Earlier today, German chemicals giant Evonik announced its results for the financial year of 2019. While the company has kept earnings stable despite a deteriorating global economy, for 2020, sales fell slightly by 1% to €13.1 billion. Adjusted EBITDA in 2019 was €2.153 billion compared with €2.150 billion in the previous year. The forecast for 2020 is between two and €2.3 billion.
“In 2019, we delivered what we promised, ” said Ina Gährken from Investor Relations.
Net income for the year more than doubled to €2.1 billion, driven primarily by proceeds from the sale of the methacrylates business in July 2019. In addition, the free cash flow also improved significantly at €717 million, before carve-out taxes related to the sale of the methacrylates business.
However, the company expects a low growth environment to continue. “And we will continue to execute our cost-efficiency measures”, noted head of investor relations, Tim Lange.
“The measures implemented in the last years to improve our cash generation have been effective,” Chief Financial Officer Ute Wolf said. “For the current year, we are aiming for a further improvement in free cash flow.”
The company’s acquisition of PeroxyChem this year is proving its value now that the coronavirus has struck - its disinfectants "are being torn out of our hands", said CEO Christian Kullmann.
Evonik generated about 8% of its 2019 sales in China. The coronavirus outbreak could impact Evonik's operating income -adjusted EBITDA - in the first quarter by around €30 million, he estimated. In his view, however, the worst is over, as production in China is up and running, with reportedly no employees having contracted the virus. "The effect will be most pronounced in Resource Efficiency, it's the most global business with sizable exposure to automotive and construction," Wolf noted.
"We want to stay on course," Kullman emphasised. But: "2020 will not be an easy year," he said.
The company will continue with the implementation of its new divisional structure, designed to better reflect the ‘growth engines’ defined in its strategy two years ago – the next logical step in Evonik’s portfolio transformation.
On 1 July, the current operating segments will be transferred into four divisions that are more balanced in their size and type of business. The four divisions – Specialty Additives, Nutrition & Care, Smart Materials and Performance Materials – will have a ‘lean and efficient setup’. The benefits of the new structure include more transparency, clearly defined strategic roles and smoother internal management.