Evonik reports "no meaningful turnaround" in second quarter

Essen, Germany – Evonik Industries AG has seen its sales and earnings decline in the second quarter of 2023 amid continued weakness in key markets.

Over the three months to 30 June, earnings (adjusted EBITDA) declined 38% year-on-year to €450 million on 19% lower sales of €3.8 billion, the Essen group reported 16 Aug.

The “economic downturn”, a 9% decline in volumes and a 5% drop in prices led the revenue decrease, Evonik explained.

Evonik also posted a 'net loss' of €270 million in the second quarter, primarily due to impairment charges of €390 million.

The cost was linked mainly to impairments on production facilities for methionine worldwide, as well as for silica in Europe and North America.

"Germany is in a recession, Europe as well, and the economy in China is not picking up as we had hoped," chairman Christian Kullmann stated frankly.

"Unfortunately, the second quarter showed no meaningful turnaround for our business," Kullmann added.

Evonik has been implementing cost-cutting measures since the second half of 2022 in order to “safeguard earnings”.

The group expects to save €250 million in the current year by not filling vacant positions, cutting down on the use of external service providers and restricting business travel.

Furthermore, the German-based chemicals supplier will limit capital expenditures in 2023 to around €850 million.

The corresponding budget was already cut from €975 million to €900 million earlier this year.

Evonik's Smart Materials unit saw second-quarter earnings fall 44% to €122 million on a 16% drop in sales to €1.1 billion.

The declines resulted from noticeably lower volumes, while selling prices remained stable and raw material costs fell slightly.

Inorganic products saw significantly lower sales on declining demand from almost all market segments while prices remained stable.

Smart Materials' portfolio includes: silica, silanes, peroxides, catalysts, polyamide 12, polyimide, special polybutadienes and polyesters.

Evonik’s Performance Materials unit reported a 27% year-on-year decline in sales to €694 million in the second quarter, mainly due to lower prices and volumes.

Products from the C4 chain, said the German group, saw declining volumes with “significantly softening prices”.

Adjusted earnings fell by 68% to €45 million, mainly a result of the drop in prices for C4 products, which overshadowed improved earnings for superabsorbents.