#1covestro Covestro Site Visit Exane BNP Paribas Chemicals German Tour Dormagen - September 7, 2016 covestro.com 1#2Forward-looking statements covestro This presentation may contain forward-looking statements based on current assumptions and forecasts made by Covestro AG. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. These factors include those discussed in Covestro's public reports which are available on the Covestro website at www.covestro.com. Covestro assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments. 2 September 2016 | IR Investor Presentation#3Covestro key investment highlights Global leader in high-tech material solutions 1 2 3 4 Leading and defendable global industry positions based on focused portfolio. Favorable industry dynamics with robust above GDP growth prospects in a diverse range of end-markets. Positioned to deliver volume growth through well-invested, large-scale asset base with competitive cost position. Portfolio including high-value CAS business with attractive and historically resilient margin profile. 5 Attractive cash flow growth outlook underpinned by disciplined cost management Headed by experienced management with full commitment to value creation 3 September 2016 | IR Investor Presentation covestro#4Covestro at a glance Inventor and leader in high-tech material solutions driven by global trends. Leading global polymer producer in polyurethanes and its derivatives as well as polycarbonates • Proven track record of process and product innovation, customer proximity as well as market-driven solutions · State-of-the-art asset base with leading process technology and 2015 China 16% APAC ex China 12% • total production capacity of 4,800 kt (a) distributed across 8 world- scale production facilities in three main regions Backward-integration into chlorine, propylene oxide and other feedstock, aimed at sourcing critical raw materials internally with no or limited merchant market sales Headquartered in Leverkusen, Germany, with 15,750 employees (c) globally Covestro key financials September 2016 | IR Investor Presentation Sales 2015 €12.1bn Notes: Adj. EBITDA 2015 €1.6bn Sales split by geography(b) NAFTA 28% EMLA 44% Sales split by end-market 2015 Sports / Leisure, Health, Others Cosmetics, 27% Chemicals 8% Automotive / Transportation 20% Construction 17% Electrical/ Electronics 12% Wood Furniture 16% Adj. EBITDA margin 2015 13.6% covestro (a) Includes total nameplate capacity for PUR and PCS in 2015, rounded to nearest 100kt (b) Based on Covestro Annual Report 2015; EMLA = Europe, Middle East, Africa, Latin America (without Mexico); NAFTA = USA, Canada, Mexico; APAC = Asia, Pacific (c) Employees refers to full-time-equivalents (FTE), rounded to nearest 50#5Covestro business units Three industry-leading, structurally attractive business units covestro Business Units Global Position (a) Sales 2015 Adj. EBITDA Margin 2015 Key Applications Polyurethanes (PUR) Global #1 (3,470kt) MDI: #2 (1,420kt) • TDI: #2 (720kt) Polyether polyols: #2 (1,330kt) €6.1bn or 50% of Covestro 10.2% Rigid foam: Building insulation Cold chain Automotive parts Flexible foam: Furniture Bedding/mattresses Polycarbonates (PCS) Joint Global #1 (1,280kt) • EMEA: #2 (540kt) • NAFTA: #2 (230kt) APAC: #2 (510kt) €3.2bn or 26% of Covestro 17.7% Automotive parts IT and electrical equipment, electronics Construction (windows, roof structure) Consumer products, medical and other applications Coatings, Adhesives, Specialties (CAS) Global #1: Aliphatic isocyanate derivatives Aromatic isocyanate derivatives Polyurethane dispersions €2.1bn or 17% of Covestro 23.5% Surface coatings Adhesives and sealants Elastomers Specialty films 5 September 2016 | IR Investor Presentation Notes: (a) Based on total nameplate capacity for PCS, MDI, TDI and Polyether polyols at year-end 2015 relative to competitors as per Covestro internal estimates; for PCS: joint global leader (SABIC is the other #1); based on entire polycarbonates nameplate capacity as per Covestro internal estimates; for CAS: based on total volume in 2015A relative to competitors as per Covestro internal estimates.