Results of Operations

Second Quarter of 2022

In the second quarter of 2022, Group sales grew by 18.9% to €4,703 million (previous year: €3,956 million). This was mainly due to a considerably higher selling price level, which had a positive impact on sales amounting to 14.5%. In addition, exchange rate movements caused sales to rise by 6.5%. In contrast, a decline in volumes sold resulted in a 2.1% decline in sales.

The sales increase in the second quarter of 2022 was driven by both segments. Sales in the Performance Materials segment grew by 25.8% to €2,461 million (previous year: €1,957 million), while sales in the Solutions & Specialties segment were up 11.0% to €2,165 million (previous year: €1,951 million).

In the EMLA region, sales were 22.8% higher, at €2,167 million (previous year: €1,765 million), while sales in the NA region increased 42.2% to €1,200 million (previous year: €844 million). Logistical bottlenecks in China limited the growth potential in the APAC region, leading to a decline in sales of 0.8% to €1,336 million (previous year: €1,347 million).

Sales by segment and region in the second quarter of 2022

€ million

In the second quarter of 2022, the Group’s EBITDA decreased by 33.0% to €547 million (previous year: €817 million). This was largely driven by a rise in raw material and energy prices, partially offset by a higher selling price level. The resulting decline in margins affected primarily the Performance Materials segment. The drop in volumes sold also had a negative effect on earnings. In contrast, lower provisions for short-term variable compensation and exchange rate movements both boosted earnings.

EBITDA decreased to €367 million (previous year: €644 million) in the Performance Materials segment and to €213 million (previous year: €237 million) in the Solutions & Specialties segment.

Depreciation, amortization, impairment losses, and impairment loss reversals rose by 14.3% to €240 million in the second quarter of 2022 (previous year: €210 million), of which €205 million (previous year: €190 million) was attributable to property, plant and equipment and €35 million (previous year: €20 million) to intangible assets.

In the second quarter of 2022, the Covestro Group’s EBIT dropped by 49.4% to €307 million (previous year: €607 million).

Taking into account a financial result of €–44 million (previous year: €–18 million), income before income taxes fell to €263 million compared with the prior-year quarter (previous year: €589 million). The tax expense in the second quarter of 2022 amounted to €65 million (previous year: €139 million). This resulted in income after taxes of €198 million (previous year: €450 million). After noncontrolling interests, net income amounted to €199 million (previous year: €449 million). Compared to the prior-year quarter, earnings per share fell to €1.04 (previous year: €2.32).

First Half of 2022

Group sales in the first half of 2022 rose by 29.2% to €9,386 million (previous year: €7,263 million), mainly due to a higher selling price level, which boosted sales growth by 18.3%. Moreover, changes in exchange rates had a positive effect of 6.1% on sales. The portfolio change arising from the acquisition of the Resins & Functional Materials (RFM) business from Koninklijke DSM N.V., Heerlen (Netherlands), in the second quarter of 2021 had the effect of increasing sales by 4.3%. The change in volumes sold had a positive effect of 0.5% on sales.

Both segments saw sales go up in the first half of 2022, with sales up 31.2% to €4,849 million (previous year: €3,697 million) in the Performance Materials segment and up 26.1% to €4,387 million (previous year: €3,480 million) in the Solutions & Specialties segment.

In the EMLA region, sales were 29.8% higher, at €4,241 million (previous year: €3,267 million), while sales in the NA region increased 55.1% to €2,316 million (previous year: €1,493 million). Sales in the APAC region rose by 13.0% to €2,829 million (previous year: €2,503 million).

Sales by segment and region in the first half of 2022

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The Group’s EBITDA contracted by 13.3% to €1,353 million in the first half of 2022 compared with the prior-year period (previous year: €1,560 million). This was mainly driven by a rise in raw material and energy prices, which were partially offset by the higher selling price level and led to lower margins. In contrast, lower provisions for short-term variable compensation and exchange rate movements both had the effect of increasing earnings. The changeschange in volumes sold had a largely neutral impactdid not have any notable effect on earnings.

Depreciation, amortization, impairment losses, and impairment loss reversals rose by 15.1% to €457 million in the first half of 2022  (previous year: €397 million), of which €402 million (previous year: €370 million) was attributable to property, plant and equipment and €55 million (previous year: €27 million) to intangible assets.

The Covestro Group’s EBIT was down 23.0% to €896 million in the first half of 2022 (previous year: €1,163 million).

Taking into account a financial result of €–72 million (previous year: €–47 million), income before income taxes declined to €824 million compared with the prior-year period (previous year: €1,116 million). After deduction of the tax expense of €209 million for the first half of 2022 (previous year: €271 million), income after taxes totaled €615 million (previous year: €845 million). After noncontrolling interests, net income amounted to €615 million (previous year: €842 million). In the first half of 2022, earnings per share decreased to €3.20 (previous year: €4.36).