Covestro: Managing challenging times

Shareholders approved all the resolutions proposed by the Board of Management and Supervisory Board by the required majority at Covestro AG’s Annual General Meeting on April 19, 2023. The actions of Covestro’s Board of Management and Supervisory Board were ratified. For the fourth year in succession, the Annual General Meeting was held virtually and broadcast live on the Internet. This year, shareholders and their proxies had the opportunity for the first time to submit their questions live via video link, similar to the right to speak and ask questions at physical meetings. A total of 120 questions were submitted during the event.

At the start of the event, Covestro CEO Dr. Markus Steilemann put the year and its challenges into perspective: “2022 was a year of polycrisis and posed many challenges for Covestro. Russia’s war of aggression on Ukraine, the rise in energy costs, the downturn in the global economy, and inflation also impacted on our results of operations. We took systematic action, however, and were able to reduce our energy demand, save costs, and make long-term efficiency improvements. We systematically implemented our strategy and continued to drive our vision of becoming fully circular to enable sustainable growth with our products.”

The complete focus on the circular economy was reinforced with the “Sustainable Future” strategy introduced in the year 2021. Growing demand for sustainable solutions and products and the increasing link between profitability and sustainability are ensuring a stable strategic foundation. There is a clear focus on sustainable high-growth markets and innovative products.

For example, Covestro offers different products for the wind energy market. Polyurethane infusion resins, for instance, allow the manufacture of increasingly longer, yet lighter and more stable rotor blades, thus extending their life and performance. Moreover, coatings and films from Covestro protect the rotor blades and wind turbine towers from wind and weather. The products offered to protect the leading edges of rotor blades alone are able to reduce repair and maintenance costs by up to 30 percent. In this way, the Covestro materials used will enhance the productivity of the wind turbine while cutting production and operating costs. This presents major potential for manufacturers of wind turbines and operators of wind farms.

“Our portfolio is focused on high-growth markets, which include areas of importance of the future, such as electromobility and wind energy. We are confident that, as soon as the economy starts up again, demand for sustainable, innovative, and high-performance materials will continue to increase,” says Steilemann. Covestro also expects growing demand for energy efficiency in the long term, for example in the area of efficient insulating solutions for buildings and refrigeration appliances.

No dividend distribution due to negative net income

In his speech, CFO and Labor Director Dr. Thomas Toepfer explained to shareholders the impact on the Group’s EBITDA of high energy and raw material prices and a decline in demand over the course of the year. It fell in full-year 2022 by almost half over the prior-year figure to EUR 1.6 billion (previous year: EUR 3.1 billion).

“Our business performance in the past year was adversely affected by the global crises. Net income declined to EUR –272 million, in particular as a result of exceptional impairments of noncurrent assets and impairment losses. Our dividend policy specifies that between 35 percent and 55 percent of net income should be distributed as dividend. Due to the net loss incurred in fiscal 2022 and in accordance with our dividend policy, we have therefore resolved not to distribute any dividend for fiscal 2022,” explains Toepfer.

New Board of Management member Dr. Thorsten Dreier

Dr. Klaus Schäfer, Covestro’s Chief Technology Officer (CTO), will retire as of June 30, 2023. He will be succeeded as from July 1, 2023 by Dr. Thorsten Dreier, the new Chief Technology Officer with responsibility for Process Technology; Engineering; Group Health, Safety & Environment; and Group Procurement. After completing a doctorate in chemistry, he started his career in Bayer AG’s Polyurethane Business Group in 2002. This was followed by various management functions in different Group departments, including research and development as well as production and technology. In his most recent role, he was responsible for the global business with coating and adhesive raw materials (Coatings & Adhesives) in the Solutions & Specialties segment at Covestro.

Dreier introduced himself to shareholders in a brief video at the Annual General Meeting.

Markus Steilemann closed the Board of Management speech section with a conclusion for the past fiscal year and an outlook for the 2023 fiscal year, which has already started. In an environment that continues to be challenging, Covestro is in still a good position, given its solid balance sheet and a strategy aimed at sustainable growth. The company’s consistent focus on becoming fully circular remains a key to solving current and future challenges.

Other documents:

• You can find a recording of the 2023 Annual General Meeting, the manuscripts of the presentations and press photos at Media Kit | Annual General Meeting | Covestro AG
• The detailed voting results on the agenda items at the Annual General Meeting are available at Annual General Meeting I Covestro | Covestro AG