Half-Year Financial Report 2023

Investors
Media
Downloads

Financial Documents

Report on Future Perspectives and on Opportunities and Risks

Forecast for the Covestro Group

The analysis of the development of our key management indicators is based on the business performance described in this Half-Year Financial Report and consideration of our potential risks and opportunities.

In view of the results of the first quarter of 2023 and higher margins and an improved cost level compared with the forecast published in the Annual Report 2022, Covestro’s Board of Management on April 28, 2023, adjusted the guidance presented in the Annual Report 2022. On the basis of the business performance described in this Half-Yearly Report and taking into account our potential opportunities and risks, we confirm the adjusted guidance for fiscal 2023.

For the remainder of the year we have, however, identified potential risk, mainly because of weak demand in our main customer industries. As a consequence, we currently expect that we will more likely meet the targets in the bottom half of each of the forecast ranges for our key management indicators presented below:

Forecast key management indicators

 

 

 

 

 

 

 

 

 

2022

 

Forecast 2023
(Annual Report 2022)

 

Forecast 2023
(April 28, 2023)

EBITDA1

 

€1,617 million

 

Significantly down on previous year

 

Between €1,100 million
and €1,600 million

Free operating cash flow2

 

€138 million

 

Significantly down on previous year

 

Between €0 million
and €500 million

ROCE above WACC3, 4

 

–5.0% points

 

Significantly down on previous year

 

Between –6% points
and –2% points

Greenhouse gas emissions5
(CO2 equivalents)

 

4.7 million metric tons

 

Similar to previous year6

 

Between 4.2 million metric tons and 4.8 million metric tons

1

Earnings before interest, taxes, depreciation and amortization (EBITDA): EBIT plus depreciation, amortization, and impairment losses; less impairment loss reversals on property, plant and equipment and intangible assets.

2

Free operating cash flow (FOCF): cash flows from operating activities less cash outflows for additions to property, plant and equipment and intangible assets.

3

Return on capital employed (ROCE): ratio of the adjusted operating result (EBIT) after imputed income taxes to capital employed.

4

Weighted average cost of capital (WACC): weighted average cost of capital reflecting the expected return on the company’s equity and debt capital. A figure of 7.0% has been taken into account for the year 2022 (2021: 6.6%).

5

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

6

This may entail a variance in the single-digit percentage range.

For the Covestro Group’s EBITDA, we project a figure between €1,100 million and €1,600 million (forecast in the Annual Report 2022: significantly down on the previous year). The forecast for the Performance Materials segment’s EBITDA is expected to be significantly below the figure for the year 2022. In the Solutions & Specialties segment, we project EBITDA on a level with the year 2022.*

The Covestro Group’s FOCF is forecast between €0 million and €500 million (forecast in the Annual Report 2022: significantly down on the previous year). For the Performance Materials segment, we expect FOCF to fall significantly short of the figure for the year 2022. In the Solutions & Specialties segment, however, we expect FOCF to be significantly higher than the amount of the year 2022.

We expect ROCE above WACC of between –6% points and –2% points (forecast in the Annual Report 2022: significantly down on the previous year).

The Covestro Group’s GHG emissions measured as CO2 equivalents are projected to be between 4.2 million metric tons and 4.8 million metric tons (forecast in the Annual Report 2022: on a level with the previous year*).

*This may entail a variance in the single-digit percentage range.

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.
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.