Evonik has released its third-quarter 2023 financial results. The company has increased its adjusted EBITDA by 8% to €485 million in the third-quarter 2023 versus the second quarter. Reportedly due to persistently weak demand, the adjusted EBITDA fell by 21% year-on-year. 

“The economic recovery is still a long time coming,” said Christian Kullmann, chairman of Evonik’s management board. “That is why we are focusing on the levers at our disposal. And that is increasingly having an effect.”

Evonik’s group sales fell 23% in the third-quarter to €3.77 billion. Sales volumes declined by 5%, and prices by 6%. For methionine, prices bottomed out in the third quarter and have improved slightly since. The business also realized initial savings effects from the ongoing transformation program of the business line animal nutrition. Free cash flow in the third-quarter increased by 63% to €469 million, driven by prudent working capital management and investment discipline. Cash generation in the first nine months was also higher than in the previous year, despite significantly lower adjusted EBITDA. Evonik said it remains committed to increasing the cash conversion rate toward its target of 40% in the current year. In 2022, the ratio was 32%.

“Our focus on cash is paying off,” says CFO Maike Schuh. “We will also benefit from this in the fourth-quarter. To strengthen our financial foundation, we will continue to rigorously scrutinize investments and other expenditures in the coming year.”

Evonik assumes continued weak demand without recovery for the remainder of the year and confirms the outlook issued in August. Full-year adjusted EBITDA for 2023 is expected to be between €1.6 billion and €1.8 billion on sales of €14 billion to €16 billion. Evonik will limit capital expenditures to around €850 million in the current year.

Third-quarter sales in the specialty additives division decreased by 21% to €882 million. The decline resulted from lower volumes, negative currency effects and falling selling prices. The prior-year figure also included sales from the TAA derivatives business, which was divested at the end of 2022. Products for the construction and coatings industry saw softening demand in all regions and slightly declining selling prices, generating significantly lower sales. Sales of additives for polyurethane foams and consumer durables also declined due to lower volumes and softening selling prices. Additives for the automotive sector recorded lower volumes, while selling prices declined slightly due to the passing-on of lower raw material costs. Adjusted EBITDA was 29% below the prior-year figure at €173 million. The adjusted EBITDA margin fell to 19.6% from 21.8% in the prior-year quarter.

Sales of the smart materials division decreased by 19% to €1,100 million in the third-quarter of 2023. The decline reportedly resulted from lower volumes, negative currency effects and softening selling prices partly due to the passing-on of lower raw material costs. Inorganic products saw significantly lower sales because of declining demand. The lower selling prices reflect the softening in raw material costs. In polymers, high performance polymers benefited from the availability of the two production facilities for polyamide 12 following maintenance work in the second-quarter. Sales were roughly level with the previous year. Adjusted EBITDA declined by 28% to €135 million. Lower volumes and prices were the main contributors, while lower variable costs had a counteracting effect. The adjusted EBITDA margin fell to 12.3% from 13.8% in the prior-year quarter.

In the performance materials division, sales fell by 23% to €616 million in the third-quarter of 2023. Lower volumes and prices as well as negative currency effects reportedly contributed to this. The prior-year figure included sales from the Luelsdorf site, which was sold effective June 30, 2023. Business with products from the C4 chain (performance intermediates) recorded stable volume demand, but sales declined as a result of noticeably lower prices. Sales of superabsorbents were also below the prior-year level due to lower demand from Europe. Adjusted EBITDA fell by 46% to €34 million. The adjusted EBITDA margin decreased to 5.5% from 7.9% in the prior-year quarter.

For more information, visit: evonik.com.