Evonik Profit Beats Estimates as Chief Engel Drives Down Costs
Evonik Industries AG (EVK), the German chemical maker that listed shares in Frankfurt in April, reported third-quarter earnings that beat analyst estimates as a cost-cutting program started to deliver savings.
Adjusted earnings before interest, tax, depreciation, amortization fell 26 percent to 518 million euros ($710 million), the Essen-based company said today in a statement. Analysts surveyed by Bloomberg had predicted 491 million euros.
Chief Executive Officer Klaus Engel is accelerating a savings program, cutting jobs and slimming the executive board after abandoning full-year forecasts for sales and profit. The maker of feed additives said today that while it sold more products, selling prices for some key products remained low.
“Evonik now aims to streamline management and administrative processes group wide to raise their efficiency,” the company said in today’s statement. “This should leverage savings of up to 250 million euros a year by the end of 2016.”
Sales dropped 4 percent to 3.24 billion euros, in line with a 3.2 billion-euro analyst estimate.
Adjusted EBITDA for this year will probably be about 2 billion euros, down 17 percent from last year, the company reiterated today.
The stock has dropped 17 percent since the chemical maker’s initial public offering, cutting the market value to 12.7 billion euros. Only 14 percent of shares are freely traded, with majority owner RAG foundation still holding 68 percent. CVC Capital Partners owns about 17.9 percent.
The RAG foundation’s CEO Werner Mueller said Evonik’s annual dividend won’t be less than the current 92 euro cents a share and he would like an increase, according to an interview he gave to Manager Magazin earlier this month.
Evonik, which is spending 6 billion euros on expansions through 2016, will reduce spending this year by 20 percent, the company said in August.
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