Covestro: Decline in sales, but hope through Asia and green technologies!

Imagine looking through a prism that breaks down the chemical industry in all its facets - from global megatrends to regional nuances. At the center of this spectrum is Covestro AG, a company that is positioning itself in the midst of dynamic change. This section delves deep into industry growth, driving trends and developments in global and regional markets to shed light on the DAX group's strategic direction and growth prospects.

The chemical industry in which Covestro operates is currently experiencing robust, if uneven, growth. According to current analysis, the global market for specialty chemicals and polymers, core segments of Covestro, will grow by around 3-4% annually until 2030, driven by increasing demand in sectors such as automotive, construction and electronics. The demand for sustainable materials and lightweight plastics that promote energy efficiency and CO₂ reduction plays a particularly central role. Covestro benefits here from its focus on polyurethanes and polycarbonates, which are indispensable in these growth areas. At the same time, the industry faces challenges such as commodity price volatility and geopolitical uncertainties that could weigh on margins.

There are clear trends emerging at a global level that Covestro is exploiting strategically. The transformation towards a circular economy and the decarbonization of industry are not only regulatory requirements, but also market drivers. The company is investing heavily in digital technologies such as quantum computing to accelerate research and development processes. In a partnership with Google since 2020, algorithms have been developed that are intended to revolutionize simulations of material properties and production processes. The company website provides further insights into these innovative approaches Covestro innovation. These technologies make it possible to select catalysts more quickly and understand reaction mechanisms more precisely, which in the long term reduces costs and shortens the time to market of new products.

A look at the regional markets shows that Covestro has a strong base in Europe, particularly in Germany, but is also expanding in Asia and North America. In Germany, its home market, the company actively supports research, for example by financing a professorship for “Electrochemical Process Engineering” at RWTH Aachen University. The aim is to use CO₂ as a raw material and to develop new hydrogen processes – a clear step towards sustainability. At the same time, Covestro is pushing ahead with projects in Leverkusen such as the brine technology center, where innovative processes for chlorine production and electrolysis are being tested. These regional initiatives not only strengthen the competitive position in Europe, but also serve as a blueprint for global rollouts.

Covestro sees enormous growth potential in Asia, particularly in China, as the region dominates global demand for plastics and specialty chemicals. Urbanization and the expansion of infrastructure are driving demand for Covestro products, for example in the construction sector. However, the risks here are also high: currency fluctuations and political tensions could affect expansion plans. In North America, however, the company is focusing on the automotive industry, where lightweight and sustainable materials are increasingly in demand. The strategic focus on these markets shows that Covestro not only reacts to global trends, but also specifically addresses regional peculiarities.

Another aspect that shapes Covestro's market position is the recent investment agreement with the ADNOC Group, signed on October 1, 2024. This cooperation, which includes a public takeover offer for all outstanding shares at €62.00 per share as well as a capital increase of 10% (18.9 million shares), brings in fresh capital amounting to €1.17 billion. XRG P.J.S.C., part of the ADNOC Group, also supports the “Sustainable Future” corporate strategy, which underlines the long-term focus on sustainability. Further details on this significant development can be found in Covestro Annual Report 2024. This partnership could not only strengthen Covestro financially, but also facilitate access to new markets in the Middle East.

The trends and developments in the industry make it clear that Covestro is at a turning point. The combination of technological innovation, regional focus and strategic partnerships positions the company to benefit from both global and local growth opportunities. How these dynamics impact operational performance and stock valuation remains an exciting area for further analysis.

Let's navigate the chessboard of the chemical industry, where every move determines market shares and competitive advantages. Covestro AG is a central player here, acting with strategic precision to consolidate its position. This section analyzes the company's market share, highlights its main competitors and highlights the key advantages that set Covestro apart in global competition.

Let's start with the hard numbers: Covestro holds a significant share of the market for polyurethanes and polycarbonates, especially in the specialty chemicals segment. It is estimated that the global market share of MDI (methylene diphenyl diisocyanate), a core product for polyurethanes, is around 15-20%, making the company one of the leading suppliers. In comparison, Covestro achieved sales of EUR 15.9 billion in 2021, while its main competitor Wanhua Chemical from China takes the lead with EUR 18.9 billion and a market share of around 25% in MDI. The market capitalization reflects this dynamic - Wanhua was at EUR 39.1 billion in January 2022, while Covestro was quoted at EUR 11.5 billion. These numbers highlight the pressure from emerging players, as detailed in the report by CHEManager described.

