Shares

Performance of Covestro shares versus market in the first half of 2023

€ (Covestro shares)

Share Price Recovers in Poor Economic Environment

Stock exchange performance in the first half of the year 2023 and the global economy both continued to be weighed down by the effects of Russia’s war against Ukraine, which started in February 2022, and a global demand crisis, which has persisted in many industries since the middle of the year 2022. Energy prices, which had been driven up by the war in Ukraine, have been declining significantly in the year 2023. Due to the unfavorable supply and demand situation, most of the benefits of lower raw material prices have to be passed on to customers, and the challenging earnings situation therefore continues.

As of June 30, 2023, the German DAX benchmark index, which is relevant for Covestro, was up 16.0% compared with the end of the year 2022. The performance of European chemical stocks was significantly more restrained. At the end of the six-month period, the STOXX Europe 600 Chemicals index was only 6.2% higher than at the beginning of the year. However, at a Xetra closing price of €47.58, Covestro’s share price was up at the end of the first half of 2023, gaining 30.2% compared with December 31, 2022. The share price started the year 2023 with an upward movement, but then declined in the course of the first quarter of 2023, reaching a low of €35.36 on March 15, 2023. During the second quarter of 2023, Covestro’s share price trended slightly higher, interspersed by brief periods of price weakness. Since the beginning of June 2023, the share price has been on an upward trajectory, boosted further by market rumors. It reached its high of the first half of 2023 of € 49.60 on June 23, 2023.

Compared with the closing price of €36.55 for the year 2022, this corresponds to a share price performance (without dividend reinvestment since no dividend was paid for fiscal 2022) of 30.2%.

At the end of the first half of 2023, Covestro’s market capitalization stood at around €9.0 billion based on 188.7 million shares outstanding. The average daily Xetra trading volume was around 1.4 million shares.

Virtual Annual General Meeting Held on April 19, 2023

Covestro AG’s 2023 Annual General Meeting (AGM) was held on April 19, 2023. Taking account, in particular, of legislation, the ownership structure, expected costs, the pandemic situation at the time, and the experience made in recent years, Covestro resolved at the end of the year 2022 to hold a virtual AGM, as in the previous year.

The Group’s net income was negative for the first time in fiscal 2022, showing a net loss of €272 million. Under the current dividend policy, this means that no dividend was distributed to shareholders of Covestro AG.

Share Buyback Program

Based on the resolution adopted at the 2019 AGM, Covestro AG’s Board of Management on February 28, 2022 resolved a share buyback program totaling around €500 million (excluding transaction costs). The share buyback program is to be completed within two years. All repurchased shares are subsequently expected to be retired and the capital stock reduced accordingly.

By the end of the first half of 2022, 3,479,956  shares worth €150 million had already been bought back in two tranches at an average price of €43.0785 per share. Due to the weakening economic outlook, the Board of Management resolved in the second half of 2022 to pause the share buyback program temporarily.

In view of the revised guidance and the sequential improvement in earnings and volumes, the current program resumed in the second quarter of 2023. The third tranche, which had a volume of €49 million, was completed at the end of June 2023 and resulted in the buyback of 1,208,035 shares at an average price of €40.8147 per share.

Moody’s Confirms Covestro Rating and Outlook

On June 21, 2023, Moody’s Investors Service, London (United Kingdom), confirmed Covestro’s Baa2 investment-grade rating with a stable outlook. Covestro intends to continue to maintain financing structures and financial ratios that support a solid investment-grade rating in the future.

12 Analysts Issue Buy Recommendation for Covestro Shares

At the end of the first half of 2023, Covestro was covered by 18 securities brokers. Of these, 12 analysts issued buy recommendations and six were neutral. The average share price target was approximately €47 at the reporting date.