Evonik cutting 2,000 jobs to address "massive" changes in economic environment

Essen, Germany – Evonik Industries AG is targeting annual costs-savings of €400 million under a new restructuring programme, likely to involve a 6% workforce reduction.

In a 4 March statement, the Essen-based chemicals major said it had completed phase I of ‘Evonik Tailor Made’, which involved an ‘extensive analysis’ of all group structures and processes.

Based on this analysis, Evonik said it will design and establish a new organisational structure by the end of 2026.

The reorganisation will see Evonik ‘doing without’ administrative activities that do not directly support its businesses.

The group will reduce the number of hierarchical levels below the executive board to a maximum of six, while ‘significantly accelerating’ review and approval procedures.

In its bid to become “leaner, faster, and have a significantly reduced cost structure”, Evonik said up to 2,000 jobs will be cut worldwide.

This, it noted, will include “a disproportionate number of management positions”.

The majority of the employment reductions, around 1,500 jobs, will be made in Germany.

Evonik expects annual cost savings of around €400 million – 80% from personnel reductions – after the programme’s completion in 2026.

First effects of the restructuring programme are expected in the current year.

The announcement accompanied Evonik’s 2023 annual results, which showed an 8% year-on-year volumes decline amid “unfavourable" trading conditions.

Selling prices, reported the German chemicals group, declined by 3% year-on-year during last year.

Overall sales fell 17% to €15.2 billion during 2023, while adjusted earnings (EBITDA) declined 33% to €1.65 billion.

Evonik reported a net loss of €465 million for 2023 due to “exceptionally high impairments and burdens from structural measures, most of which occurred by end of September.”

In 2022, the group reported a net income of €540 million.

Evonik said it did not expect an economic recovery during 2024 and was, therefore, limiting capital expenditures to €750 million.

The company expects an increase in adjusted earnings to range between €1.7 billion and €2.0 billion in 2024, and sales of between €15 billion and €17 billion.

"We must not delude ourselves, even if there are slight signs of a recovery,” said Christian Kullmann, chairman of the executive board.

“What we are currently experiencing are not cyclical fluctuations, but massive, consequential changes of our economic environment," he added.

Evonik, Kullmann went on to say, is addressing the challenge with the 'Evonik Tailor Made' programme, which he said will change the group’s organisational structure “for good”.