In addition to Wanhua, BASF and Dow Chemical are also among the strongest rivals. BASF dominates with a broad portfolio and a strong presence in Europe, while Dow scores in North America and in the area of ​​integrated value chains. Wanhua, on the other hand, has risen to the top in Asia through aggressive capacity expansion - from 20,000 t/a in 1999 to 2.6 million t/a today - and low production costs. Wanhua also invests 4-5% of its sales in research and development, above the average for Western chemical companies, which underlines the company's innovative strength. Covestro not only has to assert itself against established giants, but also against dynamic newcomers who score points through cost advantages and expansion.

So what are the strengths that make Covestro stand out from the competition? A key advantage is the focus on sustainability as a differentiating feature. With projects such as the NALYSES research project, which develops more climate-friendly car headlights made of polycarbonate in cooperation with partners such as HELLA and BMW, Covestro is positioning itself as a pioneer in the circular economy. The concept reduces CO₂ emissions by saving weight of up to 1.5 kg per vehicle and simplifies recycling by using a single plastic. Detailed information about this innovative approach can be found in the press release Covestro Press. Such initiatives not only address regulatory requirements but also meet increasing customer demand for environmentally friendly solutions.

Another plus point is the technological expertise. Covestro has secured a lead in optimizing research and development processes through investments in digital tools and partnerships – for example with Google in the area of ​​quantum computing. This enables faster new product launches and more efficient material development, which is a clear advantage compared to competitors with less digital focus. Added to this is its strong regional roots in Europe, particularly in Germany, where Covestro has access to cutting-edge knowledge through research locations such as Leverkusen and collaborations with universities.

A third aspect is the strategic flexibility shown in the recent partnership with the ADNOC Group. This cooperation not only brings fresh capital, but also opens up access to new markets in the Middle East, where competitors like Wanhua have previously had less of a presence. While BASF and Dow are often slower to adapt to regional characteristics due to their size, Covestro can react more quickly to market requirements through targeted alliances. However, the challenge remains to match the cost efficiency of Asian competitors such as Wanhua, which dominate through integrated value chains and low cash costs.

The competitive landscape shows a complex picture in which Covestro scores points through innovation and sustainability, but lags behind in terms of economies of scale and market capitalization. How this balance affects long-term positioning and whether the strategic advantages are sufficient to narrow the gap to the leaders remains a key point for further observation.

Let's delve into the world of numbers, where every balance sheet item and every profit indicator examines the financial health of Covestro AG. This section provides a precise analysis of sales development, profit, EBITDA, margins and key balance sheet figures in order to paint a clear picture of the DAX Group's operational performance and future prospects.

First of all, sales revenue: In the 2024 financial year, Covestro recorded sales of €14,179 million, a decrease of 1.4% compared to €14,377 million in 2023. This slight decline is mainly due to price effects, which fell by 8.0%, while volume increased by 7.4%. From a regional perspective, there is a mixed picture: In the EMLA region (Europe, Middle East, Latin America, Africa) sales fell by 1.6% to €5,848 million, in North America by 6.1% to €3,507 million, while the APAC region (Asia-Pacific) recorded growth of 2.6% to €4,824 million. These numbers reflect different market dynamics, particularly the recovery in demand in Asia.

When looking at the earnings situation, it becomes clear that Covestro is under pressure. EBITDA remained almost stable at €1,071 million in 2024, a marginal decrease of 0.8% compared to €1,080 million in the previous year. However, this figure was heavily impacted by price effects, which were negative by 106.9%, while volume increases (37.0%) and raw material price developments (59.4%) provided positive impetus. EBIT, on the other hand, fell drastically - from €186 million in 2023 to €87 million in 2024, a decrease of 53.2%. The consolidated result also deteriorated significantly to -€266 million (2024) compared to -€198 million (2023), which corresponds to a decline of 34.3%. This results in earnings per share of -€1.41 in 2024, compared to -€1.05 in the previous year.

The development of margins further underlines the challenges. EBITDA margin is approximately 7.6% for 2024, almost unchanged from 7.5% in 2023, indicating some stability in operating costs. Nevertheless, the margin remains below average compared to competitors such as Wanhua, which benefit from lower production costs in Asia. The sharp decline in EBIT also signals that depreciation and other operational burdens are further reducing profitability. These figures can be viewed directly from the current annual report, which is available at Covestro Annual Report 2024 provides detailed insights.

A look at the balance sheet figures also shows mixed signals. Cash flow from operating activities fell from €997 million in 2023 to €870 million in 2024, indicating lower cash generation. The financial result remained almost constant at -€114 million (2024) compared to -€113 million (2023), indicating stable financing costs. However, the negative consolidated result puts a strain on the equity base, which could limit financial flexibility in the long term, especially with planned investments in sustainability and digitalization. However, the recent capital increase as part of the ADNOC partnership with a volume of €1.17 billion could create a buffer here.

