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Evonik to change structure, sell superabsorbents

During its 2023 results presentation, Evonik announced that it will establish a new organisational structure by the end of 2026. Under ‘Evonik Tailor Made’ it will eliminate administrative activities that do not directly support its businesses and bundle key tasks in the new structure.

As a result, about 2,000 jobs will be cut, 75% of them in Germany, saving about €400 million/year following completion in 2026. A “disproportionate number” of management positions will be affected because the number of hierarchical levels below the executive board will be reduced to a maximum of six and remaining managers will have a median of seven direct reports, compared to one to four at present.

In 2023, group sales were 17% down to €15.3 billion and EBITDA was €1.66 billion. Volume sales fell by 8% and selling prices by 3%. There was a net loss of €465 million “due to exceptionally high impairments and burdens from structural measures”. Free cash flow, however, rose to €801 million and the company achieved its 2023 savings target of €250 million.

“The many crises around the world have put a damper on our results,” said Christian Kullmann, chairman of the executive board. “Overall, we got away with a black eye … However, the general conditions will not get any easier, which is why we will continue our fundamental revamp of the group.”

Evonik does not expect an economic recovery during 2024. For this reason, capital expenditures will be limited to around €750 million. “We must not delude ourselves, even if there are slight signs of a recovery. What we are currently experiencing are not cyclical fluctuations, but massive, consequential changes of our economic environment,” Kullmann said.

All four divisions shared in the fall in sales. Specialty Additives was down by 16% to €3.52 billion, primarily due to lower volumes and negative currency effects, and adjusted EBITDA fell by 29% to €673 million. Demand from the construction and coating industries declined in all regions, while automotive demand was steadier.

Nutrition & Care saw sales fall by 15% to €3.61 billion, mainly due to lower prices in the Animal Nutrition business and negative currency effects. Adjusted EBITDA fell 43% to €389 million. The Health & Care business’s revenue declined due to lower volumes despite a slight improvement in prices, although active cosmetic ingredients performed well.

Sales in the Smart Materials division fell by 15% to €4.46 billion due to a big drop in demand and negative currency effects. Inorganic products had significantly lower sales because of declining demand in almost all market segments. Green speciality applications for hydrogen peroxide and high-performance polymers bucked the trend. Adjusted EBITDA decreased by 27% to €540 million.

Perhaps hardest hit was Performance Materials, which has been earmarked for sale. Sales fell by 22% to €2.55 billion, in part due to the mid-year divestment of the site in Lülsdorf and associated assets at Wesseling, Germany, to ICIG but the business with products from the C4 chain saw declining volumes and significantly lower prices. Adjusted EBITDA fell by 68% to €111 million.

Evonik simultaneously announced the sale of its superabsorbents business to ICIG for a price in the “low triple-digit million euro range”, marking the second step in the divestment of Performance Materials. This business had also seen a fall in sales in 2023, due to lower demand from Europe. Completion is expected in mid-2024, subject to employee consultation and approval by the relevant competition authorities.

ICIG is taking over the entire division with around 1,000 employees and facilities in Krefeld and Rheinmünster, Germany, Greensboro, North Carolina, and Garyville, Louisiana. It also includes plants at Marl that make the key raw material, acrylic acid. Kullmann commented that the business “no longer fits our character as a speciality chemicals company”. The business had sales of €892 million in 2023.

ICIG has also just acquired a majority stake in Vasant Chemicals an Indian supplier of speciality chemicals and pharmaceutical intermediates with facilities at Hyderabad and Visakhapatnam. Terms were not disclosed. Vasant will be integrated into the WeylChem Group, its fine chemicals platform of ICIG.


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