MOSCOW (MRC) -- After a strong third quarter, Evonik is making its earnings forecast for the current year more precise, as per the company's press release.
The company now expects adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) of about EUR2.4 billion. This is the upper end of the previous range of EUR2.3 billion to EUR2.4 billion that Evonik had expected mid-year. Sales will also reach the upper end of the forecast range - EUR14.5 billion. Previously, Evonik had expected EUR13 billion to EUR14.5 billion.
"We continued to grow strongly in the third quarter," said Christian Kullmann, chairman of the board of management. "All four chemical divisions benefited from increased demand. We were able to completely compensate for higher raw material, energy and logistics costs by raising our prices."
Adjusted EBITDA rose 24 percent to EUR645 million in the July to September period compared with the same three months the previous year. Compared with the second quarter, earnings remained stable, despite one-time costs of around €30 million from higher bonus provisions, maintenance shutdowns and loss of sales due to impaired supply chains and a lack of raw material availability.
Sales at the company gained 33% to EUR3.87 billion in the third quarter compared with the previous year. The increase reflects continued positive demand dynamics across all divisions. Adjusted net income increased 45% to EUR269 million with adjusted earnings per share rising from EUR0.40 to EUR0.58.
Improved business performance led to a 68 percent increase in free cash flow in the quarter to EUR524 million. As a result, free cash flow reached a record level of EUR937 million in the first nine months.
"For the year as a whole, we now expect free cash flow of around €1 billion," said Ute Wolf, chief financial officer. "We are proud that we were able to generate even more cash than previously thought. Now we’re expecting a full-year cash conversion rate above last year's good figure, which was about 40%."
Specialty Additives: The division's sales rose 20% to EUR934 million in the third quarter. Products for the construction and coatings industry as well as for renewable energies achieved significant sales growth in all regions because of a considerable increase in demand. Additives for polyurethane foams for the automotive sector as well as durable goods such as mattresses and refrigerators saw higher demand with sales rising significantly. The increase in sales at the division was partly limited by interruptions in global supply chains and the associated lack of availability of individual raw materials. Adjusted EBITDA increased by 5% to EUR224 million.
Performance Materials: The division's sales rose by 77% to EUR784 million in the third quarter. Sales of C4 products increased significantly with higher demand and strongly improved selling prices. The superabsorbent business continues to be affected by a difficult market environment. Adjusted EBITDA rose from EUR28 million to EUR97 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 1,138,510 tonnes in January-September 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding statistical copolymers of propylene (PP random copolymers) decreased significantly.
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.