Financial Position

Cash Flows from Operating Activities/Free Operating Cash Flow

In the second quarter of 2021, cash flows from operating activities were up, rising to €553 million (previous year: €171 million). The key driver here was an increase in EBITDA, which more than offset any negative effects. These mainly comprised cash tied up in working capital, whereas in the prior-year quarter funds had been freed up from working capital. In addition, higher income tax payments had a negative effect. After deduction of cash outflows for additions to property, plant, equipment and intangible assets of €179 million (previous year: €147 million), free operating cash flow totaled €374 million (previous year: €24 million).

At €981 million, cash flows from operating activities in the first half of 2021 exceeded the prior-year figure of €61 million, chiefly on account of higher EBITDA. An increase in funds tied up in working capital and higher income tax payments had the opposite effect. After deduction of cash outflows for additions to property, plant, equipment and intangible assets of €289 million (previous year: €286 million), free operating cash flow totaled €692 million (previous year: €–225 million).

Cash Flows from Investing Activities

In the second quarter of 2021, net cash used in investing activities totaled €1,472 million (previous year: cash outflow of €660 million). Net purchase price payments of €1,469 million for the acquisition of the RFM business and additions to property, plant, equipment and intangible assets of €179 million (previous year: €147 million) were the main factors here. The net sale of money market fund units produced a cash inflow of €208 million.

In the first half of 2021, the net cash outflow for investing activities totaled €1,145 million (previous year: cash outflow of €792 million). This figure largely comprised the aforementioned net purchase price payments for the RFM acquisition and additions to property, plant, equipment and intangible assets of €289 million (previous year: €286 million). In contrast, net redemptions of short-term bank deposits amounted to €335 million, and the net sale of money market fund units generated €269 million.

Cash Flows from Financing Activities

In the second quarter of 2021, the Covestro Group’s net cash outflow for financing activities totaled €341 million (previous year: cash inflow of €795 million), mainly due to dividend payments of €257 million. Of this amount, €251 million was attributable to Covestro AG shareholders.

Largely due to the aforementioned dividend payments, net cash used in financing activities in the first half of 2021 amounted to €395 million (previous year: cash inflow of €1,494 million). Net cash provided by financing activities in the prior-year period consisted mainly of bond issues totaling €1.0 billion.

In comparison with December 31, 2020, the Covestro Group’s financial debt increased by €96 million to €2,982 million in the first half of 2021.

Cash and cash equivalents decreased in comparison with the figure on December 31, 2020, by €548 million to €856 million. This change was mainly driven by the net purchase price payments for the RFM acquisition amounting to €1,469 million. Moreover, cash and cash equivalents declined on account of cash outflows for additions to property, plant, equipment and intangible assets of €289 million and dividend payments of €257 million. In contrast, positive cash flows from operating activities (€981 million), net proceeds of short-term bank deposits maturing (€335 million), and the net sale of money market fund units (€269 million) increased cash and cash equivalents. The redemption of short-term bank deposits and net sale of money market fund units in particular decreased current financial assets, which were down €604 million to €522 million.

In comparison with December 31, 2020, the Covestro Group’s net financial debt increased by €1,248 million to €1,604 million as of June 30, 2021.