Forecast for the Covestro Group

The analysis of the development of our key management indicators is based on the business performance described in this Quarterly Statement, the economic outlook outlined above, and consideration of our potential risks and opportunities. Our forecast does not include the potential effects of a supply bottleneck, e.g., as the result of a halt to Russian natural gas deliveries, or the possible tightening of restrictions to combat the coronavirus such as prolonged lockdowns in China.

Despite good business performance in the first quarter of 2022, Covestro adjusted the forecast for fiscal 2022. This resulted from the current pandemic-related lockdown in China, especially in the Shanghai region, continued significant increases in energy and raw material costs, as well as weaker than expected growth of the global economy. We now expect the following developments in our key management indicators for fiscal 2022:

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Forecast for key management indicators

 

 

 

 

 

 

 

 

 

2021

 

Forecast 2022
(Annual Report 2021)

 

Adjusted forecast 20221

EBITDA2

 

€3,085 million

 

Between €2,500 million
and €3,000 million

 

Between €2,000 million
and €2,500 million

Free operating cash flow3

 

€1,429 million

 

Between €1,000 million
and €1,500 million

 

Between €400 million
and €900 million

ROCE4 over WACC5

 

12.9% points

 

Between 5% points
and 9% points

 

Between 1% point
and 5% points

Greenhouse gas emissions6 (CO2 equivalents)

 

5.2 million metric tons

 

Between 5.6 million metric tons
and 6.1 million metric tons

 

Between 5.5 million metric tons
and 6.0 million metric tons

1

Published on May 2, 2022.

2

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

3

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

4

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

5

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%).

6

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

For the Covestro Group’s EBITDA, we forecast a figure between €2,000 million and €2,500 million. The Performance Materials segment’s EBITDA is still expected to be significantly down on the amount for the year 2021. In the Solutions & Specialties segment, however, we continue to project an EBITDA well over the figure for the year 2021.

The Covestro Group’s FOCF is forecast between €400 million and €900 million. For the Performance Materials segment, we still expect FOCF to fall significantly short of the figure for the year 2021. In contrast, FOCF in the Solutions & Specialties segment is projected to significantly exceed FOCF in the year 2021.

We anticipate that ROCE above WACC will be between 1% point and 5% points.

The Covestro Group’s GHG emissions measured as CO2 equivalents are projected to be between 5.5 million and 6.0 million metric tons.