Evonik Sets Lower-Than-Estimated 2014 Goal as Engel Digs Deeper

Evonik Industries AG (EVK), Germany’s second-largest chemical maker, set a full-year earnings goal below analyst estimates as Chief Executive Officer Klaus Engel battles stagnant prices with an extended savings drive.

Adjusted earnings before interest, tax, depreciation and amortization will probably be 1.8 billion euros ($2.5 billion) to 2.1 billion euros, the Essen-based company said today in a statement. Analysts surveyed by Bloomberg had predicted full-year profit of 2.13 billion euros.

The company last year announced a savings program, cutting jobs and slimming the executive board after it had to abandon its annual profit and sales goals. A slowdown in the automotive industry weighed on prices at butadiene-based operations. While sales are expected to rise “slightly” in 2014, selling prices “could be below the average for 2013,” the CEO said.

“We will be raising the efficiency of our operational and administrative areas still further,” Engel said today.

Engel is budgeting for the first results of an additional savings program introduced in the second half of 2013 to feed into results this year, having already taken measures to save 280 million euros a year. Global growth will pick up, though “considerable uncertainty” exists around emerging markets, Evonik said.

The German chemical maker is spending 6 billion euros on expansion through 2016, including a 500 million-euro methionine factory in Singapore that will boost capacity by more than a third.

Dividend Boost

Management proposed an 8.7 percent increase in the annual dividend payout to 1 euro. Adjusted Ebitda dropped 15 percent in the fourth quarter to 386 million euros. Analysts had predicted 381.2 million euros. Sales dropped 1 percent to 3.14 billion euros, in line with estimates.

The stock has dropped 15 percent since the chemical maker’s listing in April of last year, cutting the market value to 13.1 billion euros. Only about 14 percent of shares are freely traded, with majority owner RAG foundation still holding 68 percent. CVC Capital Partners owns about 17.9 percent.

To contact the reporter on this story: Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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