Financial Position
| Summary statement of cash flows | ||||
|---|---|---|---|---|
| 2nd quarter 2023 |
2nd quarter 2024 |
1st half 2023 |
1st half 2024 |
|
| € million | € million | € million | € million | |
| EBITDA | 385 | 320 | 671 | 593 |
| Income taxes paid | (95) | (42) | (117) | (80) |
| Change in pension provisions | (7) | (8) | (17) | (19) |
| (Gains)/losses on retirements of noncurrent assets | (34) | (4) | (34) | (7) |
| Change in working capital/other noncash items | (100) | (247) | (373) | (491) |
| Cash flows from operating activities | 149 | 19 | 130 | (4) |
| Cash outflows for additions to property, plant, equipment and intangible assets | (159) | (166) | (279) | (272) |
| Free operating cash flow | (10) | (147) | (149) | (276) |
| Cash flows from investing activities | (179) | (375) | (458) | (218) |
| Cash flows from financing activities | (173) | 244 | (126) | 169 |
| Change in cash and cash equivalents due to business activities | (203) | (112) | (454) | (53) |
| Cash and cash equivalents at beginning of period | 949 | 684 | 1,198 | 625 |
| Change in cash and cash equivalents due to exchange rate movements | (5) | (3) | (3) | (3) |
| Cash and cash equivalents at end of period | 741 | 569 | 741 | 569 |
Cash Flows from Operating Activities/Free Operating Cash Flow
In the second quarter of 2024, net cash inflows from the Covestro Group’s operating activities amounted to €19 million (previous year: €149 million). A higher amount of funds tied up in working capital and a decline in EBITDA were only partially offset by lower income tax payments. The change in working capital was impacted especially by the payment of short-term variable compensation in an amount of €105 million for fiscal 2023. In the year 2023, no short-term variable compensation was paid for fiscal 2022. After deduction of cash outflows of €166 million for additions to property, plant and equipment and intangible assets (previous year: €159 million), free operating cash flow in the second quarter of 2024 totaled €–147 million (previous year:
Cash flows from operating activities in the first half of 2024 accounted for net outflows of €4 million (previous year: cash inflows of €130 million). That was predominantly attributable to a higher amount of cash tied up in working capital and the decrease in EBITDA. Lower income tax payments, on the other hand, had a positive effect on cash flows from operating activities. After deduction of cash outflows of €272 million for additions to property, plant and equipment and intangible assets (previous year: €279 million), free operating cash flow totaled €–276 million (previous year: €–149 million).
Cash Flows from Investing Activities
Net cash outflow for investing activities in the second quarter of 2024 totaled €375 million (previous year: €179 million). That was mainly due to net cash outflows of €198 million (previous year: €85 million) for short-term bank deposits and cash outflows of €166 million (previous year: €159 million) for additions to property, plant, equipment and intangible assets.
In the first half of 2024, the net cash outflow from investing activities totaled €218 million (previous year: €458 million). This was mainly due to cash outflows of €272 million (previous year: €279 million) for additions to property, plant and equipment and intangible assets. This was offset in particular by net inflows of €54 million for short-term bank deposits (previous year: net outflows of €272 million).
Cash Flows from Financing Activities
In the second quarter of 2024, the Covestro Group’s net cash inflow from financing activities totaled €244 million (previous year: net cash outflow of €173 million), mainly because of loans raised in the amount of €215 million as well as net proceeds of €116 million from current liabilities to banks in China. Outflows resulted primarily from lease payments of €39 million and interest payments of €34 million.
See note 8 “Financial Instruments” in the Notes to the Consolidated Interim Financial Statements.
In the first half of 2024, financing activities gave rise to a net cash inflow of €169 million (previous year: net cash outflow of €126 million). These cash inflows were above all attributable to the above-mentioned loans and the net proceeds from current liabilities to banks in China. Outflows resulted mainly from lease payments of €78 million and interest payments of €60 million.
| Net financial debt | ||
|---|---|---|
| Dec. 31, 2023 | June 30, 2024 | |
| € million | € million | |
| Bonds | 1,990 | 1,991 |
| Liabilities to banks | 657 | 965 |
| Lease liabilities | 743 | 769 |
| Liabilities from derivatives | 15 | 5 |
| Other financial liabilities | 2 | 2 |
| Receivables from derivatives | (19) | (15) |
| Gross financial debt | 3,388 | 3,717 |
| Cash and cash equivalents | (625) | (569) |
| Current financial assets | (276) | (220) |
| Net financial debt | 2,487 | 2,928 |
Gross financial debt grew by €329 million compared with the figure on December 31, 2023, to €3,717 million as of June 30, 2024. In addition to the increase of €308 million in liabilities to banks, this was also due to a rise of €26 million in lease liabilities. The rise in liabilities to banks was driven in particular by the loans described in the “Cash Flows from Financing Activities” section and by net proceeds from current liabilities to banks in China.
Cash and cash equivalents decreased in comparison with the figure on December 31, 2023, by €56 million to 569 million. This was mainly due to cash outflows of €272 million for additions to property, plant and equipment and intangible assets, set against cash inflows from financing activities of €169 million. Moreover, the net inflows for short-term bank deposits described in the “Cash Flows from Investing Activities” section raised cash and cash equivalents and led to a reduction in current financial assets.
In comparison with December 31, 2023, the Covestro Group’s net financial debt rose by €441 million to €2,928 million as of June 30, 2024.