Quarterly Statement Third Quarter 2023

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Forecast, Opportunities and Risks

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.

After recently assuming a target attainment in the bottom half of each of the forecast ranges published on 28 April 2023, we have updated the guidance for fiscal 2023 in view of the existing adverse macroeconomic conditions and weak demand. We now expect the following developments in our key management indicators:

Forecast key management indicators

 

 

 

 

 

 

 

 

 

 

 

2022

 

Forecast 2023
(Annual Report 2022)

 

Forecast 2023
(April 28, 2023)

 

Forecast 2023
(October 27, 2022)

EBITDA1

 

€1,617 million

 

Significantly down on previous year

 

Between €1,100 million
and €1,600 million

 

Around €1,100 million6

Free operating cash flow2

 

€138 million

 

Significantly down on previous year

 

Between €0 million
and €500 million

 

Between €0 million
and €200 million

ROCE above WACC3, 4

 

–5.0% points

 

Significantly down on previous year

 

Between –6% points
and –2% points

 

Around –6% points6

Greenhouse gas emissions5 (CO2 equivalents)

 

4.7 million metric tons

 

Similar to previous year6

 

Between
4.2 million metric tons
and 4.8 million metric tons

 

Between
4.2 million metric tons
and 4.8 million metric tons

1

EBITDA: EBIT plus depreciation, amortization, and impairment losses; less impairment loss reversals on intangible assets and property, plant and equipment.

2

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

3

ROCE: ratio of EBIT after imputed income taxes to capital employed.

4

WACC: weighted average cost of capital reflecting the expected return on the company’s equity and debt capital. A figure of 7.6% has been taken into account for the year 2023 (2022: 7.0%).

5

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

6

This may entail a variance in the single-digit percentage range.

For the Covestro Group’s EBITDA, we now forecast a figure in the region of €1,100 million[*] (previously: between €1,100 million and €1,600 million). For the Performance Materials segment, our forecast remains unchanged with an EBITDA significantly below the figure for the year 2022. In the Solutions & Specialties segment, we continue to project an EBITDA on a level with the year 2022.*

The Covestro Group’s FOCF is now forecast to total between €0 million and €200 million (previously: between €0 million and €500 million). For the Performance Materials segment, we still expect FOCF to fall significantly short of the figure for the year 2022. In the Solutions & Specialties segment, however, we have not adjusted our forecast that FOCF is anticipated to be significantly higher than the amount of the year 2022.

We now expect ROCE above WACC in the region of –6% points* (previously: between –6% points and –2% points).

The Covestro Group’s GHG emissions measured as CO2 equivalents are still projected to be between 4.2 million metric tons and 4.8 million metric tons.

*This may entail a variance in the single-digit percentage range.

EBITDA / Earnings Before Interest, Taxes, Depreciation, and Amortization
EBIT plus depreciation and amortization of property, plant, equipment, and intangible assets.
FOCF / Free Operating Cash Flow
Operating cash flows (pursuant to IAS 7) less cash outflows for additions to property, plant, equipment and intangible assets.
ROCE / Return on Capital Employed
Ratio of EBIT after imputed income taxes to capital employed.
WACC / Weighted Average Cost of Capital
Weighted average cost of capital reflecting the expected return on the company’s equity and debt capital. Used for the internal measurement of the absolute value contribution.