Business Performance at a Glance

Significant Events

Coronavirus pandemic

Business performance in the year 2020 as a whole was heavily influenced by the coronavirus pandemic. Demand in our main customer industries reached its low in the second quarter of fiscal 2020, followed by a strong recovery in demand in the second half of the year. Covestro took a wide range of steps early on to protect the health of all its employees, secure its delivery capabilities, and safeguard its strong liquidity position. For instance, we implemented far-reaching health, safety, and hygiene measures at our sites. Depending on the local situation in each case, some of our staff, particularly employees in administrative departments, are working from home. Production has continued at our sites, for the most part unimpeded by the pandemic.

In anticipation of economic challenges, the Board of Management initiated measures for cost control in the course of the planning for fiscal 2020. In response to the coronavirus pandemic, the Board of Management once again raised the target for these cost savings. In total, we achieved short-term cost savings of €360 million during the reporting year compared with the original planning before resolving the additional measures. This step was taken in addition to the Perspective efficiency improvement program, which was launched in the year 2018 and successfully completed in fiscal 2020, cutting costs by €130 million in total. In addition, the figure for capital expenditure was lowered from the original projection. Investments totaled €704 million in fiscal year 2020 (projected: €900 million).

The Board of Management, the Supervisory Board, and Covestro employees are working together in solidarity to reach these goals and put the company in an even more robust position in the current environment. At all our German companies, the Board of Management and employee representatives agreed to implement a model to reduce working hours for six months while adjusting pay for all employees. The percentage reduction in compensation increased up the pay scale. Covestro’s Board of Management and Supervisory Board are participating by accepting a 15% pay cut. All Covestro Group companies outside Germany implemented comparable country-specific measures to reduce costs. However, because the economic situation during the second half of fiscal 2020 proved to be more positive than expected, participants in the solidarity initiative worldwide received a one-time gross compensation payment at year-end.

Covestro is continually monitoring the development of the coronavirus pandemic worldwide to ensure that the company can react quickly when necessary. Existing measures are modified or expanded as required in line with recommendations and instructions issued by the relevant governments and committees of experts.

Other events

On January 2, 2020, Covestro successfully concluded the sale of its European polycarbonate sheets business to the Serafin Group. This included central management and distribution functions in Europe and production sites in Belgium and Italy. Serafin has pledged to continue operations at all sites. Covestro will continue to act as a key supplier of raw materials for the foreseeable future.

Covestro has taken various steps to safeguard its liquidity. Effective March 17, 2020, Covestro obtained a syndicated revolving credit facility totaling €2.5 billion with a term of five years. On June 5, 2020, Covestro also successfully placed €1.0 billion in euro bonds on foreign debt markets.

Moreover, a dividend for fiscal 2019 of €1.20 per share carrying dividend rights was resolved at Covestro’s first virtual Annual General Meeting (AGM) on July 30, 2020. The Board of Management had previously proposed a dividend of €2.40 per share carrying dividend rights to the AGM originally scheduled for April 17, 2020, in Bonn (Germany).

In July 2020, Covestro AG’s Supervisory Board voted in favor of an early extension of the contract with Board of Management member Dr. Thomas Toepfer. The contract now runs for five years from April 1, 2021, to March 31, 2026. Dr. Toepfer has held the position of Chief Financial Officer (CFO) and Labor Director since April 1, 2018.

On September 30, 2020, Covestro signed an agreement to acquire the Resins & Functional Materials (RFM) business from Koninklijke DSM N.V., Heerlen (Netherlands), for a preliminary purchase price of €1.6 billion. The goal is to build up Covestro’s sustainable and innovative business activities to support the long-term corporate strategy. RFM’s integration into the Coatings, Adhesives, Specialties segment significantly expands the portfolio of high-growth sustainable coating resins. As part of the announced acquisition, Covestro successfully carried out a capital increase of 10,200,000 no-par value bearer shares on October 13, 2020, using a portion of the Authorized Capital 2020 for this purpose. The gross issuing proceeds (before commission and costs) amounted to €447 million and will be used to finance the purchase price.

Overall Assessment of Business Performance and Target Attainment

Business performance

Fiscal year 2020 was a challenging one for the Covestro Group, in part owing to the coronavirus pandemic. Compared with the prior year, trailed well behind the results of fiscal 2019. This development is primarily due to a pandemic-related drop in demand in the first half of fiscal 2020, whereas in the second half, core volumes sold again exceeded the prior-year figure. At €1,472 million, was down (previous year: €1,604 million), although cost-cutting measures played a major role in countering an even greater decrease. As a result of the pandemic, cash outflows for additions to property, plant, equipment, and intangible assets declined to €704 million (previous year: €910 million). Despite the lower EBITDA, rose to €530 million (previous year: €473 million).

Target attainment

In the 2019 Annual Report, the Covestro Group published a forecast for key performance indicators in fiscal 2020. The Board of Management lowered the forecasts for all key management indicators for fiscal 2020 as a whole on April 15, 2020, as a result of business performance in the first quarter of fiscal 2020, which was heavily influenced by the coronavirus pandemic. After the business situation showed signs of a robust recovery in the second half of the year 2020, the Board of Management again adjusted the fiscal 2020 forecast on October 9, 2020. The recovery continued apace, and the forecast for the year as a whole was again modified on December 8, 2020. The Covestro Group most recently anticipated a decline in volumes between –5% and –6% after originally projecting volume growth in the low-single-digit percentage range. Also adjusted was the expected FOCF and performance. After initially projecting FOCF of between €0 million and €400 million, the Covestro Group changed this range in December 2020 to between €400 million and €550 million for the full year. The original ROCE forecast of 2% to 7% was lifted to the mid-single-digit percentage range in October 2020.

Despite the massive downturn in business in the first half of 2020, we were able to meet or exceed the profitability and liquidity forecasts from fiscal 2019. At –5.6%, our core volume growth fell below our original forecast target. Free operating cash flow for fiscal 2020 amounted to €530 million, exceeding the originally announced range, while ROCE at 7.0% came in at the upper end of the bandwidth originally communicated. In view of the most recently adjusted forecast from December 2020, the performance of all key performance indicators was as anticipated.

Target attainment for fiscal year 2020














Forecast 20201


Adjusted forecast 20202


Target attainment 2020

Core volume growth




Low single-digit-percentage range increase


Decrease of between –5% and –6%



Free operating cash flow


€473 million


Between €0 million and €400 million


Between €400 million and €550 million


€530 million





Between 2% and 7%


Mid-single-digit-percentage range increase




Published on February 19, 2020 (Annual Report 2019).


Published on December 8, 2020 (ad hoc notification).

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 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.
EBITDA/earnings before interest, taxes, depreciation and amortization
EBIT plus depreciation and amortization of property, plant, equipment, and intangible assets
FOCF/free operating cash flow
Operating cash flows (pursuant to IAS 7) less cash outflows for additions to property, plant, equipment and intangible assets
ROCE/return on capital employed
Ratio of operating result after imputed income taxes to the capital employed