Evonik AG reported higher-than-expected quarterly adjusted core profit during the second quarter, saying portfolio changes and its efficiency programs partially offset the effects of the coronavirus pandemic.

 

The two growth segments Resource Efficiency and Nutrition & Care showed robust performance in the second quarter and achieved strong EBITDA margins of 20 percent each which helped maintain a healthy profit margin. 

 

The Performance Materials segment, on the other hand, was hit much harder by the slump in demand as well as suffering from the low oil price.

 

Sales and earnings in the second quarter decreased compared to the previous year due to significantly weaker demand in some markets. Company sales fell by 14 percent to €2.83 billion, while adjusted earnings before interest, tax, depreciation and amortization (EBITDA) fell 19 percent to €456 million.

 

Adjusted net income in the second quarter decreased by 30 percent year-on-year to €160 million. Adjusted earnings per share declined from €0.49 to €0.34. Free cash flow was significantly positive at €96 million. Lower bonus payments and tax reimbursements more than compensated for the effects of lower operating profit and an increase in net working capital.

 

"Evonik is weathering the crisis," said Christian Kullmann, chairman of the management board. "In the second quarter we felt the effects of the pandemic. However, the strategic portfolio changes and the implementation of our efficiency programs contributed to the fact that we got through the first half of the year better than initially expected. This is especially true for our strong growth segments."

 

"In the crisis, we have shown high cash and cost discipline," said Ute Wolf, chief financial officer. "We are starting to see initial signs of recovery in some markets. However, there is still no question of a general economic recovery. The Corona crisis is not yet over."

 

The company confirmed its 2020 outlook of sales between 11.5 billion and 13.0 billion euros, and adjusted EBITDA of between 1.7 billion and 2.1 billion euros.