24 March 2009 15:24 [Source: ICIS news]
TORONTO (ICIS news)--Evonik aims to reduce annual costs by €300m ($411m) in 2009 as it expects considerably lower sales in its core specialty chemicals business amid low demand, the Germany-based producer said on Tuesday.
By 2012, the company aims to save €500m/year, CEO Dr Klaus Engel said in a briefing on Evonik's 2008 earnings results and outlook.
Measures planned for the near term included reducing travel expenses and cutting back on outsourcing and other operating expenses, he said.
“Moreover, all employee groups will have to make a material contribution to overcoming the crisis,” Engel said.
Evonik has been discussing “exact modalities” with workers’ representatives and chemicals union IG BCE, and expected to reach an agreement by the end of March, he said.
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The cost-cutting programme would be headed by new chief financial officer Wolfgang Colberg, who will join Evonik on 1 April, Engel said.
The cuts come amid a continued tough outlook for the chemicals industry, he said.
“Present market information on the chemicals sector suggests that there is not yet any light at the end of the tunnel,” he said.
“Although some forecasters anticipate that demand for chemicals will pick up in the second half of the year, that is far from certain at present,” he said.
“What we can say with some certainty today is that demand is currently stabilising at a low level,” he said.
Evonik had seen market demand in construction, plastics, electronics and automotive industries “crash virtually overnight” at the end of 2008, Engel said.
“At the peak, our chemicals operations suffered a slump in orders of up to 50% in some market segments,” he said.
But longer term, Evonik sees particular growth opportunities in sectors such as photovoltaic products and lithium batteries, Engel said.
And even business operations such as carbon blacks, silicas and silanes would move back into profit once “this historic slump in demand is over,” Engel said.
“Regardless whether the mobility of our world is driven by combustion engines, electric or hybrid drives in five, ten or 15 years' time, the vehicles on the road will still need tyres with silicas, silanes and carbon blacks from Evonik,” he said.
What was helping Evonik cope in the crisis were its non-cyclical energy and real estate businesses, which cushioned the market-driven earnings downturns in its large chemicals business, Engel said.
Engel also said that Evonik owners RAG Stiftung and private equity group CVC Captial Partners remained committed to list 74.9% of Evonik on the stock market “in the medium term”, but he did not mention a specific year.
CVC had said last year that 2013 was the target date for an initial public offering.
Evonik earlier on Tuesday reported 2008 results, with net income of €285m, down 67% from €876m in 2007, and sales of €15.87bn, up 10%.
($1 = €0.73)
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