Evonik Industries : is back on course for growth

• Targets for 2020 achieved: Adjusted EBITDA of €1.9 billion, sales of more than €12 billion
• Free cash flow significantly above previous year
• Outlook 2021: Adjusted EBITDA to increase to between €2.0 billion and €2.3 billion

Essen, Germany. Evonik has achieved the financial targets it set itself in May 2020. Production and logistics have been secured worldwide and all measures to protect the workforce have been consistently implemented. For 2021 the company is back on course for growth.

'We passed the pandemic endurance test,' said Christian Kullmann, chairman of the board of management. 'We have successfully overcome the crisis and we have delivered.'

In the spring of 2020 Evonik was one of the few companies to give an outlook for the full year. With adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of €1.91 billion and sales of €12.2 billion, the target was fully met. Adjusted EBITDA decreased by 11 percent compared with the previous year, while earnings from the three growth divisions Specialty Additives, Nutrition & Care and Smart Materials fell by only 3 percent. These three divisions now account for about 95 percent of the operating business' earnings. In the previous year, Evonik posted an adjusted EBITDA of €2.15 billion and sales of €13.1 billion.

'In the crisis, our transformation towards more specialty chemicals has paid off,' said Kullmann. 'We are in the midst of this transformation process, which we will continue to drive forward, and which will generate new growth in 2021 and beyond.'

Growth projects include the expansion of specialty lipids production, which are essential for mRNA-based Covid-19 vaccines. In addition to production in the USA and Canada, Evonik is further expanding its production facilities at the German sites of Hanau and Dossenheim, which are expected to produce lipids in commercial quantities as early as the second half of 2021. Evonik's new production complex for Polyamide 12, used in growth markets such as 3D printing, will also be ready this year as planned.

Today Evonik generates around 35 percent of its sales from products that, compared with competing products, offer superior sustainability benefits to customers. In the field of future technologies, these so-called Next Generation Solutions are urgently needed. Evonik will continue to increase the proportion of sales from these products in the coming years.

For 2021 Evonik expects adjusted EBITDA to rise to between €2.0 billion and €2.3 billion. Sales are expected to be between €12 billion and €14 billion and the cash conversion rate at around 40 percent. In the first quarter of this year the company expects adjusted EBITDA of at least €550 million.

Last year Evonik increased its free cash flow to €780 million and the cash conversion rate to above 40 percent. 'We raised our forecast for free cash flow twice during the year and then even exceeded that,' said Ute Wolf, chief financial officer. 'Our outlook points in a clear direction: We expect rising earnings, a persistently high cash conversion rate and thus an increase in free cash flow in 2021.'

Net income for the year 2020 fell to €465 million. In 2019, it amounted to €2.1 billion, a figure that included the proceeds from the sale of the Methacrylates business.

Evonik believes in continuity for the dividend. At the annual shareholders' meeting on June 2, 2021, the executive and supervisory boards will be proposing a dividend of €1.15 per share. Based on the closing share price at year-end 2020 that corresponds to a dividend yield of 4.3 percent.