Report on Future Perspectives

Economic Outlook

Global economy

The lingering coronavirus pandemic is likely to make the year 2021 remain a challenge for the global economy. On account of the increasing availability of vaccines and the resulting ability to wage a controlled fight against the pandemic, we expect all regions to return to positive growth rates, which should put overall global economic growth at around 4%.

Economic growth1








Growth 2020


Growth1 forecast 2021
















of which Western Europe





of which Germany





of which Eastern Europe





Middle East





Latin America










North America2





of which United States










of which China






Real growth of gross domestic product; source: IHS (Global Insight), as of January 2021.


North America (not including Central America): Canada, Mexico, United States.

We believe growth in Western Europe will slightly underperform the global pace. Pandemic-related restrictions continue to pose challenges for the economy. In contrast, the stimulus provided by the EU recovery fund, still-expansive fiscal policy, and the investment pact agreed between the EU and China had a positive impact on growth. Germany’s export-oriented economy should see growth of 2.8%.

In contrast, Eastern Europe and Africa are unlikely to be able to keep pace with this rate. Energy-producing countries in Eastern Europe, such as Russia, continue to face challenges in the form of low prices and production restrictions. In North Africa in particular, countries with a major tourism industry will remain under pressure, as this sector will stay below pre-pandemic levels in the first quarter of the year 2021 at a minimum. We anticipate that growth in the Latin America region will lie slightly below the global level. The reason for this is the expiration of economic stimulus programs.

Growth in the Middle East and North America will likely match that of the global economy, with the oil industry expected to be the driver of this expansion in the Middle East. Rising oil prices boost exporter income, which in turn will reduce the need for credit. An increasing number of coronavirus infections and the resulting measures implemented to curb the spread will hamper growth in the United States. The United States is nonetheless expected to recover relatively well due to new fiscal stimulus and could reach 2019 levels again by the end of the year 2021.

The Asia-Pacific region will probably succeed in controlling the pandemic with comparatively moderate restrictions. For this reason, it is expected to outpace the global economy earlier than other regions. Positive effects are expected from the new Regional Comprehensive Economic Partnership (RCEP) free trade agreement. In China, we project above-average economic growth of around 7.6% in the year 2021. However, the pace of recovery could be slowed by the expiration of economic policy measures.

Main customer industries*

We expect the automotive industry worldwide to return to positive growth of around 17% in the year 2021. Latin America will be the vanguard with the highest growth rate, but all other regions are expected to return to generating strong positive growth as well.

We anticipate positive growth of around 1% for the global construction industry. In Western Europe, growth is likely to be slightly positive. The construction industry in North America and the Asia-Pacific region should remain stable, whereas Eastern Europe and Latin America are expected to continue to report a mildly negative pace of growth.

In the year 2021, we project that the global electrical, electronics, and household appliances industry will grow by around 6%, again exceeding the prior-year level. All regions are expected to see strong positive growth rates, with Latin America and Asia-Pacific likely to somewhat outperform Europe and North America.

In the global furniture industry, fiscal year 2021 should bring growth of some 5%, mainly driven by expansion in the Asia-Pacific region. We expect an equally positive trend in Europe. In Latin America and North America, our forecast is for slightly positive growth rates.

* Covestro’s estimate, based on the following sources: LMC Automotive Limited, B+L, CSIL (Centre for Industrial Studies), Oxford Economics.

Forecast for the Covestro Group and Covestro AG

Covestro Group

The following forecast for the 2021 fiscal year is based on the business development described in this Annual Report and takes into account the potential opportunities and risks. The completion of the acquisition, which is planned for the first quarter of fiscal year 2021, and integration of the Resins & Functional Materials (RFM) business of Koninklijke DSM N.V., Heerlen (Netherlands), into the Coatings, Adhesives, Specialties segment has been factored into this forecast. One-time costs that could arise in conjunction with the LEAP transformation program have not been considered.

Covestro AG’s Board of Management expects the business situation to recover in fiscal year 2021, despite the coronavirus pandemic’s continued influence on the market, and the company to see robust growth, in part thanks to the planned acquisition.

Forecast key performance indicators










Forecast 2021

Core volume growth




Between 10% and 15%

Free operating cash flow


€530 million


Between €900 million and €1,400 million





Between 7% and 12%

We anticipate that for the Covestro Group will be between 10% and 15%, with around 6 percentage points attributable to the acquisition of the RFM business. Accordingly, we project growth for the Coatings, Adhesives, Specialties segment significantly above the corridor expected for the Group. In contrast, we expect growth in the mid- to high-single-digit percentage range in the Polyurethanes and Polycarbonates segments.

The Covestro Group’s (FOCF) is forecast to total between €900 million and €1,400 million. Owing to one-time expenses in conjunction with the planned acquisition, we expect FOCF in the Coatings, Adhesives, Specialties segment to be significantly below the prior-year value. In contrast, FOCF in the Polyurethanes and Polycarbonates segments will be significantly above the prior-year level.

We anticipate that return on () will be between 7% and 12%.

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, Covestro AG should generate a significantly over the level of the previous year. This forecast includes the acquisition and integration of the RFM business, which is scheduled for completion in the first quarter of fiscal year 2021. One-time costs that could arise in conjunction with the LEAP transformation program have not been considered.

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.
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 shareholders