Evonik Sees Profit at Low End of Forecast Range on PricesSheenagh Matthews
Evonik Industries AG said operating profit will probably be at the low end of the German chemical maker’s targeted range as low product pricing led to second-quarter earnings and sales that missed analyst estimates.
Adjusted earnings before interest, tax, depreciation and amortization will probably be closer to 1.8 billion euros ($2.4 billion) than the 2.1 billion-euro top of the forecast, Essen-based Evonik said today in a statement. Quarterly adjusted Ebitda dropped 7 percent to 473 million euros, missing the 482 million-euro average of six analyst estimates.
Chief Executive Officer Klaus Engel plans to make each of the company’s business units a separate legal entity to give them greater entrepreneurial independence. At the same time, Engel is pushing a savings drive at Germany’s second-largest chemical maker, including job cuts to help meet profit targets.
“Price trends have remained below original expectations” at the specialty-materials unit, which makes plastics and rubber materials, the company said. “If this should continue for the remainder of this year, Evonik currently assumes that adjusted Ebitda will probably be in the lower rather than the upper part” of the range.
Evonik dropped as much as 2.2 percent to 27.85 euros and was trading down 2 percent as of 10:09 a.m. in Frankfurt. The stock has declined 5.8 percent this year, valuing the company at 13 billion euros.
Second-quarter sales rose 1.2 percent to 3.25 billion euros, compared with the average analyst estimate of 3.28 billion euros. Net income fell 28 percent to 139 million euros. The chemical maker reiterated a full-year target for sales to rise slightly from last year’s 12.7 billion euros.