Covestro AG is the parent company and strategic management holding company of the Covestro Group. The principal management functions for the entire Group are performed by the Board of Management. These include strategic planning for the Group, resource allocation, and executive and financial management. Covestro AG’s results of operations, financial position, and net assets are largely determined by the business performance of its subsidiaries.
The Financial Statements of Covestro AG are prepared in accordance with the German Commercial Code (HGB) and the German Stock Corporation Act (AktG). The company, headquartered in Leverkusen (Germany), is registered in the commercial register of the Local Court of Cologne under No. HRB 85281.
Covestro AG performs energy-specific services for Covestro Brunsbüttel Energie GmbH, Brunsbüttel (Germany), (affiliated power and gas grid operator) and therefore prepares activity reports in the areas of electricity supply and gas supply pursuant to Section 6b (3) Sentence 1 Nos. 2 and 4 of the German Energy Industry Act (EnWG).
There is a control and profit and loss transfer agreement between Covestro AG and Covestro Deutschland AG, Leverkusen (Germany). All profit not subject to a prohibition on transfer is transferred in full to Covestro AG at the end of the year. Losses are absorbed in full. Other retained earnings recognized during the term of the agreement must be released upon request by Covestro AG and used to compensate a net loss for the year or transferred as profit.
In addition, on February 27, 2024, another profit and loss transfer agreement was entered into between Covestro First Real Estate GmbH, Leverkusen (Germany), and Covestro AG. It was registered in the commercial register on May 31, 2024 and applies retrospectively for fiscal 2024. The contractual arrangements are identical to those in the existing agreement with Covestro Deutschland AG.
| Covestro AG income statement according to the German Commercial Code | ||
|---|---|---|
| 2023 | 2024 | |
| € million | € million | |
| Income from investments in affiliated companies – net | (70) | (28) |
| Interest expense – net | 107 | 108 |
| Other financial income – net | (5) | (5) |
| Net sales | 26 | 22 |
| Cost of services provided | (22) | (22) |
| General administration expenses | (87) | (103) |
| Other operating income | – | 2 |
| Other operating expenses | (2) | (1) |
| Income before income taxes | (53) | (27) |
| Income taxes | (71) | (28) |
| Net loss | (124) | (55) |
| Retained earnings brought forward from prior year | – | (124) |
| Withdrawal from other retained earnings | – | – |
| Net accumulated losses | (124) | (179) |
In fiscal 2024, Covestro AG generated a net loss of €55 million (previous year: €124 million). The change compared with the prior year was largely attributable to the net loss from investments in affiliated companies of €28 million (previous year: €70 million). The net loss from investments included the loss absorbed under the control and profit and loss transfer agreement with Covestro Deutschland AG of €78 million, which was partially offset by gains from the control and profit and loss transfer agreement with Covestro First Real Estate GmbH of €50 million.
In addition to interest expense of €41 million (previous year: €44 million) for the euro bonds issued, the interest result included mainly interest income of €178 million (previous year: €176 million) on loans extended to Covestro Deutschland AG. Interest expense of €28 million (previous year: €31 million) was incurred in the reporting year on external loans from third parties. Other financial income and expenses mainly comprised bank fees totaling €5 million (previous year: €5 million). These included fees for providing the company lines of credit, the prorated reversal of the discount on the bonds issued, and one-time fees associated with raising a loan.
General administration expenses totaling €103 million (previous year: €87 million) mainly consisted of personnel expenses for the employees of the Group holding company and members of the Board of Management. The rise in general administration expenses in fiscal 2024 was primarily due to higher expenses for consultancy services. This was set against reduced expenses for short-term variable compensation.
The result of operations was €–27 million (previous year: €–53 million) and led to income taxes of €28 million (previous year: €71 million). This led to a net loss for the year of €55 million (previous year: €124 million), which also represents the net accumulated losses for the reporting year. This amount is carried forward to new account.
