Evonik: 2021 earnings expected at top end of forecast range

• Sales rise 33 percent in third quarter, adjusted EBITDA gains 24 percent
• Company expects adjusted EBITDA of about €2.4 billion for full year
• Free cash flow outlook raised to about €1 billion for 2021

After a strong third quarter, Evonik is making its earnings forecast for the current year more precise. The company now expects adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) of about €2.4 billion. This is the upper end of the previous range of €2.3 billion to €2.4 billion that Evonik had expected mid-year. Sales will also reach the upper end of the forecast range - €14.5 billion. Previously, Evonik had expected €13 billion to €14.5 billion.

"We continued to grow strongly in the third quarter," said Christian Kullmann, chairman of the board of management. "All four chemical divisions benefited from increased demand. We were able to completely compensate for higher raw material, energy and logistics costs by raising our prices."

Adjusted EBITDA rose 24 percent to €645 million in the July to September period compared with the same three months the previous year. Compared with the second quarter, earnings remained stable, despite one-time costs of around €30 million from higher bonus provisions, maintenance shutdowns and loss of sales due to impaired supply chains and a lack of raw material availability.

Sales at the company gained 33 percent to €3.87 billion in the third quarter compared with the previous year. The increase reflects continued positive demand dynamics across all divisions. Adjusted net income increased 45 percent to €269 million with adjusted earnings per share rising from €0.40 to €0.58.

Improved business performance led to a 68 percent increase in free cash flow in the quarter to €524 million. As a result, free cash flow reached a record level of €937 million in the first nine months.

"For the year as a whole, we now expect free cash flow of around €1 billion," said Ute Wolf, chief financial officer. "We are proud that we were able to generate even more cash than previously thought. Now we’re expecting a full-year cash conversion rate above last year's good figure, which was about 40 percent."

Specialty Additives: The division's sales rose 20 percent to €934 million in the third quarter. Products for the construction and coatings industry as well as for renewable energies achieved significant sales growth in all regions because of a considerable increase in demand. Additives for polyurethane foams for the automotive sector as well as durable goods such as mattresses and refrigerators saw higher demand with sales rising significantly. The increase in sales at the division was partly limited by interruptions in global supply chains and the associated lack of availability of individual raw materials. Adjusted EBITDA increased by 5 percent to €224 million.

Nutrition & Care: Sales at Nutrition & Care rose 30 percent to €931 million in the third quarter. Essential amino acids continued to be in high demand worldwide and generated significantly higher sales with improved selling prices. Products for the health and care sector also benefited from good demand. In particular, active ingredients for cosmetic applications saw very good volume development. In pharmaceutical applications lipids for mRNA vaccines saw a significant increase in sales. Adjusted EBITDA improved by 37 percent to €192 million.

Smart Materials: The division's sales improved by 27 percent to €1 billion in the third quarter. High-performance polymers saw a significant increase in demand from the automotive industry. Demand was also strong for polyamide-12 powders for 3D printing and membranes for efficient gas processing. The tire silica business benefited from high demand worldwide and active oxygen products had good volume growth both in the specialty business and in the classic hydrogen peroxide business. The catalysts business benefited from the first-time inclusion of Porocel, which was acquired in November 2020. Adjusted EBITDA rose 29 percent to €177 million at the division.

Performance Materials: The division's sales rose by 77 percent to €784 million in the third quarter. Sales of C4 products increased significantly with higher demand and strongly improved selling prices. The superabsorbent business continues to be affected by a difficult market environment. Adjusted EBITDA rose from
€28 million to €97 million in the quarter.