#6Exposure to fundamental macro trends Above GDP industry growth supported by global trends. Global trends Needs Climate change Zero emission concepts Low energy buildings Mobility Growing population Energy efficient mobility Lightweight transportation Food preservation Low cost durable goods Affordable housing Increasing urbanization Living comfort Public infrastructure 6 September 2016 | IR Investor Presentation covestro Industry demand outlook 2015 - 2020E (a) 15.2Mt CAGR ~4% 18.5Mt 2015 2020E CAGR ~4% 4.7 Mt 3.8 Mt • Covestro solutions Building insulation Insulation along the cold chain Foam mattresses and comfort solutions Weight-saving car parts Lightweight materials for transportation Roofing and glazing for buildings Blends and composites for electronics IT and consumer goods CASE (c) PC PU(b) 2015 2020E CAGR -4% 3.3Mt 2.7Mt 2014 Notes: (a) Assumes global GDP CAGR 2015-2020E of -3% Source: 2020E High performance surfaces and coatings High-tech films Solvent-free coatings and adhesives (b) Comprises MDI, TDI and polyether polyols (c) Shows PU raw materials industry demand in coatings, adhesives and sealants Company information. CASe market: Orr & Boss 2014 & Covestro internal estimates with annual growth of 4% for 2015#7Q2 2016 and 6M 2016 - Sales per Region Above-GDP volume growth in all regions. Solid growth in Q2 2016 in million / Core volume growth Y/Y China 499 Vol. +15% APAC 863 Vol. +13% EMLA 1,340 Vol. +6% US 653 Vol. +5% NAFTA 787 Vol. +4% Germany 397 Vol. +3% . . Q2 2016 Highlights Strong core volume growth of 7.7% Y/Y APAC and China with double-digit growth. • Growth accelerated in Germany. US and NAFTA with slower sequential growth due to high comparison basis 7 September 2016 | IR Investor Presentation Solid growth in 6M 2016 in € million / Core volume growth Y/Y China 946 Vol. +14% • • • APAC 1,655 Vol. +12% EMLA 2,641 Vol. +6% US 1,306 Vol. +8% NAFTA 1,569 Vol. +6% Germany 800 Vol. +2% 6M 2016 Highlights Strong core volume growth of 8.1% Y/Y China remains a high growth market with 14% Y/Y Significant core volume growth in the US with 8% Y/Y Solid growth in EMLA covestro#8A common chemical backbone across all segments Significant synergies in scale, process technology and chemical know-how Integrated production model Feedstock Phenol Acetone Chlorine Base products Polycarbonates Isocyanates covestro Specialties / derivatives Customers / end-markets 1) Benzene Toluene . MDA ⚫ MDI ⚫ TDA ⚫ TDI Systems Propylene Propylene Oxide Polyether polyols Amines HDA • IPDA • H12 MDA • ONDA Purchased raw materials Covestro activities²) 8 September 2016 IR Investor Presentation Monomers ⚫ HDI ⚫ IP DI H 12 MDI NDI Automotive / Transportation 20% Construction 17% Furniture / Wood 16% Electrical / Electronics 12% Derivatives (2,300+) Chemicals 8% Sports / Leisure, Cosmetics, Health, Others 27% Notes: 1) 2015 Covestro sales split by end-markets 2) Including Covestro's participation in joint ventures#9A common chemical backbone across all segments Significant synergies in scale, process technology and chemical know-how Chemical backbone Products Customer industries MDI Chlorine Phosgene Caustic soda TDI Hydrochloric acid PCS Services Propylene oxide (a) CAS PET . Common assets economies of scale • Chemical know-how Chemical know-how • Process technology Process technology 9 September 2016 | IR Investor Presentation Synergies GPP(b) Notes: (a) Contracts and JV activities (b) Gas Phase Phosgenation . Automotive/transportation Construction Wood/furniture Electrical/electronics Chemicals Sports, leisure, cosmetics, health, other industries • Customer access • Global presence covestro#10A common chemical backbone across all segments Significant synergies in scale, process technology and chemical know-how. Covestro operates 8 interlinked world-scale sites in all key regions 10 September 2016 IR Investor Presentation Americas Baytown, USA EMEA APAC Antwerp, Belgium Shanghai, China 4 sites, Germany