Forecast Update Report

Economic Outlook

We expect the global economy to grow at the same pace as in the previous year, by slightly over 3% in 2018. Our current assessment of the macroeconomic environment and developments in the individual regions is therefore largely in line with our outlook in the Annual Report 2017, despite increasingly challenging economic conditions.

We also see only a minor change, or none at all, as compared with our expectations in the Annual Report 2017 for the performance of our main customer industries, not taking into account any adverse consequences arising from existing or potential future global trade barriers.

Forecast for Key Data

Based on the business performance described in this quarterly statement, along with our consideration of the potential associated risks and opportunities, we confirm the forecast for key data for the rest of the 2018 fiscal year made in the half-year financial report for 2018.

We expect core volume growth in the low-to-mid-single-digit-percentage range. This projection applies to the Covestro Group as well as the Polyurethanes, Polycarbonates, and Coatings, Adhesives, Specialties segments. The Polycarbonates and Coatings, Adhesives, Specialties segments are anticipated to outperform the Polyurethanes segment somewhat.

In fiscal 2018, free operating cash flow is expected to exceed €2 billion. We anticipate that free operating cash flow will be significantly above the previous year’s level in the Polycarbonates segment, and slightly above the previous year’s level in the Polyurethanes and Coatings, Adhesives, Specialties segments.

We expect ROCE¹ around the 2017 level in the 2018 fiscal year.

¹ ROCE: The return on capital employed is calculated as the ratio of EBIT after taxes to capital employed. Capital employed is the capital used by the company. It is the sum of current and noncurrent assets less noninterest-bearing liabilities such as trade accounts payable.