Analyst forecasts point to a mixed picture for the future. With an average price target of €63.24 for 2026, based on the estimates of 13 analysts, the current share price is around 6.72% lower. The spectrum ranges from a high price target of €65.10 (+9.85%) to a low price target of €55.55 (-6.26%). The analysts' reluctance is interesting: out of 19 ratings, 12 recommend a “hold”, 7 recommend a “sell” and none recommend a “buy”. This cautious assessment, as under Stocks.guide to read reflects the uncertainties regarding margin development and the global economy.

Covestro's financial situation shows stability in some operational key figures, but also significant weaknesses in profit and earnings per share. How the strategic initiatives and the recent capital injection affect long-term profitability remains a decisive factor for further development.

Let's take a journey through time through the stock market charts to decipher the curve dances of the Covestro AG share. This section is dedicated to historical price trends, volatility and a direct comparison with the DAX index in order to assess the performance and risks of the stock in a broader context.

Since the spin-off from Bayer and the IPO in October 2015, Covestro shares have undergone an eventful development. The entry price was around €24.00, and there was a steady upward trend in the first few years, reaching an all-time high of around €95.78 in January 2018. This peak was driven by strong sales growth and positive market sentiment in the chemical industry. But then a correction set in: by the end of 2019, the price fell to around €40.00, influenced by margin pressure and economic uncertainty. The 2020 pandemic brought another slump to a low of around €27.00 in March, followed by a recovery to around €60.00 by mid-2021, driven by demand for plastics in the automotive and construction industries.

However, in recent years there has been a sideways movement with high sensitivity to external factors. Following ADNOC's takeover announcement in 2024, the price jumped to around €62.00, which corresponds to the offer price, after 81.77% of shareholders accepted the offer. The share is currently trading close to this level, with only 4.98% still considered free float. Historical price data and current developments are detailed below Covestro Share Price Chart visible. This data illustrates that the stock has been heavily influenced by acquisition momentum recently, while organic price movements remain limited.

A look at the volatility shows that Covestro has experienced increased fluctuation intensity over the last five years. Annualized volatility is around 30-35% based on daily price changes, which is above the DAX average (around 20-25%). Fluctuations increased significantly, particularly in crisis phases such as 2020 or during the energy price crisis of 2022/23, with peaks of over 50% on a monthly basis. This reflects the share's dependence on raw material prices, geopolitical tensions and economic developments. In comparison, during stable market phases, such as 2017-2018, the stock showed volatility of less than 25%, indicating a certain level of robustness with positive market sentiment.

In a direct comparison with the DAX index, it is noticeable that Covestro has performed below average in recent years. Since going public in 2015, the DAX has achieved a return of around 80% (as of October 2024), while Covestro has a return of around 150% over the entire period, but is benefiting heavily from early gains through 2018. In the last three years, however, Covestro, with a return of around -5%, lagged behind the DAX, which rose by around 15% in the same period. This underperformance is due to weak earnings performance and margin pressure, while the DAX was driven by technology and export stocks. The recent price stabilization through the ADNOC offer has alleviated the shortfall, but the share remains less dynamic than the index.

Another aspect is the effect of share buyback programs on the price. Between November 2017 and December 2018, Covestro bought back over 9.8% of the share capital for approximately €1.5 billion, which temporarily supported the share price. A second program from March 2022 to June 2023 included 4.7 million shares at an average price of €42.50 (total volume €199 million of a planned €500 million), but had only a limited impact on price development given weak market conditions. Such measures demonstrate management's efforts to increase shareholder value, but failed to fully offset structural challenges.

Covestro's historical price development and increased volatility make it clear that the share is strongly influenced by external factors and company-specific events such as the ADNOC takeover. How these dynamics will evolve in a changing market environment and whether the acquisition will bring long-term stability remains a key issue for investors.

Let's look through the lens of macroeconomic and company-internal factors to decipher the framework conditions for Covestro AG. This section highlights interest rate developments, raw material prices, demand dynamics and the role of management in order to precisely analyze the operational and strategic challenges and opportunities for the DAX group.

Let's start with interest rate developments, which have a direct impact on Covestro's financing costs and investment decisions. The building interest rates for ten-year loans are currently 3.6% (as of November 5th, 2025), and over 80% of experts expect stable interest rates in the short term, supported by a robust internal market situation in the EU and an inflation rate close to the ECB's 2% target. In the medium term, however, 60% of experts predict an increase to around 4% by 2026, due to geopolitical tensions and high national debt. These assessments can be read in detail at Interhyp interest rate development, indicate that Covestro will have to expect increasing financing costs for future investments in sustainability or production capacities. This could further impact the company's financial result, which was €-114 million in 2024.

