- Klaus Engel, Chairman of the Executive Board: "Evonik remains on course although the environment is still challenging."
- Operating performance lower than in strong prior-year quarter:
- Organically, Group sales declined slightly to €3.3 billion
- Adjusted EBITDA and adjusted EBIT below the high levels
in Q1 2012
- Adjusted EBITDA margin still good at 18.1 percent
- Net income rose 7 percent to €289 million
- Step plan to exit real estate business
- Evonik shares listed on the stock market since April 25, 2013
- Outlook for 2013 reiterated: sales expected to be higher, while the operating results are expected to remain at the very good 2012 level
Essen. "Since the economic environment remains challenging, Evonik got off to a somewhat moderate start to 2013 compared with the very strong first quarter of 2012. However, we expect business to pick up perceptibly in the second half of the year, partly because of a recovery in the global economy and partly because new production capacities will come on stream," said Klaus Engel, Chairman of the Executive Board of Evonik Industries AG today, when the Group published its key financial data for the first quarter of 2013. "We remain confident about 2013 as a whole and have therefore confirmed our guidance."
Business performance in Q1 2013
In accordance with its focus on specialty chemicals, Evonik intends to withdraw completely from the activities bundled in its Real Estate segment. In March 2013 a step plan to divest the majority of this business was adopted and the Real Estate segment was reclassified to discontinued operations. The prior-year figures have been restated accordingly.
The Evonik Group's organic sales trend slipped 2 percent due to lower prices (-2 percent), while volumes remained stable. Overall, Group sales dropped 4 percent to €3,263 million (Q1 2012: €3,407 million) due to the divestment of two small businesses in 2012.
In the first quarter of 2013, operating earnings fell short of the very good levels reported for Q1 2012, mainly as a result of lower selling prices and, in some cases, higher raw material costs. The application of the revised version IAS 19, which addresses the recognition of employee benefits (including pensions), caused a retrospective increase of €22 million in 2012 operating earnings, €6 million of which related to the first quarter. Overall, adjusted EBITDA declined by 10 percent to €589 million in the first quarter of 2013 (Q1 2012: €656 million) while adjusted EBIT dropped 13 percent to €445 million (Q1 2012: €509 million). The adjusted EBITDA margin was 18.1 percent and thus remained at a good level (Q1 2012: 19.3 percent).
The adjustments of minus €30 million mainly comprised expenses in connection with recognition of the put and call options for the remaining shares in STEAG GmbH, and the adjustment of provisions for the German phased retirement program in accordance with IAS 19. The prior-year figure mainly comprised impairment losses on production plants in the Resource Efficiency segment and income in connection with the recognition of the STEAG options.
Income after income taxes, continuing operations increased by 8 percent to €266 million (Q1 2012: €246 million), mainly as a result of lower interest and tax expense. The income after taxes from the discontinued operations was €20 million, as in Q1 2012. In Q1 2013 this mainly related to the Real Estate segment.
Net income rose 7 percent to €289 million (Q1 2012: €269 million). Earnings per share improved from €0.58 to €0.62.
The cash flow from operating activities, continuing operations declined by €172 million to €192 million in the first quarter of 2013. The main reasons for this were lower earnings before depreciation and amortization, lower income before the financial result and taxes, and the increase in net working capital, partly in connection with upcoming overhauls of production plants. Including the cash flow from discontinued operations, the cash flow from operating activities declined by €170 million to €213 million.
In line with Evonik’s ambitious investment program, capital expenditures increased by 14 percent to €183 million (Q1 2012: €161 million). 33 percent of capital expenditures were allocated to the Consumer, Health & Nutrition segment, 27 percent to the Specialty Materials segment and 20 percent to the Resource Efficiency segment.
At the end of March 2013 net financial debt was €1,137 million, slightly lower than at year-end 2012 (€1,163 million). This was attributable to two factors: Firstly, the reclassification of the Real Estate segment to discontinued operations and secondly the dividend of €429 million for fiscal 2012, which was paid in March 2013. In 2012, the dividend for fiscal 2011 was only paid in the second quarter.
Shares listed on the stock market
At the start of 2013, the previous sole owners of Evonik Industries AG—RAG-Stiftung and funds advised by CVC Capital Partners—sold some of their shares to institutional investors in Germany and abroad through private placements in preparation for Evonik's stock exchange listing. Shares in Evonik were admitted to trading on the regulated market of the stock exchanges in Frankfurt am Main (Germany) and Luxembourg on April 24, 2013. Trading started on April 25, 2013. Around 14.5 percent of the capital stock was placed before the commencement of trading.
