Evonik on target after the first half of 2017

Initial synergies from integration of the Air Products specialty additives business

04-Aug-2017 - Germany

Evonik grew sales to €7.3 billion in the first six months of 2017. The rise of 15 percent compared with the first half of 2016 was partly due to the first-time consolidation of the specialty additives business of the US company Air Products. Evonik acquired this business in January. Other reasons for the increase in sales were the significant rise in demand and slightly higher selling prices.

"Our business development is on target," said Christian Kullmann, Chairman of the Executive Board. "Moreover, we are reaping the first benefits of the biggest acquisition in our history."

Adjusted EBITDA rose 8 percent to €1.25 billion in the first six months, driven principally by better results in the Resource Efficiency and Performance Materials segments. Earnings in the Nutrition & Care segment were lower than in the prior-year period, mainly because of lower prices for feed additives.

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Adjusted net income increased 10 percent to €549 million, while adjusted earnings per share improved to €1.18. Net income slipped 3 percent to €394 million, principally as a result of one-time expenses in connection with the acquisition of the Air Products specialty additives business.

Integration of these units, which were acquired at the start of the year, is proceeding smoothly and successfully. Initial synergies were leveraged in the second quarter. Good progress is also being made with the acquisition of the silica business of US company J.M. Huber. Evonik expects to close this transaction as planned in the second half of 2017.

The company's net financial debt was €3.09 billion as of June 30, 2017. At the start of July, Evonik issued a hybrid bond for the first time. With a coupon of 2.125 percent, this was the cheapest ever Euro hybrid bond issued by an industrial company. The proceeds will be used to finance the acquisition of Huber's silica business. “The conditions achieved are further evidence that the capital markets have enormous confidence in our financial position,” said Chief Financial Officer Ute Wolf. “We have a solid investment grade rating. And we want to keep that.”

Outlook confirmed

Evonik confirmed its forecast to increase both sales and operating profit for the full year 2017. Adjusted EBITDA is still expected to grow to between €2.2 billion and €2.4 billion (2016: €2.165 billion).

Segment performance

Resource Efficiency: Sales increased 21 percent to €2.76 billion in the first half of 2017. 12 percentage points of this increase came from the first-time consolidation of the business acquired from Air Products. Prices were also slightly higher. Moreover, volumes were driven by high demand for silica, especially from the tire industry, for high-performance polymers, e.g. for 3D printing, and for oil additives for the automotive, construction and transportation industries, as well as for coating additives. Adjusted EBITDA rose by 19 percent to €628 million in the Resource Efficiency segment.

Nutrition & Care: Sales rose 5 percent to €2.28 billion in the first six months. This was attributable to the initial consolidation of the business acquired from Air Products, and to slight volume growth. On the downside, selling prices for feed additives were substantially lower than in the prior-year period. Adjusted EBITDA fell 31 percent to €385 million in the Nutrition & Care segment.

Performance Materials: Sales grew 18 percent to €1.89 billion in the first six months, and adjusted EBITDA almost doubled to €328 million. High demand and continued shortages in the supply chain, especially for butadiene and methylmethacrylate, resulted in higher selling prices. Successful implementation of restructuring measures also had a positive impact.

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