Annual Report 2023

Business Performance at a Glance

Significant Events

Events outside the Company

Challenging Economic Environment

The situation in the European energy markets largely stabilized in the year 2023 compared with the volatile full-year 2022, mainly due to a significant decrease in gas prices. This is set against persistently weak demand, driven especially by lower spending on consumer goods. The adverse macroeconomic conditions had a negative impact on the selling price level and the volumes sold at Covestro.

War in Ukraine

The Russian war against Ukraine, which began in February 2022, has had a notable impact on the global economy. However, Covestro’s business situation is not directly affected by the consequences of the war, as Covestro does not operate any sites in the countries affected by the war (Russia, Belarus, and Ukraine). As in the previous year, the sanctions imposed on Russia and Belarus by the international community therefore affected Covestro’s business only indirectly.

Events within the Company

Business in Europe, the Middle East, and Africa to Be Centralized at the Leverkusen Site

In line with its Sustainable Future strategy and Group-wide initiatives to increase operating effectiveness and efficiency, Covestro has resolved to manage the business in Europe, the Middle East, and Africa centrally from Leverkusen (Germany) in the future. As a consequence, the business activities of Covestro International SA, based in Fribourg (Switzerland), are expected to be discontinued by the middle of fiscal 2024. The relocation is not expected to have any effects on the Group’s sales activities or sales. The decision to relocate the business activities of Covestro International SA primarily led to a net tax expense of €29 million and restructuring expenses of €14 million in the year 2023.

Operations Start at New Chlorine Plant in Tarragona

In February 2023, Covestro successfully commissioned a new large-scale plant for the manufacture of chlorine in Tarragona (Spain). It is the world’s first industrial-scale production plant using the innovative and energy-efficient oxygen-depolarized cathode technology developed by Covestro and partners. The new plant guarantees efficient, continuous, and independent supplies of chlorine for the diphenylmethane diisocyanate (MDI) production in Tarragona, thus strengthening the European MDI production network.

Sale of Additive Manufacturing Business

On April 3, 2023, Covestro successfully completed the sale of the additive manufacturing business of the Solutions & Specialties segment to Stratasys, a U.S.-Israeli manufacturer of 3D printers and 3D production systems. The sale resulted in an inflow of purchase price payments of €54 million for Covestro in fiscal 2023; the net gain on the disposal amounted to €35 million. In addition, a variable earn-out payment has been agreed, which will depend on the achievement of various success factors; the amount will be finally determined in the year 2025.

Maezio® Product Line to be Discontinued

As part of its continuous Group-wide activities to optimize the portfolio, Covestro will in the future align the Engineering Plastics business entity in the Solutions & Specialties segment with its core business. As a result, the Board of Management has resolved that the manufacture of the highly specialized Maezio® products, and therefore the operations at the production site in Markt Bibart (Germany), will be discontinued. In this context, impairment losses of €31 million were recognized on goodwill, intangible assets, and property, plant and equipment in the year 2023, and restructuring expenses and valuation allowances on inventories of €7 million were recognized through profit or loss.

Changes in the Board of Management

The previous Chief Technology Officer Dr. Klaus Schäfer retired from the company as of June 30, 2023. His successor, Dr. Thorsten Dreier, took on responsibility for the corporate functions of Process Technology; Engineering; Group Health, Safety and Environment; and Group Procurement as of July 1, 2023. In addition to his duties as Chief Technology Officer, Dr. Thorsten Dreier has had the position of Labor Director since September 1, 2023.

The previous Chief Financial Officer (CFO) and Labor Director, Dr. Thomas Toepfer, left the company as of August 31, 2023 to pursue a new role as CFO at the European aircraft manufacturer Airbus. He was succeeded by Christian Baier, who took over the position of CFO as of October 1, 2023. Dr. Markus Steilemann, Chief Executive Officer of Covestro AG, acted in this role on an interim basis during September 2023.

Financing Measures

Share Buyback Program

On February 28, 2022, Covestro AG’s Board of Management resolved a share buyback program totaling around €500 million (excluding transaction costs), which was launched in March 2022 and was expected to be completed within two years. Following the resumption of the program in May 2023, 1,208,035 shares with a total value of €49 million were bought back during the third tranche. On October 26, the Board of Management resolved to terminate the share buyback program early. Covestro AG had acquired a total of 4,687,991 shares valued at €199 million in three tranches. In December 2023, 4,200,000 of the repurchased shares were retired and the capital stock of Covestro AG was reduced accordingly.