Another critical factor is raw material prices, which play a central role in the chemical industry. Covestro is heavily dependent on the costs of petrochemicals such as benzene and toluene, which serve as raw materials for polyurethanes and polycarbonates. After peaking during the 2022/23 energy crisis, prices fell by around 10-15% in 2024, which had a positive impact on margins - an effect that is visible in the 2024 annual report with an EBITDA improvement due to raw material price effects of 59.4%. However, uncertainties remain: geopolitical tensions in the Middle East and possible trade tariffs could push prices up again. A moderate increase of 5-8% is expected for 2025, making cost control an ongoing task for Covestro.

On the demand side, there is a mixed picture with regional differences. In the APAC region, particularly in China, sales rose 2.6% to €4,824 million in 2024, driven by urbanization and infrastructure projects that boost demand for plastics and specialty chemicals. In North America, however, sales fell by 6.1% to €3,507 million, due to weaker automobile production and economic uncertainty. Europe (EMLA) recorded a decline of 1.6% to €5,848 million, reflecting high energy costs and a subdued construction industry. In the long term, demand for sustainable materials remains a growth driver, especially in the automotive and electronics sectors, where Covestro can score points with innovative solutions. Global demand growth of 3-4% is forecast for 2025, with Asia remaining the driving force.

The quality of management is crucial for dealing with these external factors. Under the leadership of CEO Markus Steilemann, Covestro has pursued a clear strategic focus on sustainability and digitalization, as the “Sustainable Future” strategy shows. The partnership with ADNOC, which closed in 2024 and brought in €1.17 billion of fresh capital, demonstrates a proactive approach to ensuring financial stability and market access. Steilemann's focus on innovation - for example through investments in quantum computing and collaborations with Google - has accelerated research and development processes. However, management faces the challenge of improving margins as the EBITDA margin was only 7.6% in 2024. Critics also complain that the company is reacting too slowly to cost pressure from Asian competitors such as Wanhua, which is putting a strain on profitability.

The takeover by ADNOC could also entail changes in the management structure, as XRG P.J.S.C. takes control with 95.02% of the shares. It remains to be seen whether the previous strategic line will be maintained or whether new priorities will be set, particularly with regard to integration into ADNOC's value chain. However, the new majority shareholder's support of the "Sustainable Future" strategy so far gives hope for continuity.

The combination of rising interest rates, volatile raw material prices, regional differences in demand and the upcoming changes in the management environment pose complex challenges for Covestro. How the company navigates these factors and whether it manages to overcome operational weaknesses will determine its future competitive position.

Let us imagine that we view the global economy as a fragile network of geopolitical tensions in which Covestro AG is interwoven as a globally operating company. This section analyzes the impact of trade conflicts, sanctions and political stability on the DAX company's business activities in order to assess the external risks and their potential consequences for the strategic direction.

Trade conflicts represent one of the biggest threats to companies like Covestro, which are heavily dependent on international supply chains and export markets. In particular, tensions between the USA and the EU have put a strain on the German economy in recent years, as an analysis by the Economic Service shows. The US threat to increase tariffs on EU motor vehicles and parts to up to 25% would have a direct impact on the automotive industry – a core market for Covestro products such as polycarbonates and polyurethanes. Although the deadline for this tariff increase passed in 2019, uncertainty remains as new punitive tariffs could come back into play at any time. Simulations with the NiGEM model, described in detail at Economic service, show that a prolonged trade conflict would lead to significant declines in exports, which could further reduce Covestro's sales in North America (2024: €3,507 million, -6.1%).

Such a conflict would not only cause direct costs through tariffs, but also increase economic uncertainty, which inhibits investment. For Covestro, this means potentially delayed expansion plans, especially in markets like the USA, where automobile production is already weak. A short trade conflict could still be dealt with through price adjustments, but if it escalates over several years, higher export prices would further weaken competitiveness against Asian competitors such as Wanhua. Fiscal policy countermeasures could mitigate the impact, but the simulation results suggest that Germany has less scope for such measures compared to the US, which could delay the recovery.

Sanctions are another risk factor, especially in the context of geopolitical tensions such as the Ukraine war. Covestro achieved sales of €5,848 million in the EMLA region (Europe, Middle East, Latin America, Africa) in 2024, and sanctions against Russia have already led to significant energy and raw material price increases in 2022, as mentioned in CEO Markus Steilemann's 2022 annual report. These cost burdens have a direct impact on margins, as Covestro is heavily dependent on petrochemical raw materials. Future sanctions – for example in the event of an escalation in the Middle East – could make access to raw materials even more difficult and drive up production costs. At the same time, the partnership with ADNOC (95.02% of the shares after acquisition) potentially offers a strategic advantage as access to raw materials in the Middle East could be secured, provided political stability in the region is guaranteed.

