Dear Shareholders,

2025 was an exceptional year for Covestro – with groundbreaking highlights as well as challenges of unprecedented intensity. On the one hand, we had to face yet another deterioration in economic conditions, which weighed heavily on our business. On the other, in the tenth year of our successful existence, an important new chapter started for our company: the partnership with XRG, to which we look ahead with optimism.

We firmly believe that, with XRG as a strong player with a long-term outlook, Covestro is about to embark into an even better future. Together, we will be able to utilize our potential to the full extent to set new benchmarks in the chemical industry and help shape key megatrends. In particular, we want to pave the way into a sustainable, climate-neutral future for our customers in many key industries – a trend for which, in our view, there is no alternative in the long run.

By the same token, we see ourselves as a pioneer of the rapidly advancing digitalization, which we have identified as a major opportunity. Together with XRG, we want to drive advanced technologies such as artificial intelligence and quantum computing in this area. Overall, with this new partner by our side, we believe that we are perfectly positioned to continue to realize our Sustainable Future strategy and to stand our ground in a geoeconomic environment that is expected to remain difficult in future.

Against the backdrop of an unprecedented level of trade conflicts and protectionism, our business in the year 2025 was affected by strong competitive and price pressures. Persistently weak demand had a particularly detrimental effect. Combined with surplus capacities, this led to considerable oversupply in the global polymer market, resulting in massive price decreases and lower sales volumes. Alongside exchange rate movements and non-recurring effects, this resulted in our company’s sales and earnings being lower than the prior year. 

We continued to counter these adverse circumstances with cost discipline and numerous efficiency measures. In this context, we remained on a clear course to achieving our target of annual savings of €400 million by the year 2028. In addition, we continued to drive our long-term transformation on many levels in the past year. For example, our portfolio was honed further by making two acquisitions in attractive areas – highly specialized films and aliphatic isocyanates, which are important in coatings and adhesives.

At the same time, Covestro again invested in improving its production in the year 2025 to further increase reliability, safety, efficiency, and sustainability. At the Dormagen site, for example, following the modernization of our largest European plant for the manufacture of the flexible foam component TDI, the use of waste heat has resulted in a reduction of up to 70 percent in our energy use compared to conventional processes. Measures such as these contribute to increasing our energy efficiency, for which we set ourselves a new ambitious target last year: to manufacture every metric ton of product by the year 2030 using 20 percent less energy than in the year 2020. This will enable us to save more than half a million metric tons of CO2 – roughly equivalent to the annual emissions of a town with 70,000 citizens.

What is more, by steadily transitioning to renewable energies, we are making production increasingly environmentally compatible. For example, since the previous year, four of our sites in the United States have been fully supplied with green energy. This is one step of many toward making Covestro climate-neutral – by 2035, initially at operational level and then throughout the entire company by the middle of the century. This process goes hand in hand with our vision of fully aligning Covestro to the circular economy. We also continued to drive this major goal in the year 2025 – by switching to non-fossil raw materials and conducting research and development into innovative recycling technologies. 

As a result, we are increasingly offering climate-neutral, circular products and solutions. Our customers and partners were able to get a glimpse of these at K2025, the world’s largest plastics trade show in Düsseldorf. Under the motto “The Material Effect,” Covestro showed off its special know-how in the combination of material science, application development, and process technology. The result is innovative high-quality plastics for areas such as electronics, health care, sports, and leisure.

In the mobility sector, our company again laid emphasis on its expertise in materials in the year 2025. One example is the prototype of an electric bus that moves autonomously – thanks, among other things, to the high-performance plastic polycarbonate that integrates assistance systems and sensors. Another example of the possibilities of the mobility of the future is the “Sonnenwagen,” a solar-powered racing car for whose latest – further improved – version numerous high-performance materials from Covestro were used once again. 

With innovations such as these, our company has evolved into a trustworthy global partner for sustainable material solutions since it was established ten years ago. We therefore marked our company’s anniversary with pride and confidence around the globe in September 2025. What we have achieved in this time is due in particular to our roughly 17,500 employees. Within the framework of our unique corporate culture, they work tirelessly, contributing their know-how, creativity, passion, and courage to making the world a brighter place. For this, they all deserve special thanks.

On the threshold of the second decade, we now enter a new phase of our company’s history together with XRG. We look forward to creating a global platform for performance materials and special chemicals with our new partner. And we are confident that, with this strategic partnership, we will be able to unlock new opportunities, spur on sustainable and digital change, and create value for all stakeholders.

Warmest regards,

Markus Steilemann