Earnings Report | Covestro Concludes Fiscal Year 2025 With Continued Efficiency Enhancements, Performance Meets Expectations

In the fiscal year 2025, despite the ongoing challenging market environment, Covestro achieved its set EBITDA target. The turbulent geopolitical situation, persistently weak global demand, and intense market competition, along with the impact of the fire incident at the Dormagen chemical park, significantly pressured the group's operations. Particularly, the further decline in price levels across various regions and the overcapacity in core business segments had a major impact on the group's profitability and earnings. Meanwhile, Covestro firmly advanced its transformation process, successfully reaching an agreement with XRG.Strategic CooperationIt has taken a decisive strategic step toward long-term development.

In the fiscal year 2025, the group's sales decreased by 8.7% to 12.9 billion euros, mainly due to the decline in product prices across global regions and the impact of currency fluctuations. EBITDA was 740 million euros (previous year: 1.1 billion euros), within the guidance range of 700 to 800 million euros that the company clarified in October 2025. The fire at the Domagen chemical park, which led to the shutdown of multiple plants, had a negative impact of several hundred million euros on the full-year performance. Free operating cash flow was -283 million euros (previous year: 89 million euros), also within expectations. The group's net loss was 644 million euros (previous year: loss of 266 million euros), reflecting the continuously challenging market environment. Greenhouse gas emissions (Scope 1 and Scope 2) were reduced to 4.3 million tons of CO2 equivalent (previous year: 4.7 million tons), mainly due to the successful implementation of climate initiative projects at the nitric acid plants in Baytown, USA, and Shanghai, China.

In 2025, Covestro made targeted investments to drive business growth and enhanced organizational efficiency. Despite continued market pressures, the company further strengthened its presence in attractive growth markets through strategic acquisitions. In August, Covestro completed the acquisition ofPontacol AGThe acquisition expands its film portfolio to highly specialized multilayer films, opening up new opportunities in medical technology, transportation, and the textile industry.

Additionally, in August 2025, Covestro signed an agreement with Vencorex to acquire its two HDI derivative production sites located in Rayong, Thailand, and Freeport, Texas, USA. The transaction is expected to close in the first half of 2026, further strengthening Covestro's aliphatic isocyanate production network and providing strong support for the growth strategy of its Coatings & Adhesives business segment.

Meanwhile, Covestro continues to steadily advance its STRONG transformation program, launched in 2024. Through the consistent implementation of established efficiency measures, the company has already achieved cost savings of approximately €275 million as of the end of 2025. The program aims to realize annual cost savings of €400 million globally by the end of 2028. Key priorities will focus on continuously driving the transformation forward, optimizing organizational structures and processes, and comprehensively implementing digitalization and artificial intelligence across all business areas.

A key milestone in the 2025 fiscal year was the successful establishment of a strategic partnership between Covestro and XRG on December 10. With the support of XRG, a strategic shareholder with a long-term perspective, Covestro will further accelerate its transformation process. Against this backdrop, the 1.17 billion euro capital increase agreed upon in the investment agreement was completed as planned in December. This transaction strengthens Covestro's equity base and enhances the company's financial flexibility in a volatile market environment.

Covestro expects market conditions in fiscal year 2026 to remain significantly challenging. Global demand has yet to show signs of a sustainable recovery, and global markets continue to be constrained by overcapacity, persistently downward price pressure, and increasingly protectionist trade policies.

In this context, the group has decided to use qualitative assessments for the forecasts of EBITDA, free operating cash flow, and ROCE over WACC, replacing set quantitative ranges. Covestro expects EBITDA for the 2026 fiscal year to be roughly flat compared to the 2025 fiscal year. Free operating cash flow and ROCE over WACC are expected to show significant improvement compared to the 2025 fiscal year. The group also expects greenhouse gas emissions (Scope 1 and Scope 2) to be between 3.9 million and 4.5 million metric tons of CO2 equivalent.