Business Development Covestro Group

Results of operations

In the third quarter of 2018, the Group’s core volumes (in kilotons) remained at the level of the prior-year quarter. The Coatings, Adhesives, Specialties and Polycarbonates segments saw volumes grow 7.2% and 2.6%, respectively, whereas the volumes sold by the Polyurethanes segment dropped 2.0% year over year.

Group sales amounted to €3,702 million, up 4.8% over the prior-year quarter (previous year: €3,532 million). An increase in selling prices contributed to this result, which had a positive effect on sales of 3.1%. This development was largely driven by the Polycarbonates segment. Total volumes increased sales by 3.0% over the same quarter in the previous year. Key drivers here were the Coatings, Adhesives, Specialties and Polycarbonates segments. Exchange rate movements and the effect of the portfolio change due to the sale of the U.S. polycarbonate sheet business drove down Group sales by 0.6% and 0.7%, respectively.

Mainly responsible for the sales increase in the third quarter of 2018 were the Polycarbonates and Coatings, Adhesives, Specialties segments. Sales climbed to €1,038 million (previous year: €933 million) in the Polycarbonates segment and to €606 million (previous year: €557 million) in the Coatings, Adhesives, Specialties segment. In the Polyurethanes segment, sales declined to €1,849 million (previous year: €1,871 million).

The Covestro Group’s EBITDA in the third quarter of 2018 remained at the level of the prior-year period, at €859 million (previous year: €862 million). Volume growth and the gains from the aforementioned sale amounting to €36 million were offset by a decline in margins.

EBITDA in the Polycarbonates segment rose by 49.3% to €315 million (previous year: €211 million). In the Coatings, Adhesives, Specialties segment, it totaled €126 million, remaining at the level of the prior-year quarter (previous year: €125 million). EBITDA in the Polyurethanes segment dropped 21.5% to €432 million (previous year: €550 million).

The Covestro Group’s EBIT also remained stable at the prior-year level in the third quarter of 2018, amounting to €707 million (previous year: €705 million).

Financial position

Compared with the prior-year quarter, operating cash flow decreased to €766 million (previous year: €775 million).

Free operating cash flow was down to €578 million in the third quarter of 2018 (previous year: €658 million). This was chiefly the result of the expected increase in cash outflows for additions to property, plant, equipment and intangible assets in the amount of €188 million (previous year: €117 million).

The Covestro Group’s net financial debt increased by €108 million from December 31, 2017, to €391 million as of September 30, 2018. Cash and cash equivalents as well as cash inflows from operating activities and maturing short-term bank deposits were used to redeem the first tranche of the €500 million debt issuance program and for Covestro AG’s dividend payment of €436 million. Moreover, additional shares with a total value of €974 million were purchased under the share buy-back program in the first three quarters of 2018. Covestro AG repurchased 12,391,524 shares between January 1, 2018, and September 30, 2018.