Sales up, EBITDA down at Covestro in “challenging” economic environment

Leverkusen, Germany – Sales at materials specialist Covestro were €18bn in 2022, a rise of 13% on the previous year’s €15.9bn. Although this was a record sales figure for the company, volumes were lower. The headline sales figure was boosted by a significant increase in selling prices.

EBITDA was down by 48% to €1.6bn, from €3.1bn in 2021, as a result of high prices for both energy and raw materials, and a reduction in demand over the year. Net income for the year was negative, at –€272m, the first time the company has made a net loss. As a result, it will be making no dividend payments for the 2022 financial year.

Sales in the fourth quarter of 2022 had a particular impact on the overall figures for the year, falling by 8.6% to €4.0bn, down from 2021’s €4.3bn. EBITDA for the quarter plummeted from €663m in the 2021 quarter to –€38m in the 2022 quarter.

Business performance was impacted by global challenges that had significant and perceptible effects. “In particular, the sharp rise in energy and raw material prices during the year, especially in Europe, put a strain on the company,” it said. “This was compounded by continuing adverse effects caused by the coronavirus pandemic in China, high inflation and an overall slowdown in global economic growth.”

Looking at the two parts of the business, sales in the performance materials segment of €9.1bn were up 11.7% from 2022’s €8.1bn, largely driven by higher selling prices. The 63% fall in EBITDA to €951m was, for the most part, the result of slashed margins because of higher prices for both energy and raw materials, alongside a fall in sales volumes.

The headline performance in the solutions and specialties part of the business was better. Again, higher selling prices drove an increase in the headline sales figure, up by 13% to €8.6bn, from €7.6bn in 2021. EBITDA here increased by 9.9%, from €751m to €825m. This was attributed to the rapid integration of the resins and functional materials business it acquired from DSM in April 2021. “Lower non-recurring expenses and higher synergy effects had a positive impact on earnings,” the company said.

“2022 was a year of polycrisis with unprecedented challenges for Covestro,” said CEO Markus Steilemann. “That is reflected in our results for the fiscal year. The action we took last year was all the more resolute: We reduced our energy consumption, cut costs and worked on further developing our products.”

He also highlighted its efforts towards achieving its vision of a circular economy, alongside its “Sustainable Future” strategy. “We are continuously gearing our product portfolio towards sustainable growth markets such as wind energy or electromobility, and serving the increasing demand for circular solutions,” he said. “One thing is clear, our contribution is essential for a sustainable future.”

The company said that economic conditions “remain challenging” for 2023. It anticipates EBITDA for both the company as a whole and its performance materials business will be “well below” the previous year, while for solutions and specialities it expects similar EBITDA in 2023 to the 2022 level.