Covestro Q2 Financial Report: Turbulent Market Environment Drags Down Second-Quarter Performance

• Group sales of EUR 3.4 billion (–8.4%) due to price decline
• EBITDA at EUR 270 million (–15.6%) in line with forecast
• Consolidated net income at EUR –59 million
• Free operating cash flow at EUR –228 million
• Full-year forecast adjusted: EBITDA between EUR 700 million and EUR 1.1 billion
• Monique Buch appointed new Chief Commercial Officer

Covestro closed the second quarter of 2025 in a difficult economic environment that was further exacerbated by new trade barriers. The unpredictable increase in US import tariffs led to noticeable disruptions in global supply chains in some key customer industries and significant declines in exports to the US. This resulted in a significant oversupply in relevant sales markets, particularly from the Asia-Pacific region, which led to a massive global decline in prices.

While sale volumes remained largely stable, the decline in average selling prices and currency effects had a significant negative impact. Overall, Group sales fell by 8.4 percent to EUR 3.4 billion (previous year: EUR 3.7 billion). EBITDA fell by 15.6 percent to EUR 270 million (previous year: EUR 320 million), which was at the upper end of our own forecast. This was helped by the reversal of EUR 44 million in bonus provisions following the adjustment of the full-year forecast. Net income amounted to EUR –59 million (previous year: EUR –72 million). Free operating cash flow was EUR –228 million, compared with EUR –147 million in the same period of the previous year.

“The economic environment remains challenging: geopolitical tensions and new trade barriers unexpectedly increased pressure in the second quarter,” says Dr Markus Steilemann, CEO of Covestro. “We are also seeing the consequences: overcapacity, tougher price developments, and hardly any economic momentum. This makes it all the more important that we look ahead, stay the course, and focus on what we can control.”

Full year 2025: Annual forecast adjusted

Due to the continuing weak overall economic situation with no signs of a short-term recovery, Covestro adjusted its forecast for fiscal 2025 on July 11, 2025. Covestro now expects EBITDA to be between EUR 700 million and EUR 1.1 billion (previously: EUR 1.0 billion to EUR 1.4 billion). Free operating cash flow is now forecast to be between EUR –400 million and EUR +100 million (previously: EUR 0 million to EUR 300 million). Covestro expects its return on capital employed above the weighted average cost of capital (ROCE above WACC) for fiscal 2025 to be between –9 and –5 percentage points (previously: –6 to –3 percentage points). The expectation for greenhouse gas emissions measured in CO₂ equivalents remains unchanged: Covestro continues to plan for a value between 4.2 million and 4.8 million tons. For the third quarter of 2025, Covestro expects EBITDA between 150 and 250 million euros.

“In the second quarter, the ongoing challenges posed by weak demand, oversupply, and new trade tariffs had a significant impact on our margins,” says Christian Baier, CFO of Covestro. “Despite stable sales volumes, these external factors are clearly reflected in our results. A short-term recovery is not currently foreseeable – we have therefore adjusted our forecast and are resolutely implementing our transformation and efficiency measures.”

Acquisition strengthens sustainable growth

With the acquisition of Pontacol AG agreed in June 2025, Covestro is strategically expanding its portfolio in the specialty films segment and further advancing the implementation of its “Sustainable Future” strategy. The Swiss manufacturer of multilayer adhesive films brings two specialized production sites in Switzerland and Germany with around 100 employees to the company. The acquisition opens up additional value creation potential through complementary technologies, an expanded customer and product portfolio, and synergies in central functions. The transaction will be financed with cash and is therefore in line with Covestro’s goal of maintaining a solid investment-grade rating. The transaction is expected to close in the third quarter of 2025.

New Chief Commercial Officer

Monique Buch will join Covestro as Chief Commercial Officer (CCO) on August 1, 2025. She will be responsible for the Solutions & Specialties segment and will lead six business units, including the Supply Chain Centers in the three main regions. Monique Buch succeeds Sucheta Govil, whose second term ends on July 31, 2025. Monique Buch has been a member of Covestro’s Executive Board since June of this year.

Segment results at a glance

In the Performance Materials segment, sales declined by 11.8 percent to EUR 1.6 billion in the second quarter of 2025 (previous year: EUR 1.8 billion). EBITDA fell to EUR 149 million (previous year: EUR 196 million), weighed in particular by lower margins and expenses for implementing the STRONG transformation program. Free operating cash flow amounted to EUR –172 million (previous year: EUR –89 million).

The Solutions & Specialties segment recorded a 5.4 percent decline in sales to EUR 1.7 billion (previous year: EUR 1.8 billion). EBITDA amounted to EUR 175 million (previous year: EUR 174 million). Lower expenses for the STRONG transformation program and higher sales volumes had a positive effect here. Free operating cash flow amounted to EUR 56 million (previous year: EUR 36 million).

First half of the year marked by sustained price pressure

Group sales declined by 4.8 percent to EUR 6.9 billion in the first half of 2025 (previous year: EUR 7.2 billion). The decline was primarily due to lower sale prices, which had a negative impact of 3.0 percent. EBITDA at Group level amounted to EUR 407 million (previous year: EUR 593 million), while free operating cash flow was EUR –481 million (previous year: EUR –276 million).