Could you share Covestro's origin story post-Bayer and your current areas of focus in the market?
Covestro, originating from Bayer, stands as a prominent B2B entity focused on material science. Our proximity to daily life is so pervasive that one is never more than a few feet away from our materials, often without realizing it. We pride ourselves on being the inventors of polyurethane and polycarbonate, among other significant contributions to the materials industry. Our expansive product range, including large coatings, adhesives portfolios, and innovative solutions, cater to a variety of industries such as mobility, automotive, construction, electronics, and healthcare, to name a few. Our vision is ambitious: to achieve full circularity. This reflects our commitment to not only enhance the utility of our products but also to significantly reduce their carbon footprint. Our goal is to ensure that all materials we produce can eventually be reused, embodying our drive towards sustainability. In 2023, we reported sales slightly above the 14.3 billion mark, underscoring our financial strength and dedication to our mission despite global challenges.
How has the role of a marketeer in the chemicals industry evolved, and how does it address chemophobia and the need for storytelling?
We need to show the integral role chemicals has in our daily lives through storytelling. This shift reflects a deeper understanding that we're all part of solving global challenges, regardless of whether we operate in a B2B or B2C context. The focus has broadened from merely providing functional solutions to addressing ecosystem-level issues, such as reducing carbon footprints affordably, ensuring food security with sustainability, and improving home insulation for energy efficiency. This paradigm shift towards ecosystem thinking means moving beyond the traditional sales approach to engaging with a wide range of stakeholders, including governments and consumers, to collaboratively address broad societal challenges. It’s about presenting solutions that are not only functionally superior but also contribute positively to the environment and society at large. This approach is critical in an era where no single solution suffices, and the industry must adapt to offer more sustainable, effective alternatives.
Can you detail Covestro's performance in 2023, especially considering the geopolitical challenges and the chemical industry's situation?
2023 presented a 'perfect storm' for Covestro, accentuated by the geopolitical crisis and its domino effects on global demand and energy costs. The Ukraine-Russia conflict exacerbated these challenges, leading to a notable impact on our sales volumes, prices, and ultimately, a 20% decrease in sales to 14.4 billion from the previous year's 18 billion. Despite these adversities, we take pride in our cash management and the steps we took to mitigate the downturn. Our EBITDA fell by over half a billion to 1.1 billion, but our strategic handling of finances resulted in a positive free operating cash flow of 232 million, a testament to our resilience in the face of significant economic pressures. Amidst these trials, we steadfastly pursued our sustainability goals, achieving ISCC Plus certification across major regions and establishing strategic partnerships for circular materials. Noteworthy is our agreement in the U.S. for a 90 megawatt virtual power purchase, showcasing our commitment to reducing CO2 emissions and advancing towards our vision of carbon neutrality by 2035. Despite the challenges, our focus on innovation, sustainability, and circularity remains unwavering, highlighting our dedication to leading the industry through turbulent times.
How do you envision Covestro moving towards self-reliance in the context of a de-globalized state, particularly in managing raw materials and supply chain bottlenecks?
Firstly, Covestro has established a global footprint with robust strategies that enable us to serve regions with their domestic demands efficiently. Our facilities are strategically placed across various continents, including Asia, Europe, and the US, allowing us to cater to regional needs effectively. This setup not only mitigates the risk of supply chain disruptions but also enhances our capability to remain self-sufficient across different markets. Despite occasional challenges like energy price hikes, our diversified raw material portfolio and commitment to renewable energy sources further strengthen our resilience. Through partnerships and strategic acquisitions, such as with Encina for chemically recycled feedstock, we maintain a versatile supply chain that can swiftly adapt to changing market dynamics. This approach ensures we're not overly reliant on single sources and can navigate short-term fluctuations without significant impact on our operations.
Can you elaborate on Covestro's ambitions for achieving carbon neutrality by 2035, and how does this goal align with your financial strategies?
Achieving carbon neutrality by 2035 is both an ambitious and essential goal for Covestro. Our approach involves a comprehensive strategy that encompasses not only reducing direct emissions (Scope 1 and 2) but also addressing indirect emissions (Scope 3) with a goal set for 2050, through innovative product offerings and sustainable practices. This effort is closely tied to our financial strategies, aiming to balance environmental commitments with business performance.
We are focused on forging strong partnerships and prioritizing materials that contribute to a circular economy, which allows us to maintain competitive advantage and support our customers in achieving their sustainability goals.
Although transitioning to sustainable practices requires investment and may impact short-term financials, we're convinced that this direction will not only fulfill regulatory requirements but also drive long-term value creation for our stakeholders, ensuring resilience and profitability in a changing market landscape.
What message would you like to convey to the chemical industry and broader audiences about Covestro's role and aspirations in the context of the green transition?
Covestro firmly believes in the indispensable role of high-performance polymers and plastics in achieving climate neutrality and reversing climate change. It's crucial to understand that sustainability and the transition towards a green economy are not just about meeting regulatory demands but about recognizing the intrinsic value these materials bring to various sectors, including affordable housing, mobility, and healthcare. We urge the industry and the broader community to focus on the utility and effectiveness of sustainable solutions rather than getting caught up in fluctuating sustainability narratives. It's vital to stay the course, despite occasional setbacks or challenges, as our collective commitment to innovation and sustainability will pave the way for achieving long-term goals and ensuring a better future for the planet.