Issuance of Schuldschein Loans

On October 7, 2022, Covestro issued Schuldschein loans with a total volume equivalent to around €650 million, of which the remaining €100 million was transferred to Covestro in the first quarter of 2023. Linked to an ESG rating, these Schuldschein loans were issued in tranches comprising fixed and variable interest rates with terms of three, five, and seven years. In October 2023, Covestro prematurely repaid Schuldschein loans in an amount equivalent to around €260 million.

Overall Assessment of Business Performance and Target Attainment

Persistently weak demand made fiscal year 2023 very challenging for Covestro. Sales decreased by 20.0% to €14,377 million (previous year: 17,968 million), predominantly due to the lower selling price level and a drop in sales volumes. In particular the decline in the selling price level, which was only partially offset by lower raw material and energy prices, and lower sales volumes led to a 33.2% drop in EBITDA to €1,080 million (previous year: €1,617 million). Free operating cash flow rose to €232 million (previous year: €138 million). The year-over-year rise was mainly attributable to lower cash outflows for additions to property, plant, equipment and intangible assets and higher cash flows from operating activities. In addition, ROCE above WACC was –6.1% points (previous year: –5.0% points). The decrease compared with the previous year was the result of a higher WACC and a significant drop in net operating profit after taxes (NOPAT). GHG emissions stood at 4.9 million metric tons of CO2 equivalents, slightly up on the prior-year value (4.7 million metric tons of CO2 equivalents), as the decline in production volumes was offset by factors such as a higher proportion of fossil sources of energy in externally procured power and steam.

In the Annual Report 2022, the Covestro Group published a forecast for key management indicators in fiscal 2023, which was adjusted on April 28, 2023 and updated on October 27, 2023.

The forecast for all key management indicators for full-year 2023 in the Annual Report 2022 was last updated in October 2023. After original expectations of a significant year-over-year decline in EBITDA, the Covestro Group projected EBITDA of around €1,100 million*. After initially projecting a significant year-over-year decrease in FOCF, the Covestro Group ultimately forecast a figure between €0 million and €200 million for the full year. For ROCE above WACC, the original forecast was for a figure significantly below the previous year; most recently, in October 2023, a decline of around 6% points was anticipated. For GHG emissions, the Covestro Group had originally anticipated a figure on a level with the previous year*, and ultimately expected an amount between 4.2 million metric tons of CO2 equivalents and 4.8 million metric tons of CO2 equivalents.

The actual figures recorded by Covestro in fiscal year 2023 for EBITDA, ROCE above WACC, and GHG emissions corresponded to the forecast originally published in the Annual Report 2022. FOCF exceeded the figure originally projected.

Compared to the forecast updated in October 2023, EBITDA and ROCE above WACC were in the ranges communicated. While GHG emissions were slightly above the communicated range, FOCF, on the other hand, performed better than anticipated in the most recent forecast.

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

Forecast-actuals-comparison for fiscal year 2023














Forecast 2023
(Annual report 2022)


Forecast 2023
(October 27, 2023)





€1,617 million


Significantly down on previous year


Around €1,100 million6


€1,080 million

Free operating cash flow2


€138 million


Significantly down on previous year


Between €0 million
and €200 million


€232 million

ROCE above WACC3, 4


–5.0% points


Significantly down on previous year


Around –6% points6


–6.1% points

Greenhouse gas emissions5 (CO2 equivalents)


4.7 million metric tons


Similar to previous year6


Between 4.2 million metric tons
and 4.8 million metric tons


4.9 million metric tons


Earnings before interest, taxes, depreciation and amortization (EBITDA): EBIT plus depreciation, amortization, and impairment losses; less impairment loss reversals on property, plant and equipment and intangible assets.


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


Return on capital employed (ROCE): ratio of EBIT after imputed income taxes to capital employed. Imputed income taxes are calculated by multiplying an imputed tax rate of 25% by EBIT.


Weighted average cost of capital (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%).


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


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

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.
MDI/Diphenylmethane Diisocyanate
A chemical compound from the class of aromatic isocyanates, primarily used in polyurethane foams.
NOPAT/Net Operating Profit after Taxes
EBIT after imputed income taxes.
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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