Significant Events

War in Ukraine

The Russian war against Ukraine, which began in February 2022, has had a notable impact on the global economy. The worldwide consequences for the energy and raw material markets also influenced Covestro’s business situation. Covestro ceased all business activities with Russia and Belarus in the first half of 2022 and has now closed the sales support office in Russia; the Russian company is currently undergoing an official liquidation process. This means that Covestro does not operate any locations in the countries affected by the war (Russia, Belarus, and Ukraine) so that the international sanctions imposed on Russia and Belarus are having only an indirect effect on Covestro’s business. 

Energy Crisis

The tense situation on the energy markets, especially in the EMLA region, exacerbated further in the third quarter of 2022 and led to a substantial rise in energy prices, particularly in Europe.

Covestro is an energy-intensive company and depends to a large extent on gas. It is predominantly used as a source of energy and as process gas in chemical reactions and there is no comprehensive short-term substitute for gas in the production processes. For this reason, Covestro, along with large parts of the chemical industry, is majorly affected by the persistently high and volatile energy prices, which can at present be passed on to customers only to a small extent.

Covestro continued to receive gas supplies to meet its demand in the third quarter of 2022, thus ensuring supplies at our production locations. There is, however, uncertainty about future supplies: if the gas supply to companies is rationed, this may have considerable consequences for all of Covestro’s locations in Europe, depending on the scale of the reduction.
See “Opportunities and Risks.”

Coronavirus Pandemic

The coronavirus pandemic did not have any major impact on Covestro’s business situation in the third quarter of 2022. Production at our sites was again not affected by the pandemic. Unlike in the first half of 2022, there were no more logistical bottlenecks at the location in Shanghai (China) either.

Sale of Additive Manufacturing Business

On August 5, 2022, Covestro signed an agreement for the sale of its additive manufacturing business to Stratasys, a U.S.-Israeli manufacturer of 3D printers and 3D production systems. The selling price is €43 million. In addition, the agreement specifies a variable earn-out of up to €37 million, which depends on the achievement of various success factors. The business offers material solutions for common polymer 3D printing processes. The portfolio of the additive manufacturing business also comprises products of the Resins & Functional Materials business acquired from Koninklijke DSM N.V., Heerlen (Netherlands), in fiscal 2021. The transaction is expected to be completed in the first quarter of 2023.
See “Divestitures.”

Issuance of a European Commercial Paper Program (ECPP)

On August 26, 2022, Covestro established a European Commercial Paper Program (ECPP) with a potential total volume of €1.5 billion in order to allow the company to issue notes in different currencies and tenors of up to one year on a flexible basis. In September 2022, Covestro issued commercial paper in an amount of €150 million under the ECPP.

Further information at: www.covestro.com/en/investors/debt/european-commercial-paper-program