Driven by a high demand for high-performance plastics and significantly higher margins, Covestro increased group sales by 18.8 percent to EUR 14.1 billion over the past fiscal year. Group EBITDA came in at €3.4 billion, which, at a 70.6 percent increase over the prior year period, is a “significant plus,” Thomas said at the financial news conference on Feb. 20 in Cologne, Germany.
Net income more than doubled from EUR 795 million to EUR 2.0 billion.
Core volumes registered growth of 3.4 percent, ‘in the middle of our guidance of low-to-mid-single- digit growth”, he noted. APAC showed an increase of 6 percent, EMLA of 3 percent and NAFTA, at 1 percent, grew slightly slower, due to the effect of Hurricane Harvey. “The infrastructure was impacted, and the effects were felt into November,” said Thomas.
He added that ROCE increased from 14.2 to 33.4 percent, “so we reached our target as well.”
Sustainability remains a driver of growth, emphasized Thomas. The trends which have led to Covestro's successful development in the past years are still valid, he said, enabling the company to achieve these excellent results. Covestro not only outgrew GDP in 2017; the company is confident it will continue to do so in years to come.
For 2018, Covestro expects solid growth in the main customer industries, as well as in other areas, including e-mobility, energy-efficient construction and energy-saving LED lamps.
Robust customer demand and the tight supply situation over the past year meant that many facilities were running almost at full capacity, Covestro will also significantly increase its investments to take advantage of the expected growth in the main customer industries – the automotive and the building sectors. These investments include all segments and regions and are expected to be in excess of the depreciation level.
Covestro is in an excellent position to do so, as despite higher working capital, the Free Operating Cash Flow reached a record of more than €1.8 billion in 2017, an improvement of some 35 percent that was wholly driven by the significant EBITDA increase.
The company now expects to deliver a cumulative free operating cash flow of €5 billion by the end of 2019, ahead of the original commitment made in 2017 to generate a cumulative FOCF by year end 2021.