PUR PCS CAS Map Ta Phut, Thailand covestro#11Covestro NRW sites covestrol September 2016 | IR Investor Presentation 11#12Covestro in the Federal State North Rhine-Westphalia (NRW) Highlights covestro rath lich Krefeld (57 UERDINGEN 288 JAHN 52 Kaarst INENBROICH 1 230 46 Uerdingen Icktener Siedlung HEIDHAUSEN KETTWIG ANGERMUND Amt Angerland 227 Heiligenhaus. LANK-LATUM KAISERSWERTH Ratingen 57 44 STADTBEZIRK 5 LOHAUSEN 3 $2 44 44 KAPELLEN Noithausen Grevenbroich 540 ASTER 59 Meerbusch Neuss STADTBEZIRK 7 Düsseldorf FRIEDRICHSTADT OBERBILK Gnadental 46 A77 NORF 57 ALLERHEILIGEN Münchener Str NIEVENHEIM Mettmann ANGI NEVIGES Wülfrath Katernbe Erkrath 228 46 GRUITEN HOCHDAHL 224 CRO 46 Haan HASSELS 228 Wald Hilden Solingen BENRATH ZONS BAUMBERG 477 HORREM Dormagen Waldnaturschutzgebiet Knechtsteden 57 Rommerskirchen STO 477 HACKENBROICH ROGGENDORF/ THENHOVEN Langenfeld (Rheinland) Ohligs 229 229 Dormagen OPLADEN Leverkusen Pulheim 12 September 2016 IR Investor Presentation RHEINDORF 59 51 Leverkusen WIESDORF 2 Odent 51 Da Source: Google Map NRW share of Covestro's global production capacities (2015) ~30% Production by segments: NRW sites PUR: DOR, UER PCS: UER CAS: LEV, DOR produced finished products worth (2015) ~€3.5bn#13Site Leverkusen www covestro September 2016 IR Investor Presentation 13#14Site Leverkusen 14 • At a glance Covestro Corporate Headquarters Various CAS production plants • Chlorine capacity: 390kt • • Research labs and technical centers for PUR, PCS and CAS ~3,550 employees Covestro (converted to full-time equivalents) September 2016 | IR Investor Presentation Notes: All capacities are annual name plate capacities as of FY 2015 covestro#15Site Leverkusen Construction of a multipurpose plant for coating raw materials Rising demand for high-performance polyurethane coatings. • Total investment: EUR 35 million • Production of isocyanates HDI and IPDI efficient and flexible in line with customer demand Commissioned in January 2014 15 September 2016 | IR Investor Presentation covestro#16111 Uerdingen site L covestrol September 2016 | IR Investor Presentation 16#17Uerdingen site 17 • At a glance • • . History: silks and satins. Polycarbonates capacity: 300kt Isocyanates (MDI) capacity: 200kt • Chlorine capacity: 260kt ~ 1,000 employees Covestro (converted to full-time equivalents) September 2016 | IR Investor Presentation Notes: All capacities are annual name plate capacities as of FY 2015 covestro#18Site Uerdingen Oxygen depolarized cathode (ODC) for innovative chlorine production Facts and figures • Over 55% of sales in the chemical industry • are based on chlorine chemistry Electricity saved by the new process: 30-50% Reduction in CO2 emissions: 10,000 tons per year Successful technology transfer covestro Installation at other Covestro chlorine production plants Expansion of own ODC production and global marketing to third parties Potential of ODC technology: if entire German chlorine production was converted to ODC, this would save approx. 1% of Germany's entire electric power requirement (equivalent to city of Cologne). 18 September 2016 | IR Investor Presentation ODC technology: important contribution to climate protection#19Dormagen site covestrol September 2016 | IR Investor Presentation 19#20Dormagen site At a glance • 20 20 • covestro Headquarters of NRW site management and largest NRW site by area: 24 hectars Isocyanates (TDI) capacity: 250kt Polyols capacity: 250kt Various CAS production plants and Specialty Films production Chlorine capacity: 480kt ~ 1,400 employees in Covestro (converted to full-time equivalents) • September 2016 | IR Investor Presentation Notes: All capacities are annual name plate capacities as of FY 2015#21Polyether polyols process technology development Cost leadership through proprietary IMPACT technology and next generation CO2-based polyols IMPACT catalysts for efficient polyether polyol production Carbon dioxide as raw material for polyols production covestro Start-up in 2003A (Dormagen) Covestro able to run continuous