Evonik met the 2023 forecast the company had reduced in the summer, despite a continuously challenging environment. The specialty chemicals company's adjusted EBITDA amounted to €1.66 billion, within the targeted range of between €1.6 billion and €1.8 billion. Group sales fell by 17 percent to €15.3 billion, also within the targeted range of €14 billion to €16 billion.

"The many crises around the world have put a damper on our results," says Christian Kullmann, Chairman of the Executive Board. "Overall, we got away with a black eye. We owe this above all to the great efforts of all our employees. However, the general conditions will not get any easier, which is why we will continue our fundamental revamp of the Group."

The focus on liquidity management proved very successful. Free cash flow in 2023 amounted to €801 million ─ even higher than in the previous year ─ thanks to prudent management of net working capital and strict investment discipline. The cash conversion rate, the ratio of free cash flow to adjusted EBITDA, reached a strong 48 percent. In 2022, it was 32 percent. Payments for investments in property, plant and equipment were reduced to €793 million in 2023, compared to €865 million in 2022.

Evonik also achieved its 2023 savings target of €250 million by through measures to safeguard earnings.

"In difficult times, the first order of business is to keep the money together," says Maike Schuh, Chief Financial Officer of Evonik. "We have retained our ability to act. This was painful at times, but it was also successful. We will therefore continue these measures in the current year."

Evonik does not expect an economic recovery during 2024. Hence, capital expenditures will be limited to around €750 million. The company expects an increase in adjusted EBITDA to a range between €1.7 billion and €2.0 billion, with sales between €15 billion and €17 billion. The cash conversion rate should be around 40 percent.

"We must not delude ourselves, even if there are slight signs of a recovery: What we are currently experiencing are not cyclical fluctuations, but massive, consequential changes of our economic environment," says Kullmann. "We are addressing this challenge with the 'Evonik Tailor Made' program which will change our organizational structure for good."

The first phase of ‘Evonik Tailor Made’ has been completed. All structures and processes of the company have been analyzed extensively over the past months. Based on this analysis, Evonik will design and establish a new organizational structure by the end of 2026. Evonik aims to do without administrative activities that do not directly support its businesses. At the same time, key tasks will be consistently bundled in the new structure. The number of hierarchical levels below the Executive Board will be reduced to a maximum of six, while review and approval procedures will be significantly accelerated. Group-wide, managers will then lead a median of seven direct reports, compared to the current span of control of one to four.

As a result, Evonik will become leaner, faster, and have a significantly reduced cost structure. Up to 2,000 jobs will be cut worldwide, including a disproportionate number of management positions. The majority of these adjustments, around 1,500 jobs, will be made in Germany. Evonik expects cost reductions of around €400 million annually after the program’s completion in 2026. Around 80 percent of these savings will derive from personnel reductions, the rest will come from lower material costs. First effects of ‘Evonik Tailor Made’ should materialize in the current year already.

"We have chosen our own, tailor-made path for Evonik without external consultants to achieve the best possible results," says Thomas Wessel, Chief Human Resources Officer and Labor Director. "It is clear that our company will look very different in two years ─ much more dynamic and efficient. We will achieve this in the fair manner Evonik is known for: focused on joint goals and respectful in our dealings with each other."