“Don’t expect a real recovery”
Evonik saves against the crisis – jobs are lost
March 4, 2024, 8:48 a.m
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Evonik cannot escape the crisis in the chemical industry either. Sales and profits were significantly lower last year. Expectations are cautious. The company looks at the costs – and starts with management.
In view of the industry crisis, the specialty chemicals company is pulling out the red pencil and cutting thousands of jobs. The Essen-based company announced that up to 2,000 of the current 33,000 jobs will be eliminated by 2026, around 1,500 of them in Germany. The cuts will primarily affect management. The program is intended to reduce costs by around 400 million euros and the group is intended to become leaner and more efficient. After a slump in sales and profits last year, Evonik expects only slight growth in 2024.
“Evonik does not yet expect any real economic recovery in 2024,” the company said. Operating income (adjusted EBITDA) is expected to be in the range of 1.7 billion to 2 billion euros with sales of 15 billion to 17 billion euros. Investments in property would also be limited.
Last year, Evonik clearly lost ground in the industry crisis. The group, which produces products ranging from amino acids for animal fattening to lipids for vaccines, had an adjusted EBITDA of almost 1.7 (previous year: 2.5) billion euros with sales falling by 17 percent to 15 billion euros . The shareholders of the Essen-based RAG-Stiftung are to receive an unchanged dividend of 1.17 euros per share despite the slump in profits.
“Massive change in the economic environment”
“The many crises worldwide have ruined our results,” said CEO Christian Kullmann. Overall, Evonik “got away with a black eye.” The general conditions are “not getting any easier”: “We will therefore continue our fundamental restructuring of the group,” emphasized Kullmann.
Evonik is not happy with the declines. The chemical industry is still suffering from comparatively high energy prices and the weak economy. “We are in the middle of a deep, long valley. And it is still unclear how long we have to go through it,” the President of the Chemical Industry Association (VCI), Markus Steilemann, recently said.
Evonik’s competitor Covestro, whose boss is Steilemann, recorded a 20 percent decline in sales last year. Industry leader BASF reported a decline in profits and sales for 2023. BASF is responding with savings programs and job cuts. “We shouldn’t fool ourselves even with slight signs of recovery: what we are currently experiencing is not an economic fluctuation, but a massive, consistent change in our economic environment,” said Kullmann.