Covestro (1COV) Investor presentation summary

Strategic direction and transformation

• Focus on customer proximity, innovation, and sustainability, with ambitions to become climate neutral and fully circular by 2035 for scopes 1 and 2, and net-zero by 2050 for scope 3 emissions.

• Transformation program STRONG targets €400 million annual cost savings by 2028, with €275 million achieved by 2025 and cumulative restructuring costs of €300 million.

• Ongoing shift to high-margin business through portfolio management, divestments, and targeted acquisitions, especially in Solutions & Specialties.

• Significant investments in growth and circular economy projects, with nearly €1 billion planned between 2021 and 2030.

• Strong ESG ratings and index memberships, with top 10% industry ranking in EcoVadis and AA rating from MSCI.

Financial performance and outlook

• FY 2025 sales declined to €12.9bn, mainly due to lower prices and unfavorable FX, with EBITDA at €740m and negative FOCF of €-283m.

• EBITDA margin dropped to 5.7% for FY 2025, with Q4 margin at 3.1% due to persistent margin pressure and negative pricing delta.

• Net income was negative at €-644m, driven by lower EBIT, impairments, and deferred tax asset adjustments.

• Total net debt decreased to €1.88bn after a €1.17bn capital increase, with net debt/EBITDA ratio at 2.5x.

• FY 2026 guidance expects EBITDA around 2025 levels, with significant improvement in FOCF and capex maintained at ~€770m.

Segment and market developments

• Solutions & Specialties segment saw sales decline by 7.7% in Q4 2025, with EBITDA margin at 8.5%, impacted by negative pricing and FX despite positive volumes.

• Performance Materials segment experienced a 19.5% sales drop in Q4 2025, with EBITDA margin at 2.9%, mainly due to lower prices, volumes, and FX.

• Regional performance varied: APAC and NA showed positive volume trends, while EMLA faced ongoing demand weakness, especially in electro, construction, and auto.

• MDI and TDI markets are moving toward balance, with industry utilization rates expected to recover as demand grows between 2025 and 2030.

• Key customer industries show modest growth outlook, with automotive and construction expected to rebound moderately in 2026.