Political stability remains a crucial factor for Covestro's global activities. In Europe, the EU's relative stability provides a solid basis, but the uncertainties caused by Brexit and right-wing populist movements in several member states could bring regulatory changes affecting the chemical industry. In Asia, where Covestro recorded sales growth of 2.6% to €4,824 million in 2024, tensions between China and the USA are a latent risk. A renewed trade war could dampen demand in China, a key market, and disrupt supply chains. In addition, despite the ADNOC partnership, political instabilities in the Middle East could endanger raw material supplies. Such uncertainties require a flexible strategy, as the management under Steilemann is already striving for with its focus on regional production (“in the region for the region”).

The combination of trade conflicts, sanctions and political instability creates a complex risk environment for Covestro. How the company overcomes these external challenges and whether strategic partnerships such as the one with ADNOC can serve as a buffer will be crucial to long-term resilience and competitiveness.

Let's deepen our look into the operational mechanisms that drive the engine of Covestro AG by taking a close look at the production and supply chain processes. This section focuses on the order backlog, supply bottlenecks and production capacities in order to assess the DAX group's ability to respond to market requirements and realize growth potential.

First of all, the order backlog, which serves as an indicator of short-term demand and the economic stability of a company. Current data from the Federal Statistical Office show that the order backlog in the manufacturing sector in Germany fell by 0.2% in June 2024 compared to the previous month and by 6.2% compared to the previous year. Sectors such as the automotive industry, a core market for Covestro, are particularly affected, with a decline of 0.7% - the 17th month in a row. The range of the order backlog is 7.2 months, which indicates a solid but not expansive order situation. For Covestro, this means that demand is under pressure in Europe, where sales of €5,848 million were achieved in the EMLA region in 2024. The press release below provides detailed insights into this development Destatis order backlog. A sustained decline could weigh on revenue forecasts for 2025, particularly in capital goods-focused segments where the range is 9.7 months.

Supply bottlenecks represent another challenge that may affect Covestro's operational performance. Since global supply chain disruptions during the pandemic and compounded by geopolitical tensions such as the Ukraine war, the chemical industry has struggled with disruptions in raw materials such as petrochemicals. In 2022, Covestro management reported significant energy and raw material price increases, some of which were caused by shortages. Although the situation has eased slightly in 2024, risks remain, particularly from possible sanctions or trade conflicts in the Middle East, which could limit access to key feedstocks such as benzene and toluene. The partnership with ADNOC, which controls 95.02% of the shares, could provide a strategic advantage here by securing access to raw materials in the region. Nevertheless, such uncertainties require a robust supply chain strategy, such as Covestro's focus on regional production (“in the region for the region”).

Covestro's production capacities are a crucial factor in responding to fluctuations in demand and serving growth markets. The company operates production sites worldwide, including major plants in Leverkusen (Germany), Shanghai (China) and Baytown (USA), with a focus on polyurethanes and polycarbonates. In 2024, Covestro was able to increase production volumes by 7.4%, indicating efficient use of capacity, despite a 1.4% decline in sales to €14,179 million. However, the plants in Europe are under pressure from high energy costs, as stated in the 2022 annual report by Chief Technology Officer Dr. Klaus Schäfer mentioned, who emphasized energy efficiency measures and the switch to renewable energies. Investments in innovative technologies, such as the oxygen consumption cathode technology in the Leverkusen brine technology center, aim to increase production efficiency and reduce costs.

However, the ability to adapt capacities to regional fluctuations in demand remains a limiting factor. While demand is growing in the APAC region (sales 2024: €4,824 million, +2.6%), unused capacities in North America (sales decline of 6.1%) could lead to inefficient cost structures. The strategic decision to raise capital of €1.17 billion through the ADNOC partnership could enable the expansion of production facilities in high-growth markets such as Asia. At the same time, the volatile order situation in Europe requires flexible production planning to avoid overcapacity and protect margins, which in 2024 had an EBITDA margin of just 7.6%.

The dynamics of the order backlog, delivery bottlenecks and production capacities show that Covestro is faced with the challenge of combining operational efficiency with strategic flexibility. How the company finds this balance and whether it manages to overcome bottlenecks through targeted investments and partnerships will be crucial for its competitiveness in an uncertain market environment.

Let's explore the innovation front where Covestro AG is shaping the future of the chemical industry and take a look at the driving forces behind technological advances. This section analyzes the latest developments, patents and research and development (R&D) expenditure to assess the DAX Group's innovative strength and its influence on its competitive position.

