Fiscal 2020: Significant improvement in second half of year

Covestro successfully navigates exceptional year 2020


  • Core volumes down by 5.6%
  • Group sales approximately EUR 10.7 billion (–13.7%)
  • Free operating cash flow increased to EUR 530 million (+12.1%)
  • Realignment of strategy towards becoming fully circular

 

Covestro saw a strong end to an exceptional year in 2020 and benefited, especially in the second half, from its consistent crisis prevention measures and a recovery in demand. Core volumes sold in the fourth quarter of 2020 rose by 1.7% globally over the prior-year period. Global group sales therefore increased by 5.0% to EUR 3.0 billion as a result of higher selling prices. Net income climbed sharply from EUR 37 million in the prior-year quarter to EUR 312 million. FOCF also increased in the fourth quarter, by 19.4% to EUR 394 million.

 

Despite the very successful fourth quarter, the Group could not fully compensate the massive, pandemic-related cut-backs that arose in the first six months. In 2020, the Group's core volumes sold were down by 5.6% over the prior-year period. Group sales also declined, falling 13.7% year over year to approximately EUR 10.7 billion. By implementing extensive cost-saving measures, Covestro could be able to finish fiscal 2020 as forecast at approximately EUR 1.5 billion (previous year: approx. EUR 1.6 billion). Net income reached EUR 459 million (–16.8%), while free operating cash flow (FOCF) increased to EUR 530 million (+12.1%).

 


“We were able to successfully navigate through this highly exceptional year and maintained our ability to act at all times. We took a broad range of measures to protect our employees, keep supply chains running, and expand our strong liquidity position,” said CEO Dr. Markus Steilemann. “In fiscal 2020, we therefore were able to actively pursue our strategic goals. We defined our vision to become fully circular and took a major step in this direction with the announced acquisition of the Resins & Functional Materials business from DSM.”

 

For fiscal 2021, Covestro expects core volume growth of between 10% and 15%. Around 6 percentage points of this figure are attributable to the planned acquisition of the Resins & Functional Materials (RFM) business from DSM, that the Group announced.

 


Realignment of the strategy: Vision as guiding principle 

Earlier in 2020, Covestro announced to become fully circular. To fulfill this long-term vision and embed circularity into all areas of its business activities, the Group decided to focus on four topics: alternative raw materials, innovative recycling, joint solutions, and renewable energies. With the clear goal of becoming fully circular and as an answer to changing market expectations, Covestro has consequently aligned its Group strategy.

 

This effort is centered on increased customer orientation and sustainable growth. Starting on July 1, 2021, Covestro will manage its business in a new, tailored structure around seven business entities aligned to customer needs and the competitive landscape. Going forward, the Group will distinguish between two business areas, Performance Materials as well as Solutions and Specialties.

 

  • Performance Materials: This area will form a separate business entity and will comprise Standard Polycarbonates, Standard Urethane Components, and Basic Chemicals.
  • Solutions and Specialties: This area will consist of the six new business entities Tailored Urethanes, Coatings and Adhesives, Engineering Plastics, Specialty Films, Elastomers, and Thermoplastic Polyurethanes.

Covestro is combining the consistent alignment of products and processes with its customers’ needs with an even sharper focus on addressing sustainability in a profitable way. In the future, the Group will apply sustainability criteria even more stringently when undertaking investments, acquisitions, and R&D activities. As part of its transition towards a circular economy, Covestro is also expanding its portfolio of circular products.

 

“Our vision to become fully circular is charting the direction of our new Group strategy. The new structure is creating an optimal starting point for the future and will position us to become significantly more competitive,” according to Steilemann. “This will enable us to better meet our customers’ needs, make our company more efficient and effective, and generate sustainable growth. We are truly driving forward the transformation towards a circular economy."

About Covestro:

With 2020 sales of EUR 10.7 billion, Covestro is among the world’s leading polymer companies. Business activities are focused on the manufacture of high-tech polymer materials and the development of innovative, sustainable solutions for products used in many areas of daily life. In doing so, Covestro is fully committed to the circular economy. The main industries served are the automotive and transportation industries, construction, furniture and wood processing, as well as electrical, electronics, and household appliances industries. Other sectors include sports and leisure, cosmetics, health and the chemical industry itself. At the end of 2020, Covestro has 33 production sites worldwide and employs approximately 16,500 people (Information as of the end of 2020)

Note to editors:

Please find a table showing key data for Covestro AG for fiscal 2020 in the side column.

  • The Annual Press Conference starts at 10 a.m. CET. You can follow the conference live here.
  • The presentation of the Annual Press Conference is available in the digital press kit from 10 a.m. CET here:  https://www.covestro.com/press/
  • The Annual Report 2020 is available online at: https://report.covestro.com

Forward-looking statements

This news release may contain forward-looking statements based on current assumptions and forecasts made by Covestro AG. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. These factors include those discussed in Covestro’s public reports which are available at www.covestro.com. The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.