Significant Events

Coronavirus pandemic

Business performance in the first half of 2020 was heavily influenced by the evolution of the coronavirus pandemic. Early on, Covestro took steps to adjust the company’s activities to current conditions, protect the health of all Covestro employees, guarantee delivery capability for customers, and safeguard Covestro’s strong liquidity position.

Covestro decided to implement an extensive list of measures to protect all employees, including a wide range of health, safety and hygiene measures at our sites. Depending on the local situation in each case, staff, particularly employees in administrative departments, began working from home. Production continued for the most part at our sites in the first half of 2020, so Covestro's delivery capability was ensured throughout the period.

In reaction to the economic challenges of the coronavirus pandemic, the Board of Management increased the target for achieving short-term cost savings to over €300 million in the 2020 fiscal year (previously: €200 million). This step was taken in addition to the “Perspective” restructuring program underway, which is expected to cut costs by €130 million in fiscal 2020. Moreover, Covestro decreased current investments by around €200 million. In fiscal 2020, investments totaling approximately €700 million are now planned (previously: €900 million).

The Board of Management, the Supervisory Board and employees of Covestro are working together in solidarity to reach these goals and put the company in an even more robust position in the current environment. At all German companies, the Board of Management and employee representatives agreed to implement a model to reduce working hours while adjusting pay for all employees. The percentage reduction in compensation increases up the pay scale. Covestro's Board of Management and Supervisory Board are participating by accepting a 15% pay cut. These measures have been in effect since June 1, 2020, and are scheduled to run for a period of six months. All Covestro Group companies outside of Germany are implementing comparable country-specific measures to reduce costs.

Covestro's Board of Management continues to actively monitor the worldwide development of the coronavirus pandemic. Existing measures are modified or expanded as required in line with recommendations and instructions issued by the relevant governments and committees of experts.

Other events

On January 2, 2020, Covestro successfully concluded the sale of its European polycarbonate sheets business to the Serafin Group. This included central management and distribution functions in Europe and production sites in Belgium and Italy. Serafin has pledged to continue operations at all sites. Covestro will continue to act as a key supplier of raw materials for the foreseeable future.

Covestro has taken various steps to safeguard liquidity. Effective March 17, 2020, Covestro obtained a new syndicated revolving credit facility totaling €2.5 billion with a term of five years. In addition, the Board of Management of Covestro AG voted on May 19, 2020, to propose a dividend of €1.20 per share for fiscal 2019 to the Annual General Meeting scheduled for July 30, 2020. On June 5, 2020, Covestro also successfully placed €1.0 billion in euro bonds on foreign debt markets.