MOSCOW (MRC) -- Evonik has raised its outlook for 2021 after posting strong earnings in the first half. Demand for Evonik products increased significantly worldwide with sales prices also rising, as per the company's press release.
"We have emerged out of the crisis stronger than before and have made substantial gains in the first half," said Christian Kullmann, chairman of the board of management. "This positive dynamic will continue into the second half. Therefore, we are confident about raising our outlook. From today’s perspective we will even end up in the upper part of the range.”
For 2021 Evonik now expects adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) of between EUR2.3 billion and EUR2.4 billion for the full year. Previously the range was EUR2.1 billion to EUR2.3 billion. The outlook for sales is now EUR13 billion to EUR14.5 billion, up from a previously expected EUR12 billion to EUR14 billion. Last year Evonik posted adjusted EBITDA of EUR1.91 billion and sales of EUR12.2 billion.
In the second quarter, adjusted EBITDA rose 42% to EUR649 million compared with the prior-year quarter. Even compared with the pre-corona second quarter of 2019, adjusted EBITDA gained, growing 15%. The main drivers were all three growth divisions - Specialty Additives, Nutrition & Care and Smart Materials, which demonstrated their resilience despite higher raw-material costs.
Sales at the company gained 29% to EUR3.64 billion in the second quarter compared with the same quarter in 2020. Adjusted net income increased 58 percent to EUR253 million with adjusted earnings per share rising from EUR0.34 to EUR0.54.
As a result of the improved business performance, free cash flow increased year-on-year to USD101 million, despite the expected increase in net working capital and higher tax payments. As a result, free cash flow reached a record level of USD413 million in the first half of the year.
Specialty Additives: The division's sales rose 23 percent to EUR922 million in the second quarter. Additives for polyurethane foams, for example for the construction industry or durable goods such as mattresses and refrigerators, saw significantly higher demand with sales rising strongly compared to the corona-related weaker quarter last year. Additives for the coatings industry also recorded significant sales growth in all regions. Good demand for renewable energy products continued. The business with additives for the automotive industry also increased significantly year-on-year. Adjusted EBITDA increased by 20 percent to EUR242 million.
Smart Materials: The division's sales improved by 35% to EUR975 million in the second quarter. High-performance polymers saw a significant increase in demand from the auto industry. Polyamide 12 powders for 3D printing and membranes for efficient gas treatment were also in high demand. The tire silica business benefited from a strong upturn in demand compared to the corona-related weaker quarter last year. Active oxygen products recorded good volume demand both in the specialty business and in the classic hydrogen peroxide business. The catalysts business benefited from the first-time inclusion of Porocel, which was acquired in November 2020. Adjusted EBITDA rose 73 percent to EUR176 million at the division.
Performance Materials: The division's sales rose by 62 percent to EUR708 million in the second quarter. Sales of C4 products increased significantly with increasing demand and strongly improved selling prices. The superabsorbent business continues to be affected by a difficult market environment. Adjusted EBITDA rose from EUR12 million to EUR99 million in the quarter.
As MRC informed earlier, in February, 2020, Dow and Evonik entered into an exclusive technology partnership. Together, they plan to bring a unique method for directly synthesizing propylene glycol (PG) from propylene and hydrogen peroxide to market maturity.
Propylene is the main feedstock for the production of polypropylene (PP).
According to MRC's ScanPlast report, PP shipments to the Russian market were 607,8900 tonnes in January-May 2021, up by 33% year on year. Shipments of homopolymer PP and PP block copolymers increased, whereas deliveries of PP random copolymers decreased.
Evonik is one of the world leaders in specialty chemicals. The focus on more specialty businesses, customer-oriented innovative prowess and a trustful and performance-oriented corporate culture form the heart of Evonik’s corporate strategy. They are the lever for profitable growth and a sustained increase in the value of the company. Evonik benefits specifically from its customer proximity and leading market positions. Evonik is active in over 100 countries around the world with more than 33,000 employees.