Results of Operations and Financial Position of the Covestro Group

Results of Operations

Group sales declined by 6.2% in the first quarter of 2024, to €3,510 million (previous year: €3,743 million). The decrease in sales was mainly due to lower selling price levels in all regions as well as to a decline in raw material prices being passed on to customers; these factors had a diminishing effect on sales of 15.4%. In contrast, an increase in volumes sold, especially in the EMLA and APAC regions, had a positive effect on sales of 10.9%. This was boosted by higher plant availability, especially in the EMLA region. Exchange rate movements had a negative impact of 1.7% on sales.

In the first quarter of 2024, sales decreased by 5.7% to €1,689 million (previous year: €1,792 million) in the Performance Materials segment and by 6.2% to €1,767 million (previous year: €1,883 million) in the Solutions & Specialties segment. In the EMLA region, sales were 8.2% lower, at €1.515 million (previous year: €1.650 million), in the first quarter of 2024, while sales in the NA region were down 11.5% to €869 million (previous year: €982 million). In the APAC region, in contrast, sales climbed by 1.4% to €1,126 million (previous year: €1,111 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.

The Group’s EBITDA was down 4.5% to €273 million in the first quarter of 2024 (previous year: €286 million), largely because of lower margins. The decline in the selling price level was partially offset by lower raw material and energy prices. The rise in volumes sold had a positive effect on earnings, but the effect of exchange rate movements was negative.

EBITDA dropped by 40.5% to €103 million (previous year: €173 million) in the Performance Materials segment and increased by 26.1% to €208 million (previous year: €165 million) in the Solutions & Specialties segment.

The Covestro Group’s EBIT improved by 56.4% to €61 million in the first quarter (previous year: €39 million).

Financial Position

In the first quarter of 2024 cash outflows from operating activities amounted to €23 million (previous year: €19 million). This reflects higher income tax payments and a decline in EBITDA, which had a negative impact on cash flows from operating activities. On the other hand, less cash tied up in working capital had a beneficial effect on cash flows from operating activities.

Free operating cash flow improved, amounting to €–129 million in the first quarter of 2024 (previous year: €–139 million), largely due to a decline in cash outflows for additions to property, plant, equipment and intangible assets.

In comparison with December 31, 2023, the Covestro Group’s gross financial debt rose by €43 million to €3,431 million as of March 31, 2024. This was mainly due to a €40 million rise in lease liabilities.

Cash and cash equivalents were up €59 million in comparison with the figure on December 31, 2023, to €684 million. This was primarily attributable to net proceeds of €252 million from short-term bank deposits. Conversely, cash outflows of €106 million for additions to property, plant, equipment and intangible assets as well as negative cash flows of €75 million from financing activities and of €23 million from operating activities caused cash and cash equivalents to decline. The net proceeds from short-term bank deposits mentioned earlier led to a decrease in current financial assets by €252 million to €24 million.

Net financial debt therefore grew by €236 million compared with the figure on December 31, 2023, to €2,723 million as of March 31, 2024.