Evonik upbeat on 2021 outlook on increased demand, higher pricing

Written by on November 4, 2021

November 4, 2021

(Reuters) -German chemicals group Evonik Industries on Thursday firmed up its 2021 core profit and sales guidance and lifted its full-year free cash flow outlook, citing improved business performance and an ability to pass higher costs on to customers.

The Essen-based company now expects full-year adjusted core profit of about 2.4 billion euros ($2.78 billion) and sales at 14.5 billion euros, both in the upper end of ranges the company had expected at mid-year.

Evonik also expects free cash flow to rise to about 1 billion euros in 2021, up from 780 million euros in 2020. Previously the company had said it expected an increase in free cash flow in 2021.

“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,” Chief Executive Christian Kullmann said in a statement.

The company, which makes ingredients for products ranging from animal feed and diapers to the Pfizer/BioNTech’s COVID-19 vaccine, reported adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of 645 million euros ($747.23 million) in the third quarter, up 24% and slightly above analysts’ forecast of 641.1 million euros in a company-provided poll.

“We think Evonik reported good results. The previous weak spot of Evonik – the FCF generation (free cash flow generation) – seems to be managed far better than in the past”, said Baader analyst Markus Mayer.

In August, German chemical industry body VCI raised its price and revenue guidance for the year, citing a sharp rise in prices in the first half, and reaffirmed its full-year production outlook.

Evonik shares have risen 7% this year, outperforming German peers Lanxess and BASF, but outpaced by Dutch rival DSM. Lanxess also reported earnings on Thursday.

Germany is Europe’s largest producer of chemicals.

($1 = 0.8632 euros)

(Reporting by Karol Badohal and Bartosz Dabrowski in Gdansk. Editing by Jane Merriman)

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