Results of Operations
Second Quarter of 2024
Group sales declined by 0.8% in the second quarter of 2024, to €3,690 million (previous year: €3,720 million). The decrease in sales was mainly a consequence of selling price levels, which were lower in all regions for demand-related reasons, combined with a decline in raw material prices being passed on to customers; these factors had a diminishing effect on sales of 9.7%. In contrast, an increase in volumes sold, especially in the APAC and EMLA regions, had a positive effect on sales of 9.3%. In addition, exchange rate movements had a reducing effect on sales of 0.4%.
Sales in the Performance Materials segment rose by 2.5% in the second quarter of 2024 to €1,834 million (previous year: €1,789 million). Sales in the Solutions & Specialties segment decreased by 3.3% to €1,810 million (previous year: €1,872 million).
1 EMLA: Europe, Middle East, Latin America (excluding Mexico), Africa region.
2 NA: North America region (Canada, Mexico, United States).
3 APAC: Asia and Pacific region.
In the EMLA region, sales were 3.7% lower, at €1,538 million (previous year: €1,597 million), and sales in the NA region were down 5.8% to €915 million (previous year: €971 million). The APAC region saw sales climb by 7.4% to €1,237 million (previous year: €1,152 million).
In the second quarter of 2024, the Group’s EBITDA decreased by 16.9% to €320 million (previous year: €385 million), mainly due to a demand-related decline in average selling prices, which lower raw material prices offset only to some extent. The resulting drop in margins therefore reduced earnings.
The second quarter of 2023 had additionally been affected by a non-recurring positive effect from the sale of the additive manufacturing business, which had increased prior-year earnings by €35 million. In connection with the "STRONG" transformation program, expenses in the low double-digit million euro range were additionally incurred in the second quarter of 2024 for the implementation of the program.
The rise in volumes sold, in contrast, had the effect of boosting earnings. Furthermore, the supplementary government subsidies of €24 million to compensate for electricity prices in Germany and lower provisions of €26 million for variable compensation had a beneficial impact on earnings.
Depreciation, amortization, impairment losses, and impairment loss reversals went up by 9.1% to €239 million in the second quarter of 2024 (previous year: €219 million), of which €219 million (previous year: €198 million) was attributable to property, plant and equipment and €20 million (previous year: €21 million) to intangible assets. In this context, as a result of the planned closure of the production site in Augusta, Georgia (United States), impairment losses of €21 million were recognized on property, plant and equipment, primarily plant installations and machinery, in the second quarter of 2024.
In the second quarter of 2024, the Covestro Group’s EBIT decreased by 51.2% to €81 million (previous year: €166 million).
Taking into account a financial result of €–29 million (previous year: €–36 million), income before income taxes fell to €52 million compared with the prior-year quarter (previous year: €130 million). The tax expense incurred in the second quarter of 2024 was €126 million (previous year: €85 million), resulting in a net loss after taxes totaling €74 million (previous year: net income of €45 million). After noncontrolling interests, the net loss amounted to €72 million (previous year: net income of €46 million). Compared to the prior-year quarter, earnings per share fell to €–0.38 (previous year: €0.24).
First Half of 2024
Group sales declined by 3.5% in the first six months of 2024, to €7,200 million (previous year: €7,463 million). The decrease was mainly due to demand-related lower selling price levels as well as to a decline in raw material prices being passed on to customers; these factors had an adverse effect on sales of 12.5%. This was set against higher volumes sold, especially in the APAC and EMLA regions, which had a positive effect on sales of 10.0%. In addition, exchange rate movements had an unfavorable impact of 1.0% on sales.
Both segments saw sales decline in the first half of 2024. In the Performance Materials segment, sales fell by 1.6% to €3,523 million (previous year: €3,581 million), while the Solutions & Specialties segment recorded a decrease of 4.7% to €3,577 million (previous year: €3,755 million).
1 EMLA: Europe, Middle East, Latin America (excluding Mexico), Africa region.
2 NA: North America region (Canada, Mexico, United States).
3 APAC: Asia and Pacific region.
In the EMLA region, sales were 6.0% lower, at €3,053 million (previous year: €3,247 million), and sales in the NA region were down 8.7% to €1,784 million (previous year: €1,953 million). Sales in the APAC region were up by 4.4% to €2,363 million (previous year: €2,263 million).
The Group’s EBITDA contracted by 11.6% to €593 million in the first half of 2024 compared with the prior-year period (€671 million). This was mainly attributable to a demand-related decline in the selling price level, which lower raw material prices offset only to some extent. In particular the resulting drop in margins had a negative impact on earnings.
Another reason for the year-on-year decline in sales was a non-recurring positive effect from the sale of the additive manufacturing business, which had increased earnings by €35 million in the first half of 2023. In connection with the "STRONG" transformation program, expenses in the low double-digit million euro range were additionally incurred for the implementation of the program in the first half of 2024.
In contrast, a rise in volumes sold boosted earnings. Furthermore, the supplementary government subsidies of €24 million to compensate for electricity prices in Germany and lower provisions of €31 million for variable compensation had a beneficial impact on earnings.
Depreciation, amortization, impairment losses, and impairment loss reversals went down by 3.2% to €451 million in the first half of 2024 (previous year: €466 million), of which €412 million (previous year: €409 million) was attributable to property, plant and equipment and €39 million (previous year: €57 million) to intangible assets. In this context, as a result of the planned closure of the production site in Augusta, Georgia (United States), impairment losses of €21 million were recognized on property, plant and equipment, primarily plant installations and machinery, in the first half of 2024.
The Covestro Group’s EBIT was down 30.7% to €142 million in the first half of 2024 (previous year: €205 million).
Taking into account a financial result of €–59 million (previous year: €–65 million), income before income taxes went down to €83 million compared with the previous year (€140 million). After deduction of the tax expense of €194 million for the first half of 2024 (previous year: €122 million), the net loss after taxes totaled €111 million (previous year: net income of €18 million). After noncontrolling interests, the net loss amounted to €107 million (previous year: net income of €20 million). In the first half of 2024, earnings per share decreased to €–0.57 (previous year: €0.11).