Weak economy impacts Q2 performance at Evonik

Essen, Germany – Evonik has reported a 19% decline in sales for the second quarter of 2023, falling from €4.77m last year to €3.89bn this. Volumes were down by 9%, and prices dropped by 5%.

Quarterly adjusted EBITDA fell by 38% to €450m, down from €728m in the 2022 quarter. However, the company said, this does represent a slight improvement on the first quarter’s €419m.

It posted a net loss of €270m in the quarter, primarily a result of €390m in impairment charges. Most of these were on methionine production facilities around the world, as well as on silica in Europe and North America.

Earnings were propped up by the strict cost-cutting measures put in place in the second half of 2022, it said. The company hopes to save €250m this year via measures such as not filling vacancies, reducing reliance on external service providers, and cutting business travel. It said that 40% of this target had been reached by the end of June.

Planned capital expenditure this year of about €850m represents a second cut to the budget, which had already been reduced from €975m to €900m earlier this year. However, the company said, investments in green technologies will continue, as will spending on safety-related maintenance.

The company expects weak demand to continue, with no recovery in the second half of the year. It has already cut its guidance for the full year’s adjusted EBITDA, announcing in early July that this had been reduced to between €1.6bn and €1.8bn, from the previous range of €2.1bn to €2.4bn.

It also reported that sales of additives for polyurethane foams, part of its specialty additives business, had decreased. Demand for products for construction and automotive also fell.

“Germany is in a recession, Europe as well, and the economy in China is not picking up as we had hoped,” said Christian Kullmann, chairman of the company’s executive board. “Unfortunately, the second quarter showed no meaningful turnaround for our business.”