Technological advances form the backbone of Covestro's strategy, particularly with regard to sustainability and the circular economy. A groundbreaking example is the development of a process for the climate-friendly production of aniline from biomass at the Leverkusen site. Aniline, an essential raw material for synthetic fibers, paints and medicines, has previously been produced from petroleum, which causes high CO₂ emissions. The new process, developed by a team from Covestro, Bayer, the CAT Catalytic Center Aachen and the University of Stuttgart, marks a significant step towards environmentally friendly alternatives. For this innovation, the team received an innovation award from the federal government and the German economy. Further details about this breakthrough are below Covestro innovation to read. The partners are currently working on transferring the process to larger technical scales, which could reduce dependence on fossil raw materials in the long term.

In addition to such groundbreaking projects, Covestro has driven a wide range of product innovations tailored to specific industry requirements. In the automotive industry, Makrolon® Ai was developed for innovative vehicle surfaces, while Arfinio® enables sustainable design in the furniture industry. MDI CQ offers climate-neutral insulation materials for the construction industry, and in the electronics industry, Makrolon®-RE polycarbonate reduces the CO₂ footprint. These products, often ISCC PLUS certified, highlight a focus on sustainability that aligns with the UN Sustainable Development Goals (SDGs). In addition, the company is driving digital innovations, for example through cloud-based life cycle analyzes (LCA) to reduce CO₂ and the use of artificial intelligence (AI) to optimize internal processes.

Another pillar of the innovation strategy are patents, which ensure Covestro a competitive advantage. Although exact figures for current patent applications are not publicly available, the continuous introduction of new products and processes - such as bio-based aniline production or the oxygen consumption cathode technology at the Leverkusen Brine Technology Center - demonstrates an active protection policy for intellectual property. Such patents not only protect technological breakthroughs, but also strengthen the market position against competitors such as Wanhua, which also invest heavily in research. The strategic focus on open innovation, in which suppliers and customers are involved in the development process, as well as collaborations with universities such as RWTH Aachen (e.g. “QuinCAT”) and research institutions also promote the flow of ideas and patent development.

The financial resources that Covestro invests in research and development underline the high importance of innovation. In 2023, R&D expenditure was €374 million, an increase from €361 million in the previous year, representing approximately 2.6% of sales of €14,377 million. Although the number of R&D employees fell from 1,477 in 2022 to 1,338 in 2023, the focus on efficiency and targeted projects remains. According to the 2023 annual report, Covestro plans to invest around 80% of its R&D budget in projects that contribute directly to the UN Sustainability Goals by 2025. These numbers and strategic priorities are detailed below Covestro Annual Report 2023 visible. Compared to competitors like Wanhua, which invest 4-5% of its sales in R&D, Covestro is slightly behind, which increases the pressure to score points through quality and partnerships.

The innovative strength is also strengthened through digital platforms such as “idea.lounge”, which bundles creative ideas throughout the company, as well as through strategic focuses such as Group Innovation & Sustainability, which works on medium and long-term topics relating to the circular economy and digitalization. Projects to optimize production processes, for example in the chlor-alkali plant in Tarragona or through process integration in Krefeld-Uerdingen, aim to achieve climate neutrality by 2035. Future projects such as the development of bio-based raw materials and recycling technologies underline the long-term approach to reducing waste flows and establishing sustainable solutions.

The technological advances, coupled with a strategic patent policy and targeted R&D investments, position Covestro as a pioneer in sustainable chemistry. How this innovative strength affects the long-term market position and the ability to withstand competitive pressure remains a crucial aspect for the company's further development.

Let's look beyond the horizon and outline the possible paths that Covestro AG could take in the next three to five years. This section provides an outlook on the medium-term development of the DAX group, identifies key growth drivers and highlights various scenarios that could shape the company's strategic and financial future.

For the period from 2025 to 2029, Covestro will face a complex but potentially rewarding market environment. Based on current trends and analyst estimates, moderate revenue growth of 3-5% annually is expected, driven by increasing demand for sustainable materials in key sectors such as automotive, construction and electronics. Sales could increase from €14,179 million in 2024 to around €16,500-17,500 million by 2029, provided global economic activity and geopolitical stability support this. The EBITDA margin, which was 7.6% in 2024, could be improved to 8-9% through cost efficiencies and innovations, which would mean an EBITDA increase to €1,300-1,500 million. Analyst forecasts see an average price target of €63.24 for 2026, which signals a moderate price potential of 6.72% from current levels.

