The economic crisis has affected business performance of German chemical company Evonik. Sales declined 21%, EBITDA contracted by 34%.
“Although a slight improvement has been seen in recent months, there is not yet any sign of a fundamental upturn,” commented Dr. Klaus Engel, Chairman of the Executive Board of Evonik Industries AG, on key figures for the first six months of this year.
“There has been a slight recovery in some areas of our chemicals business in the past few months compared with the extremely weak first quarter but it is still at a very low level.”
To surmount the challenges resulting from the economic crisis in the short term and improve its competitive position further in the longer term, Evonik is rapidly driving forward its “On Track” efficiency improvement program.
The three main elements of this program are systematic reorganization of administrative structures, active portfolio management and tough cost cutting.
Evonik is planning to make savings of €300 million in 2009 alone. “That was the target we set at the start of the year. Now we are confident that we can actually do better than that,” says Engel.
The Group is also making good progress towards its goal of leveraging sustained savings of around €500 million p.a. worldwide by 2012.
Sharp drop in demand
In the first six months of this year, the Evonik Group’s sales contracted by 21% to €6,281 million (H1 2008: €7,933 million).
Overall, demand picked up slightly in the Chemicals Business Area in the second quarter, following a weak start to the year. A perceptible upturn in demand was registered in some industries and regions.
In all, though, volumes were still down substantially year-on-year. As a consequence, sales slipped 22% to €4,560 million in the first six months of 2009 (H1 2008: €5,873 million).
In the Energy Business Area sales fell 15% to €1,452 million and in the Real Estate Business Area sales grew 4% to €184 million.
The Group’s EBITDA (earnings before interest, taxes, depreciation and amortization) dropped 34% to €839 million (H1 2008: €1,279 million) as a result of one-off operating expenses, especially impairment losses on inventories in the Chemicals and Energy Business Areas.
Outlook for 2009
The outlook for 2009 remains very uncertain. Consequently, it is not possible to give a reliable quantitative forecast for sales and earnings.
Evonik still anticipates that sales and earnings will be considerably lower in 2009 than in 2008 as a result of the ongoing economic crisis and the associated reduction in volumes.
Evonik Industries from Germany operates in three business areas: Chemicals, Energy and Real Estate. The group is active in over 100 countries around the world. In its fiscal year 2008 about 41,000 employees generated sales of about €15.9 billion and an operating profit EBITDA of about €2.2 billion.