earnings of Covestro AG, as the parent company of the Covestro Group, largely comprise the earnings of that company’s subsidiaries. As a result of the profit and loss transfer agreement with Covestro Deutschland AG, net income of Covestro AG is particularly impacted by that company’s income from equity investments in Germany and abroad. Due to higher equity investment income expected in fiscal 2023, we forecast that the net loss generated by Covestro AG will be significantly lower than that of the year 2022.

EBITDA / Earnings Before Interest, Taxes, Depreciation, and Amortization
EBIT plus depreciation and amortization of property, plant, equipment, and intangible assets.
FOCF / Free Operating Cash Flow
Operating cash flows (pursuant to IAS 7) less cash outflows for additions to property, plant, equipment and intangible assets.
ROCE / Return on Capital Employed
Ratio of EBIT after imputed income taxes to capital employed.
WACC / Weighted Average Cost of Capital
Weighted average cost of capital reflecting the expected return on the company’s equity and debt capital. Used for the internal measurement of the absolute value contribution.

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