Financial Position

Cash Flows from Operating Activities/Free Operating Cash Flow

In the second quarter of 2022, net cash outflows from the Covestro Group’s operating activities amounted to €272 million (previous year: net cash inflows of €553 million). The key drivers of this development were higher funds tied up in working capital, due especially to the payment of short-term variable compensation for fiscal 2021 in April 2022, as well as a decline in EBITDA and a rise in income tax payments. After deduction of cash outflows of €190 million for additions to property, plant, equipment and intangible assets (previous year: €179 million), free operating cash flow totaled €–462 million (previous year: €374 million).

Cash flows from operating activities in the first half of 2022 accounted for net outflows of €115 million (previous year: cash inflows of €981 million). This was mainly due to an increase in funds tied up in working capital, lower EBITDA, and higher income tax payments. After deduction of cash outflows of €330 million for additions to property, plant, equipment and intangible assets (previous year: €289 million), free operating cash flow totaled €–445 million (previous year: €692 million).

Cash Flows from Investing Activities

In the second quarter of 2022, net cash provided by investing activities totaled €233 million (previous year: cash outflow of €1,472 million), mainly as a result of net proceeds of short-term bank deposits maturing, amounting to €420 million. This was set against cash outflows of €190 million for additions to property, plant, equipment and intangible assets (previous year: €179 million). The cash outflows in the prior-year period arose primarily from the net purchase price payments of €1,469 million for the acquisition of the RFM business.

In the first half of 2022, the net cash inflow from investing activities totaled €154 million (previous year: cash outflow of €1,145 million). This was attributable to net proceeds of short-term bank deposits maturing in an amount of €374 million, and cash inflows of €65 million from the net sale of money market fund units. Cash outflows of €330 million for additions to property, plant, equipment and intangible assets (previous year: €289 million) had an offsetting effect. Here, the cash outflows in the prior-year period were also mainly attributable to the net purchase price payments for the acquisition of the RFM business.

Cash Flows from Financing Activities

In the second quarter of 2022, the Covestro Group’s net cash outflow for financing activities totaled €276 million (previous year: €341 million), mainly due to dividend payments of €653 million. Of this amount, €651 million was attributable to Covestro AG shareholders. In addition, the share buyback program in the second quarter of 2022 led to cash outflows of €102 million. This was set against the proceeds of borrowing amounting to €565 million.
See “Share Buyback Program.”

In the first half of 2022, financing activities gave rise to a cash outflow of €381 million (previous year: €395 million). This was driven to a significant extent by the above-mentioned dividend payments of €653 million and the share buyback program, which accounted for €150 million. This was set against the proceeds of borrowing, which brought cash inflows of €579 million.

Financial debt amounted to €3,113 million on June 30, 2022, an increase of €606 million compared with December 31, 2021, due in particular to the €565 million increase in liabilities to banks.

Cash and cash equivalents decreased in comparison with the figure on December 31, 2021, by €334 million to €315 million. This was mainly attributable to dividend payments of €653 million and cash outflows of €330 million for additions to property, plant, equipment and intangible assets. Cash and cash equivalents also decreased because of the purchase of treasury shares worth €150 million in connection with the share buyback program and because of cash outflows of €115 million for operating activities. In contrast, cash inflows from an increase in liabilities to banks, net proceeds of short-term bank deposits maturing (€374 million), and the net sale of money market fund units (€65 million) increased cash and cash equivalents. Net proceeds of short-term bank deposits maturing and the net sale of money market fund units led to a decrease in current financial assets, which were down €439 million to €14 million.

In comparison with December 31, 2021, the Covestro Group’s net financial debt increased by €1,379 million to €2,784 million as of June 30, 2022.