Based on the forecast from the Annual Report 2023, the net loss for fiscal 2024 was expected to be significantly higher than the figure recorded in the previous year. In contrast, the net loss of €55 million for fiscal 2024 means that the business performed considerably better than expected in the forecast. The was due primarily to a better result from investments and lower income taxes. The improvement in the result from investments was mainly attributable to income from the control and profit and loss transfer agreement concluded with Covestro First Real Estate GmbH in fiscal 2024.
| Covestro AG statement of financial position according to the German Commercial Code | ||
|---|---|---|
| Dec. 31,2023 | Dec. 31,2024 | |
| € million | € million | |
| ASSETS | ||
| Noncurrent assets | 1,830 | 1,830 |
| Property, plant and equipment | – | – |
| Financial assets | 1,830 | 1,830 |
| Current assets | 4,953 | 4,668 |
| Trade accounts receivable | 38 | 1 |
| Receivables from affiliated companies | 4,858 | 4,591 |
| Other assets | 57 | 76 |
| Deferred charges | 10 | 8 |
| Excess of plan assets over pension liability | 1 | 2 |
| Total assets | 6,794 | 6,508 |
| EQUITY AND LIABILITIES | ||
| Equity | 3,939 | 3,884 |
| Capital stock | 189 | 189 |
| Own shares | – | – |
| Issued capital | 189 | 189 |
| Capital reserve | 3,757 | 3,757 |
| Other retained earnings | 117 | 117 |
| Net accumulated losses | (124) | (179) |
| Provisions | 97 | 145 |
| Provisions for pensions | 21 | 24 |
| Provisions for taxes | 34 | 50 |
| Other provisions | 42 | 71 |
| Liabilities | 2,758 | 2,479 |
| Bonds | 2,000 | 1,500 |
| Liabilities to banks | 621 | 821 |
| Trade accounts payable | 11 | 23 |
| Payables to affiliated companies | 109 | 81 |
| Other liabilities | 17 | 54 |
| Total equity and liabilities | 6,794 | 6,508 |
Covestro AG had total assets of €6,508 million as of December 31, 2024 (previous year: €6,794 million). The net assets and financial position of Covestro AG was dominated by its role as a holding company in managing subsidiaries and financing corporate activities. This was primarily reflected in the levels of financial assets (28.1% of total assets), receivables from affiliated companies (70.5% of total assets), and bonds and liabilities to banks.
Receivables from affiliated companies were down €267 million to €4,591 million (previous year: €4,858 million). This change was primarily attributable to a reduction in the intercompany loan to Covestro Deutschland AG, set against receivables from Covestro First Real Estate GmbH under the profit and loss transfer agreement.
All receivables and other assets has maturities of less than one year.
Property, plant and equipment was immaterial. Trade accounts receivable of €1 million (previous year: €38 million) and prepaid expenses of €8 million (previous year: €10 million) were also immaterial in relation to total assets. Other assets of €76 million (previous year: €57 million) mainly included income tax and VAT receivables.
Covestro AG’s equity amounted to €3,884 million (previous year: €3,939 million). This corresponded to an equity ratio of 59.7% (previous year: 58.0%). The capital stock and capital reserves was unchanged in fiscal 2024. The net loss for the year of €55 million led to a decline in equity.
Equity was set against provisions of €145 million (previous year: €97 million) and liabilities of €2,478 million (previous year: €2,758 million).
Provisions comprised provisions for pensions of €24 million (previous year: €21 million), tax provisions of €50 million (previous year: €34 million), and other provisions of €71 million (previous year: €42 million). The increase in provisions for taxes was largely attributable to the rise in provisions for settling possible tax claims. The rise in other provisions included a year-over-year increase in provisions for long-term variable compensation as well as provisions for consultancy services.
The decline in liabilities was mainly attributable to the repayment of the euro bond issued in the year 2016. This bond, which had a face value of €500 million, was repaid as scheduled in September 2024. Liabilities to banks rose at the same time, mainly due to a loan raised in the amount of €200 million. Moreover, commercial paper amounting to €40 million in the portfolio as of the reporting date led to an increase in other liabilities. The remaining euro bonds totaling €1.5 billion have the following maturities: €1.0 billion matures in one to five years, and another €500 million matures in or after the year 2030. Moreover, liabilities to banks totaling €469 million are due in the year 2025, another €152 million is due in one to five years, and €200 million in or after the year 2030. All other liabilities are due within one year.