UpdateGermany's Evonik Q2 net profit falls 28% on lower selling prices

01 August 2013 12:31  [Source: ICIS news]

(Adds quote in paragraph 2, segment detail in paragraphs 4-7, analyst comment in paragraphs 8-9)

LONDON (ICIS)--Evonik Industries’ net income fell by 28% to €191m ($255m) in the second quarter of this year, weighed by declining selling prices, the German specialty chemicals firm said on Thursday.

The company’s sales slipped by 5% year on year to €3.26bn, while adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) was down by 23% at €489m, the company said in a statement, adding that market conditions during the quarter were “far more difficult than expected”.

“While volumes increased slightly, earnings were lower, mainly due to declining prices," said Klaus Engel, chairman of the executive board of Evonik.

Adjusted EBIT (earnings before interest and taxes) for the company’s consumer, health and nutrition division was down by 18% year on year at €188m despite a 3% increase in sales to €1.06bn, as higher volumes were offset by lower prices.

The reverse was true for the company’s resource efficiency division. The segment, which includes inorganics, coatings and additives, posted a 4% year on year increase in adjusted EBIT to €145m despite a 4% drop in sales to €801m, as lower selling prices were balanced by higher volumes.

The sharpest EBIT drop was recorded for Evonik’s specialty materials division, which includes performance polymers and advanced intermediates.

EBIT for the division dropped by 56% year on year to €90m on an 11% drop in sales to €1.13bn.

Evonik attributed the drop to a “perceptible” drop in organic sales caused by lower sale prices, and a reduction in volumes as a result of maintenance-driven scheduled shutdowns of production facilities.

Butadiene (BD) prices in particular suffered a significant drop during the quarter, Evonik said.

Wall Street analyst Bernstein Research noted that the company's Q2 EBITDA result was 1% above the market consensus, adding that it continued to be bullish on the company's prospects.

In an analyst note, Bernstein said: "Versus some others we remain more positive as we see Evonik's portfolio of assets more resilient than peers given their wide spread.

“Despite our cautious view on the broader chemicals sector we still see value as a relatively cyclical hedge. We continue to believe Evonik has long term potential."

For the first six months of this year, Evonik’s income fell by 10% year on year to €481m, with sales down by 5% at €6.53bn. Its adjusted EBITDA in January-June this year fell by 16% year on year to €1.08bn.

Evonik expects sales in 2013 to be around the same level as in 2012 at about €13bn, with adjusted EBITDA of around €2bn.

($1 =  €0.75)

Additional reporting by Nurluqman Suratman


By: Tom Brown
+44 208 652 3214



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