A key growth driver is the strategic focus on sustainability and the circular economy. The partnership with Fortescue Future Industries (FFI) to supply up to 100,000 tons of green hydrogen per year starting in 2024 could reduce greenhouse gas emissions by up to 900,000 tons of CO₂ annually and position Covestro as a pioneer in green chemistry. This Agreement, detailed below Covestro press release, enables the replacement of gray hydrogen with green hydrogen at locations in Asia, North America and Europe. With the goal of operational climate neutrality by 2035, this could not only bring regulatory advantages, but also increase the attractiveness for environmentally conscious customers and investors.

Other growth drivers include regional expansion and technological innovation. In the APAC region, which recorded revenue growth of 2.6% to €4,824 million in 2024, demand will continue to accelerate through urbanization and infrastructure projects, with expected annual growth of 4-6% through 2029. Products such as Makrolon®-RE and MDI CQ, which reduce the carbon footprint, position Covestro well in high-growth markets such as electronics and construction. In addition, investments in digital technologies such as quantum computing and AI that accelerate R&D processes, shorten the time to market of new products and strengthen competitiveness against rivals such as Wanhua.

The acquisition by ADNOC, with a 95.02% stake upon completion in 2025, provides financial stability through the capital injection of €1.17 billion and provides access to raw materials and markets in the Middle East. This could reduce dependence on volatile raw material prices and stabilize production costs. However, the success of this partnership depends on political stability in the region and integration into ADNOC's value chain. Another driver is the increasing demand for lightweight, sustainable materials in the automotive industry, where Covestro can score points through innovations such as Makrolon® Ai despite a decline in sales in North America (2024: -6.1%).

In order to take the uncertainties of the future into account, three scenarios can be outlined for Covestro. In the base scenario (probability: 50%), moderate growth continues, supported by sustainability initiatives and regional expansion in Asia. Sales could rise to €17,000 million by 2029, with an EBITDA margin of 8.5%, provided geopolitical tensions and raw material prices remain stable. In the optimistic scenario (probability: 30%), Covestro will achieve faster margin improvement through green hydrogen and digital innovations, driving the EBITDA margin to 9.5% and sales to €18,000 million by 2029, supported by a strong economy and successful ADNOC integration. In the pessimistic scenario (probability: 20%), trade conflicts, sanctions and rising raw material prices put a strain on profitability, pushing sales to €15,500 million and the EBITDA margin to 6.5%, especially if demand deteriorates in Europe and North America.

Covestro's medium-term development depends heavily on its ability to combine sustainability goals with operational efficiency and manage geopolitical risks. How these scenarios unfold and which growth drivers ultimately dominate will depend largely on external factors and strategic decisions.

Let's zoom in closer and focus on the immediate future to shed light on Covestro AG's development over the next 6 to 12 months. This section provides a forecast for the short-term horizon, defines quarterly targets and highlights current analyst opinions to outline the expectations and potential challenges for the DAX group in the coming months.

For the period from October 2025 to September 2026, Covestro is expected to operate in a stable but uncertain market environment. Based on current sales figures of €14,179 million in 2024, slight growth of 1-2% is expected for 2025, which could bring sales to around €14,400-14,600 million. This takes into account the moderate recovery in demand in the APAC region (2024: +2.6%) and possible stabilization in Europe and North America, where 2024 saw declines of 1.6% and 6.1%, respectively. EBITDA could rise to around €1,080-1,100 million with a stable margin of 7.6%, provided raw material prices and geopolitical tensions do not cause major jumps. The focus is on cost control and the gradual integration of the ADNOC acquisition, which is expected to close in the second half of 2025.

Quarterly goals for the next 12 months are closely linked to operational and strategic milestones. Sales of around €3,600 million are targeted for the fourth quarter of 2025, which corresponds to a slight increase compared to the average quarterly figures for 2024 (around €3,545 million), driven by seasonal demand in the construction and electronics industries. The EBITDA target is €270-280 million, supported by efficiency improvements in production. In the first quarter of 2026, sales could rise to €3,650 million, with an EBITDA of €280-290 million, as deliveries of green hydrogen from Fortescue Future Industries (FFI) begin and the first cost benefits become visible. Similar revenue targets of €3,650-3,700 million per quarter are targeted for the second and third quarters of 2026, with a gradual increase in the EBITDA margin to 7.8-8.0%, which would mean an EBITDA of €285-295 million per quarter.

A key factor for near-term development is the progress of regulatory clearances for the acquisition by XRG P.J.S.C. (formerly ADNOC International Limited), which will control 95.02% of the shares. Current data from the 2025 half-year report shows that Covestro's share price has increased since the beginning of 2025 and remained stable despite tariff announcements from the USA on April 2, 2025. The Xetra closing price at the end of the first half of 2025 was €60.56 for shares in free float (1COV) and €60.40 for shares tendered by XRG (1CO), which means a price gain of 7.8% and 4.1%, respectively, compared to the end of the previous year. This stability, detailed below Covestro half-year report 2025, is influenced less by business development than by the progress of the acquisition. If the release occurs by the end of 2025, this could provide short-term price stability, but brings uncertainty regarding possible management changes.

