August 4, 2020

Evonik sees drop in sales, earnings in Q2, 2020

Against the backdrop of the worldwide recession triggered by the COVID-19 pandemic, Evonik is getting through the crisis well, the company said.

Nevertheless, sales and earnings in the second quarter decreased compared to the previous year due to significantly weaker demand in some markets. Company sales fell by 14% to €2.83 billion (US$3.3 billion), while adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell 19% to €456 million (US$536.5 million).

"Evonik is weathering the crisis," said Christian Kullmann, chairman of the management board. "In the second quarter, we felt the effects of the pandemic. However, the strategic portfolio changes and the implementation of our efficiency programmes contributed to the fact that we got through the first half of the year better than initially expected. This is especially true for our strong growth segments."

Evonik's two growth segments, Resource Efficiency and Nutrition & Care, showed robust performance in the second quarter and achieved strong EBITDA margins of 20% each. The Performance Materials segment, on the other hand, was hit much harder by the slump in demand as well as suffering from the low oil price.

Adjusted net income in the second quarter decreased by 30% year-on-year to €160 million (US$188.3 million). Adjusted earnings per share declined from €0.49 (US$0.58) to €0.34 (US$0.40). Free cash flow was significantly positive at €96 million (US$113 million). Lower bonus payments and tax reimbursements more than compensated for the effects of lower operating profit and an increase in net working capital, said Evonik.

"In the crisis, we have shown high cash and cost discipline," said Ute Wolf, Evonik's chief financial officer. "We are starting to see initial signs of recovery in some markets. However, there is still no question of a general economic recovery. The (COVID-19) crisis is not yet over."

For the full year 2020 Evonik confirms its outlook from May 7. The company expects sales of between €11.5 billion (US$13.5 billion) and €13.0 billion (US$15.3 billion) as well as adjusted EBITDA of between €1.7 billion (US$2 billion) and €2.1 billion (US$2.5 billion).

Evonik's Nutrition & Care segment has stayed robust. Sales fell by only 4% to €1.09 billion (US$1.3 billion) in the second quarter. Adjusted EBITDA even rose by 14% to €217 million (US$255.3 million). The essential amino acids for animal nutrition benefited from higher selling prices and increased demand, according to Evonik.

- Evonik