MOSCOW (MRC) -- Evonik, one the world's petrochemical majors, is embarking on the next phase of its strategic transformation, as per the company's press release.
Sustainability is being integrated fully and systematically into all elements of the strategy: portfolio management, innovation, corporate culture. “Driven by our purpose, Leading Beyond Chemistry, in recent years we have made good progress both strategically and financially,” Christian Kullmann, chairman of Evonik's executive board, told investors and analysts at the company's Capital Markets Day. “In the next phase of our transformation, we are executing targeted and massive investments in green growth and making sustainability our central innovation driver.”
Evonik is aligning its portfolio completely to its three growth divisions: Specialty Additives, Nutrition & Care, and Smart Materials. “The businesses we are withdrawing from on strategic grounds are being optimally set up to give them a responsible route to a good future,” said Kullmann. Preparations are already under way for the exit of all three businesses of Performance Materials - Superabsorbents, Functional Solutions and Performance Intermediates. Evonik aims to find new owners or partners for each of these three businesses in the course of 2023.
The proceeds from the divestment of the Performance Materials businesses and the operating cash flow in the coming years will be channeled to the green transformation. By 2030, Evonik aims to invest more than EUR3 billion in Next Generation Solutions - products with superior sustainability benefits. That is around 80% of annual growth investments. In the same period, a further EUR700 million will be invested in Next Generation Technologies, i.e., the optimization of production processes and infrastructure to avoid CO2 emissions.
Evonik aims to reduce its footprint by significantly cutting both direct and indirect greenhouse gas emissions from production and processing. With the support of Next Generation Technologies, Evonik will reduce its scope 1 and 2 emissions by 25%, from 6.5 million metric tons at present to 4.9 million metric tons by 2030. This goal is fully consistent with the requirements of the Science Based Targets (SBTi) initiative, which Evonik is committed to. At the same time, the investments in sustainability are profitable: By investing EUR700 million in Next Generation Technologies, Evonik will cut its operating costs by more than EUR100 million a year up to 2030.
The repositioned Research, Development & Innovation unit is also fully integrating sustainability into the management of Evonik’s innovation activities. “Our RD&I targets are right on track to generate additional sales of more than EUR1 billion with our innovation growth fields by 2030,” said Harald Schwager, the executive board member responsible for innovation. “Our innovative capability is a key factor in leveraging green and profitable growth.”
Evonik’s aspirations are supported by its venture capital activities. A new Sustainability Tech Fund with a total investment volume of EUR150 million will strengthen the sustainability targets by investing into innovative technologies and business models. The focus is on new technologies that will reduce emissions as well as on innovations that have a high technological fit with the Next Generation Solutions.
As part of its strategic transformation, Evonik has also reviewed its mid-term financial targets. “Despite the current challenging environment, we are confirming our core targets: an adjusted EBITDA margin of between 18 and 20%, a cash conversion rate of over 40 percent, and ROCE of around 11%,” said Evonik’s chief financial officer, Ute Wolf. In line with the full alignment to high-growth, less cyclical specialty chemicals, Evonik now aims to achieve an organic sales CAGR of over 4 percent. Up to now, the target was volume growth of over 3%. The annual capex budget increases successively from the current level of around EUR900 million to a level between EUR900 million and EUR1 billion over the next years - as a result of investments in Next Generation Technologies to save CO2 emissions.
As MRC reported earlier, in March, 2022, Evonik launched a new biosurfactant produced from renewable feedstocks.
The rhamnolipids are produced at Evonik’s plant in Slovenska Lupca, Slovakia following a triple-digit million-euro investment in the site, which is scheduled to be completed by the end of 2023. The biosurfactant range is made using feedstocks which are locally sourced and fully biodegradable, meeting demand for low-emission, low-impact cleaning products in the market.
We remind that 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.
Evonik is one of the world leaders in specialty chemicals. The company is active in more than 100 countries around the world and generated sales of EUR12.2 billion and an operating profit (adjusted EBITDA) of EUR1.91 billion in 2020. Evonik goes far beyond chemistry to create innovative, profitable and sustainable solutions for customers. About 33,000 employees work together for a common purpose: to improve life today and tomorrow.