Analysts' opinions on Covestro's short-term development remain cautious. Of 19 analyst ratings, 12 recommend a “Hold,” 7 recommend a “Sell,” and none recommend a “Buy,” indicating continued uncertainty regarding margin development and the global economy. The average price target for 2026 is €63.24, signaling a moderate potential of 6.72% from current levels (approx. €60.56), with a range of €55.55 (-6.26%) to €65.10 (+9.85%). The analysts' reluctance reflects the expectation that the takeover by XRG will bring financial stability, but will not provide any significant operational impetus in the coming year. Analysts also see risks from possible trade conflicts and raw material price volatility, which could weigh on profitability.

Covestro's short-term performance will depend heavily on external factors such as the final takeover by XRG and the development of raw material prices. At the same time, initial successes in the introduction of green hydrogen and the stabilization of demand in Asia could provide positive impulses. How these factors impact quarterly targets and stock valuation remains a key point of observation for investors in the coming months.

Let us explore the invisible stumbling blocks and hidden opportunities that line the path of Covestro AG. This section analyzes the market risks, regulatory hurdles and expansion potential to provide a comprehensive picture of the external and internal factors that could influence the strategic development of the DAX group in the near and distant future.

Market risks represent a key threat to Covestro, especially in a globally uncertain environment. Geopolitical tensions, such as ongoing trade conflicts between the US and the EU or conflicts in the Middle East, could dampen demand in key markets such as the automotive and construction industries. The 2023 annual report highlights the tense situation caused by such uncertainties, which have macroeconomic implications for the value chain. A decline in demand in North America (2024: -6.1% to €3,507 million) already shows the effects of economic uncertainty. In addition, price fluctuations for raw materials such as benzene and toluene are weighing on margins, with costs expected to increase by 5-8% in 2025. Further details on these risks can be found below Covestro Annual Report 2023 visible. Such factors could put further pressure on EBITDA, which stood at €1,071 million in 2024, if cost-cutting measures do not take effect.

Regulatory hurdles form another barrier that offers Covestro both opportunities and risks. The company is subject to a dense network of international, national and local regulations, particularly in the area of ​​environmental, health and safety (EHS). High costs of complying with these regulations could put the company at a competitive disadvantage compared to competitors such as Wanhua, which operate in less strictly regulated markets. For example, stricter emissions regulations in the EU could increase production costs in Europe (EMLA sales in 2024: €5,848 million). At the same time, regulatory trends such as the promotion of the circular economy and CO₂ reduction offer opportunities, as Covestro is well positioned for green hydrogen with products such as Makrolon®-RE and initiatives such as the partnership with Fortescue Future Industries (FFI). Another regulatory factor is the pending approval of the takeover by XRG P.J.S.C. (ADNOC), which is expected by the end of 2025 and could create uncertainty for investors if delayed.

In addition to these risks and hurdles, Covestro offers significant expansion potential, particularly in high-growth regions and markets. The APAC region, which recorded 2.6% revenue growth to €4,824 million in 2024, remains a key driver as urbanization and infrastructure projects in China and Southeast Asia boost demand for plastics and specialty chemicals. Forecasts see annual growth of 4-6% until 2029. The partnership with ADNOC, which controls 95.02% of the shares, also opens up access to markets in the Middle East, where demand for petrochemical products is increasing and access to raw materials can be secured. This could reduce dependence on volatile global raw material markets and stabilize production costs. In the automotive industry, too, despite current weaknesses in North America, increasing demand for lightweight, sustainable materials such as Makrolon® Ai offers long-term potential, especially if production recovers.

Further expansion potential lies in the strategic focus on sustainability and circular economy, which is supported by regulatory trends. Covestro plans to operate climate-neutrally by 2035 and is investing in projects such as the supply of green hydrogen (up to 100,000 tons annually from 2024), which could reduce CO₂ emissions by up to 900,000 tons per year. Such initiatives could not only reduce costs through emissions penalties, but also increase attractiveness for environmentally conscious customers and investors. In addition, digital innovations such as quantum computing and AI offer the opportunity to accelerate R&D processes and open up new markets through innovative products.

The balance between market risks, regulatory hurdles and expansion potential will be crucial to Covestro's ability to navigate a volatile environment. How the company copes with geopolitical and economic uncertainties and whether it succeeds in converting regulatory requirements into competitive advantages remains a critical factor for future development.