Annual Report 2023

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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 2024 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

 

 

 

 

 

 

 

2023

 

Forecast 2024

EBITDA1

 

€1,080 million

 

Between €1,000 million
and €1,600 million

Free operating cash flow2

 

€232 million

 

Between 0 million
and €300 million

ROCE above WACC3, 4

 

–6.1% points

 

Between –7% points
and –2% points

Greenhouse gas emissions5 (CO2 equivalents)

 

4.9 million metric tons

 

Between 4.4 million metric tons
and 5.0 million metric tons

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. Imputed income taxes are calculated by multiplying an imputed tax rate of 25% by EBIT.

4

WACC: weighted average cost of capital reflecting the expected return on the company’s equity and debt capital. A figure of 8.1% has been taken into account for the year 2024 (2023: 7.6%).

5

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

For the Covestro Group’s EBITDA, we project a figure between €1,000 million and €1,600 million. Covestro anticipates that the Performance Materials segment’s EBITDA will be EUR 400 million to EUR 800 million. In the Solutions & Specialties segment, we expect EBITDA to be significantly higher than the amount of the year 2023.

The Covestro Group’s FOCF is forecast between €0 million and €300 million. In the Performance Materials and Solutions & Specialties segments, we expect FOCF to be significantly lower than the amount of the year 2023.

ROCE above WACC is anticipated in a range between –7% points and –2% points.

The Covestro Group’s GHG emissions, measured as CO2 equivalents, are projected to be between 4.4 million metric tons and 5.0 million metric tons.

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 lower equity investment income expected in fiscal 2024, we forecast that the net loss generated by Covestro AG will be significantly higher than that of the year 2023.

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.
Net Income
Income after income taxes that is attributable to Covestro AG shareholders.
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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