Results of Operations and Financial Position of the Covestro Group
Results of Operations
In the first quarter of 2022, Group sales grew by 41.6% to €4,683 million (previous year: €3,307 million). The main factors were much higher average selling prices, which had a positive impact on sales amounting to 22.9%. Moreover, the portfolio change arising from the acquisition of the Resins & Functional Materials (RFM) business from Koninklijke DSM N.V., Heerlen (Netherlands), in the second quarter of 2021 and exchange rate movements had positive effects on sales of 9.5% and 5.6%, respectively. The change in total volumes sold had a positive effect on sales amounting to 3.6%.
In the first quarter of 2022, sales rose by 37.2% to €2,388 million (previous year: €1,740 million) in the Performance Materials segment and 45.3% to €2,222 million (previous year: €1,529 million) in the Solutions & Specialties segment. Sales increased in all regions in the first quarter of 2022. In the EMLA region, sales climbed by 38.1% to €2,074 million (previous year: €1,502 million). Sales rose by 72.0% to €1,116 million (previous year: €649 million) in the region NA region and by 29.2% to €1,493 million (previous year: €1,156 million) in the APAC region.
Sales by segment and region
€ million
1 EMLA: Europe, Middle East, Latin America (excluding Mexico), Africa region.
2 NA: North America region (Canada, Mexico, United States).
3 APAC: Asia and Pacific region.
The Group’s EBITDA improved by 8.5% to €806 million in the first quarter of 2022 (previous year: €743 million), primarily due to positive currency effects and an increase in total volumes sold. In addition, lower provisions for variable compensation and the acquisition of RFM in the second quarter of 2021 each had a positive effect on earnings. Margins were down in contrast as the result of a sharp rise in raw material and energy prices. However, a higher selling price level largely compensated for this development.
EBITDA in the Performance Materials segment decreased by 1.6% to €620 million (previous year: €630 million). In the Solutions & Specialties segment, EBITDA was up 23.8% to €224 million (previous year: €181 million).
The Covestro Group’s EBIT was up by 5.9% to €589 million in the first quarter of 2022 (previous year: €556 million).
Financial Position
Cash flows from operating activities totaled €157 million in the first quarter of 2022 (previous year: €428 million). The lower cash inflows year-over-year are mainly due to an increase in cash tied up in working capital and higher income tax payments.
Free operating cash flow was down, amounting to €17 million in the first quarter of 2022 (previous year: €318 million), largely due to lower cash flows from operating activities.
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Dec. 31, 2021 |
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Mar. 31, 2022 |
|---|---|---|---|---|
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€ million |
|
€ million |
Bonds |
|
1,492 |
|
1,492 |
Liabilities to banks |
|
275 |
|
289 |
Lease liabilities |
|
761 |
|
744 |
Liabilities from derivatives |
|
11 |
|
26 |
Other financial liabilities |
|
2 |
|
2 |
Receivables from derivatives |
|
(34) |
|
(28) |
Financial debt |
|
2,507 |
|
2,525 |
Cash and cash equivalents |
|
(649) |
|
(623) |
Current financial assets |
|
(453) |
|
(434) |
Net financial debt |
|
1,405 |
|
1,468 |
In comparison with December 31, 2021, the Covestro Group’s financial debt increased slightly, by €18 million to €2,525 million as of March 31, 2022.
Cash and cash equivalents declined in comparison with the figure on December 31, 2021, by €26 million to €623 million, mainly on account of cash outflows for additions to property, plant and equipment and the buyback of treasury shares as part of the share buyback program launched in March 2022. Conversely, cash flows from operating activities of €157 million increased cash and cash equivalents. The sale of money market fund units and net investments in short-term bank deposits decreased current financial assets by €19 million to €434 million.
Net financial debt grew by €63 million compared with the figure on December 31, 2021, to €1,468 million as of March 31, 2022.