Results of Operations

Second Quarter of 2021

Business picked up again considerably in the second quarter of 2021 after the coronavirus pandemic triggered a steep decline in demand in the prior-year quarter. The Group’s core volumes sold rose by 35.0%, driven by the strong recovery in all main customer industries, but especially the automotive and transportation industry. Volumes were also up in the Coatings, Adhesives, Specialties segment due to the initial consolidation of the Resins & Functional Materials (RFM) business, which contributed 10.4% to this increase. The Polyurethanes and Polycarbonates segments reported growth in core volumes sold of 27.8% and 15.4%, respectively. Core volumes sold in the Coatings, Adhesives, Specialties segment more than doubled, taking into account the RFM acquisition.

Group sales amounted to €3,956 million, up 83.5% from the prior-year quarter (previous year: €2,156 million). Significantly higher selling prices had a positive effect on sales amounting to 45.9%, chiefly due to a favorable competitive situation in the Polyurethanes and Polycarbonates segments. The growth in total volumes sold also increased sales by 29.0%. Moreover, the portfolio change resulting from the acquisition of the RFM business in the Coatings, Adhesives, Specialties segment in the second quarter of 2021 had a positive effect on sales of 14.0%. In contrast, exchange rate developments reduced sales by 5.4%.

All segments contributed to sales growth in the second quarter of 2021. Sales in the Polyurethanes segment more than doubled to €1,841 million (previous year: €913 million). In the Polycarbonates segment, sales were up 56.6% to €1,015 million (previous year: €648 million). The Coatings, Adhesives, Specialties segment also saw sales more than double to €926 million (previous year: €443 million), taking into account the RFM acquisition.

In the second quarter of 2021, the Group’s EBITDA increased to €817 million (previous year: €125 million). This was largely due to higher selling prices, which more than offset the rise in raw material prices. As a result, all segments reported improved margins, especially Polyurethanes. An increase in total volumes sold also had a positive effect on EBITDA. In contrast, higher provisions for variable compensation reduced earnings. Nonrecurring expenses related to the RFM acquisition also had a negative effect on earnings in the low double-digit million range.

EBITDA in the Polyurethanes segment rose to €452 million (previous year: €–24 million), while the Polycarbonates segment’s EBITDA grew to €260 million (previous year: €96 million). In the Coatings, Adhesives, Specialties segment, EBITDA increased to €134 million (previous year: €60 million) taking into account the RFM acquisition.

Depreciation, amortization and impairment losses rose by 8.8% to €210 million in the second quarter of 2021 (previous year: €193 million) for reasons including the takeover of assets as part of the RFM acquisition. They comprised €190 million (previous year: €187 million) in depreciation and impairments of property, plant and equipment and €20 million (previous year: €6 million) in amortization and impairments of intangible assets.

In the second quarter of 2021, the Covestro Group improved EBIT to €607 million (previous year: €–68 million).

Taking into account a financial result of €–18 million (previous year: €–17 million), income before income taxes increased to €589 million compared with the prior-year quarter (previous year: €–85 million). In contrast to the prior-year quarter’s tax income of €32 million, the second quarter of 2021 saw a tax expense of €139 million in line with earnings. This resulted in income after taxes of €450 million (previous year: €–53 million). After noncontrolling interests, net income amounted to €449 million (previous year: €–52 million). Compared to the prior-year quarter, earnings per share totaled €2.32 (previous year: €–0.28).

First Half of 2021

In the first half of 2021, the Group’s core volumes sold rose by 18.9%, driven by the recovery in demand in all main customer industries. The RFM acquisition contributed 4.7% of this growth. In the Coatings, Adhesives, Specialties segment, core volumes sold increased by 62.4%, mainly due to acquisitions. The Polyurethanes and Polycarbonates segments saw core volumes sold rise by 13.7% and 13.5%, respectively, over the prior-year period.

Group sales in the first half of 2021 increased by 47.1% to €7,263 million (previous year: €4,939 million). This development was largely attributable to higher selling prices, which boosted sales by 31.4%. An increase in total volumes sold had a positive effect on sales amounting to 14.6%. The portfolio change increased sales by 6.1%. In contrast, exchange rate movements reduced sales by 5.0%.

All segments saw sales grow in the first half of 2021. Sales in the Polyurethanes segment thus rose by 60.3% to €3,506 million (previous year: €2,187 million), while the Polycarbonates segment’s sales grew by 37.9% to €1,904 million (previous year: €1,381 million), and sales in the Coatings, Adhesives, Specialties segment were up 49.9% to €1,521 million taking into account the RFM acquisition (previous year: €1,015 million).

The Group’s EBITDA rose to €1,560 million in the first half of 2021 compared with the prior-year period (previous year: €379 million). This was mainly due to higher selling prices, which more than offset the rise in raw material prices. As a result, all segments reported improved margins, especially Polyurethanes. The increase in total volumes sold also had a positive impact on earnings. In contrast, higher provisions for short-term variable compensation reduced earnings. Nonrecurring expenses related to the RFM acquisition also had a negative effect on earnings in the low double-digit million range.

Depreciation, amortization and impairments in the first half of 2021 increased by 4.5% to €397 million (previous year: €380 million). They comprised €370 million (previous year: €369 million) in depreciation and impairments of property, plant and equipment and €27 million (previous year: €11 million) in amortization and impairments of intangible assets.

The Covestro Group’s EBIT rose to €1,163 million in the first half of 2021 (previous year: €–1 million).

Taking into account a financial result of €–47 million (previous year: €–56 million), income before income taxes climbed to €1,116 million compared with the previous year (previous year: €–57 million). In contrast to the prior-year period’s tax income of €25 million, the first half of 2021 saw a tax expense of €271 million in line with earnings. This resulted in income after taxes of €845 million (previous year: €–32 million). Net income amounted to €842 million (previous year: €–32 million) after noncontrolling interests. In the first half of 2021, earnings per share increased to €4.36 (previous year: €–0.17).