Economic Outlook

Global economy

The grave consequences of the coronavirus pandemic are having a substantial negative impact on the global economy. In contrast with our outlook in the 2019 Annual Report, we now project global economic output to drop significantly for a decline in growth of 4.6% for 2020 as a whole. The expectations for all regions were revised sharply downward. According to current estimates, we expect only China to post slightly positive growth. The economies in Europe, North America and Latin America are forecast to report negative growth rates. After two quarters of recession in the first half of 2020, however, the third quarter of 2020 saw the global economy enter a recovery, which is expected to continue in the fourth quarter of 2020.

Economic growth1










Growth 2019


Growth forecast 2020
(Annual Report 2019)


Growth forecast 2020






















of which Western Europe







of which Germany







of which Eastern Europe







Middle East







Latin America














North America2







of which United States














of which China








Real growth of gross domestic product; source: IHS (Global Insight), Growth 2019 and Growth forecast 2020 as of October 16, 2020


North America (not including Central America): Canada, Mexico, United States

Main customer industries*

We expect the coronavirus pandemic to also have a significant adverse impact on the performance of our main customer industries in fiscal 2020. In contrast to the significant losses felt in the first half of 2020, all of our main customer industries reported varying degrees of improvement in growth rates in the third quarter of 2020. Unlike our outlook in the 2019 Annual Report, we now believe the automotive industry will see a steep drop amounting to a double-digit percentage. Growth in the furniture industry will also likely be considerably weaker than expected. We project negative growth rates in the low single-digit range, down from our forecast in the 2019 Annual Report, for the electrical, electronics and household appliances industry as well as for the construction industry.

* Covestro’s estimate, based on the following sources: LMC Automotive Limited, B+L, CSIL (Centre for Industrial Studies), Oxford Economics. We limited the economic data of our “automotive and transportation” and “furniture and wood processing” main customer industries to the automotive and furniture segments (not the transportation or wood processing segments).

Forecast for key performance indicators

As a consequence of the third quarter 2020 results and early fourth quarter 2020 business performance, which were both better than expected, Covestro adjusted the forecast given in the 2020 Half-Year Financial Report on October 9, 2020. Based on the business performance described in this Quarterly Statement and the aforementioned economic outlook, and taking into consideration our potential risks and opportunities, we confirm the forecast for the rest of the 2020 fiscal year adjusted as compared with the 2020 Half-Year Financial Report. We expect our key performance indicators to develop as follows:

In the course of fiscal 2020, core volume growth is still projected to decline year over year (forecast in the 2020 Half-Year Financial Report: year-over-year decline).

Free operating cash flow (FOCF) is expected to be in the range between €0 million and plus €300 million this year (forecast in the 2020 Half-Year Financial Report: between minus €200 million and plus €300 million). FOCF in the Polycarbonates and Coatings, Adhesives, Specialties segments is anticipated to perform significantly better than FOCF in the Polyurethanes segment.

For fiscal 2020, the return on capital employed* (ROCE) is projected to amount to a mid-single-digit percentage (forecast in the 2020 Half-Year Financial Report: between minus 1% and plus 4%).

* 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.