Report on Future Perspectives

Forecast

Forecast key performance indicators

 

  

 

  

 

 

  

2019

  

Forecast 2020

Core volume growth

  

+2.0%

  

Low-single-digit-percentage range increase

Free operating cash flow

  

€473 million

  

Between €0 million and €400 million

ROCE

  

+8.4%

  

Between 2% and 7%

Covestro Group

The following forecast for the 2020 fiscal year is based on the business development described in this Annual Report and takes into account the potential risks and opportunities:

The Board of Management of Covestro AG assumes that fiscal 2020 will continue to be characterized by a challenging market environment. This circumstance means persistent pressure on our liquidity and profitability. Even so, we expect demand for our products to rise. Over the medium term, we expect an improvement in the supply/demand situation and therefore an increase in margins.

We expect in the low-single-digit-percentage range. This projection applies to the Covestro Group as well as to the Polyurethanes and Coatings, Adhesives, Specialties segments. Currently, we believe the Polycarbonates segment will perform somewhat better.

In fiscal 2020, we anticipate (FOCF) of between €0 million and €400 million. For the Coatings, Adhesives, Specialties segment, we expect FOCF to be moderately above the prior-year level.

In 2020, we project return on () of between 2% and 7%.

The forecast takes account of the negative impact of the coronavirus on business in China in the first quarter of 2020 that is foreseeable at the time of preparation (February 14, 2020). Beyond this, we cannot at present predict what impact this matter may have.

Covestro AG

The earnings of Covestro AG, as the parent company of the Covestro Group, largely comprise the earnings of that company’s subsidiaries. Covestro Deutschland AG’s earnings from equity investments in Germany and abroad are transferred to Covestro AG under a profit and loss transfer agreement. The earnings of Covestro AG are therefore expected to reflect the business development anticipated in the Covestro Group. On the whole, we expect Covestro AG to generate a significantly under the level of the previous year.

Core volume growth
Core volume growth refers to the core products in the Polyurethanes, Polycarbonates and Coatings, Adhesives, Specialties segments. It is calculated as the percentage change in externally sold volumes in thousand metric tons compared with the prior year. Covestro also takes advantage of business opportunities outside its core business, for example the sale of precursors and by-products such as hydrochloric acid, sodium hydroxide solution and styrene. These transactions are not included in core volume growth.
FOCF/free operating cash flow
Operating cash flows (pursuant to IAS 7) less cash outflows for additions to property, plant, equipment and intangible assets
Capital employed
Capital employed is the sum of noncurrent and current assets less non-interest-bearing liabilities such as trade accounts payable.
ROCE/return on capital employed
Ratio of operating result after imputed income taxes to the capital employed
Net income
Income after income taxes that is attributable to the stockholders