production of polyether polyols through IMPACT technology Highly efficient catalyst -10 tonnes sufficient to produce c. 400kt of polyether polyols -ecological and economic benefits Successfully out-licensed to major polyether polyols producers - New technology to co-polymerize CO2 Overcomes key industry challenges and provides superior technology in core of polyurethanes reduced carbon footprint replaces petrochemicals improves performance of end-products ●Potential to revolutionize industry • New polyurethane foams have been intensively tested, properties are at least as good as those of conventional materials • New 5,000 tpa line at the Dormagen site inaugurated in 2016 • Market launch in 2016E with first end-consumer products: mattresses ● Driver of polyether polyols growth in mid-term 21 21 September 2016 | IR Investor Presentation#22Global TDI operations Ongoing European efficiency program to further enhance quality of existing world. class assets Baytown, TX, USA Nameplate capacity: 220kt ⚫ Start of production: 2000 Technology used: Liquid- Phase Phosgenation ⚫ Serves both US and non-US markets Pittsburgh, PA, USA 22 September 2016 | IR Investor Presentation Leverkusen, Germany Dormagen, Germany ° Nameplate capacity: 250kt Start up beginning 2015 Technology used: Features new Covestro Gas-Phase Phosgenation Cost leader resilient to new capacity additions in EMEA Brunsbüttel, Germany Nameplate capacity: 125kt Start of production: 1977 Technology used: Liquid- Phase Phosgenation TDI production shut down in 2015A Shanghai, China Covestro TDI Facility Covestro Innovation Centers Notes: All capacities are annual name plate capacities as of FY 2015 Amagasaki, Japan covestro Shanghai, China Nameplate capacity: 250kt Start of production: 2011 Technology used: Features: new Covestro Gas-Phase Phosgenation • Cost leader in APAC and well-positioned to capture strong demand in Asia#2333 23 Status TDI process technology Proprietary gas-phase production technology sets industry standards in efficiency and sustainability How it works • • • Innovative gas-phase technology for TDI Significant economic improvements (a) Cost indexed to 100 -80% -60% -40% covestro TDA and phosgene heated Subsequently transferred in a gaseous form to th Condensed to a liquid and distilled to yield purified TDI with recovered solvent and phosgene First introduced in 2011A Shanghai facility first to implement gas-phase in full scale Applied in all Covestro facilities in regions with high energy costs (EMLA & APAC) from 2015E Solvent hold-up Energy consumption ■Conventional ■Gas-phase technology Phosgene hold-up Key benefits of gas-phase technology for TDI Major source of competitive advantage and cost leadership position in TDI ✓ Lower energy consumption vs. liquid phase technology Shorter reaction time vs. conventional processes with significantly higher throughput September 2016 | IR Investor Presentation Note: (a) Refers only to phosgenation step as per management estimates#24TDI regional industry cost curve Combination of scale, integration and technology provides global cost leadership North America TDI Cash Cost(a) A Western Europe TDI Cash Cost (a) B Asia TDI Cash Cost(a) covestro Covestro Baytown North American Follower Covestro Dormagen Western Europe Follower West European Laggard Covestro Shanghai Chinese Follower Other North East Asian Leader A Covestro cost leadership through backward-integration B Covestro advantages from superior process technology Raw material integration and process technology advantages driving superior cost position for Covestro 24 September 2016 | IR Investor Presentation Notes: (a) Cost of production based on total raw material costs less co-product credits, utility costs, direct fixed costs and allocated fixed costs at specific level of utilization based on Covestro internal estimates#25Dormagen site tour 25 September 2016 | IR Investor Presentation Heritage. Building Right INEOS/ Covestro West-plant/BAYER Heritage. Building Right INEOS/ East-plant/ Covestro Covestro covestro