Performance of the segments in the first quarter of 2013
Consumer, Health & Nutrition
The Consumer, Health & Nutrition segment produces specialty chemicals, principally for applications in the consumer goods, animal nutrition and healthcare sectors. It comprises the Consumer Specialties and Health & Nutrition Business Units.
Sales decreased by 2 percent to €1,035 million (Q1 2012: €1,055 million). This was mainly attributable to an organic sales reduction, caused by lower selling prices, while volumes increased slightly. The operating results fell short of the previous year's very high levels, mainly due to declining prices. Adjusted EBITDA slipped 5 percent to €274 million (Q1 2012: €287 million) and adjusted EBIT fell 6 percent to €240 million (Q1 2012: €254 million). The adjusted EBITDA margin remained very good at 26.5 percent (Q1 2012: 27.2 percent).
The Resource Efficiency segment provides environment-friendly and energy-efficient system solutions. This segment comprises the Inorganic Materials and Coatings & Additives Business Units.
Sales declined 6 percent to €771 million (Q1 2012: €818 million). The main factor in this was the colorants business, which was divested at the end of April 2012. Lower volumes resulted in a slight organic sales drop. The operating results increased, mainly because fixed costs were reduced by the shutdown of one production plant and the divestment of another in the fourth quarter of 2012. Adjusted EBITDA rose 2 percent to €172 million (Q1 2012: €168 million) while adjusted EBIT increased 9 percent to €143 million (Q1 2012: €131 million). The adjusted EBITDA margin was 22.3 percent, up from 20.5 percent in the first quarter of 2012.
The heart of the Specialty Materials segment is the production of polymer materials and intermediates, mainly for the rubber and plastics industries. It comprises the Performance Polymers and Advanced Intermediates Business Units.
Sales declined 5 percent to €1,170 million (Q1 2012: €1,234 million). The reasons for this included the divestment of a business operation and lower selling prices. The operating results were below the very good results for the first quarter of 2012 due to lower selling prices and, in some cases, higher raw material costs. Adjusted EBITDA decreased by 15 percent to €182 million (Q1 2012: €215 million) while adjusted EBIT fell 19 percent to €145 million (Q1 2012: €178 million). The adjusted EBITDA margin thus dropped from 17.4 percent in the first quarter of 2012 to 15.6 percent in the first quarter of 2013.
This segment principally comprises Site Services and Evonik Business Services. It mainly provides services for the specialty chemicals segments and the Corporate Center.
Total sales were €647 million. Internal sales accounted for €411 million of the total. External sales slipped 8 percent to €236 million. Adjusted EBITDA increased slightly to €54 million. Adjusted EBIT was unchanged year-on-year at €32 million.
Outlook for 2013 confirmed
Global economic conditions will remain very challenging, especially in the coming months, but the global economy is expected to pick up perceptibly in the second half of the year. Consequently, Evonik assumes that the forecast for the global economic environment made at year-end 2012 remains applicable for 2013. Nevertheless, there is still considerable uncertainty, especially in connection with the sovereign debt crisis in Europe and the economic development of China. This could impair economic development.
In view of the reclassification of the Real Estate segment to discontinued operations in March 2013 and the planned deconsolidation of these operations in the course of 2013, the following comments only refer to the continuing operations. The corresponding figures for 2012 have been restated.
Despite the moderate start to 2013, given the anticipated upturn in the second half of the year, Evonik is confirming its outlook for 2013. Assuming that the economic forecast for the year as a whole proves correct, the Group still expects to report a successful business performance in 2013. Evonik assumes that the new production capacities and higher selling prices in key product areas will have a positive impact. Overall, Evonik anticipates higher sales in 2013, while the operating results should be in line with the very good level achieved in 2012.
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This publication constitutes neither an offer to sell nor a solicitation to buy securities. There will be no public offer of securities of the Company.
In the United Kingdom, this document is only being distributed to and is only directed at persons who (i) are investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the “Order”) or (ii) are persons falling within Article 49(2)(a) to (d) of the Order (high net worth companies, unincorporated associations, etc.) (all such persons together being referred to as “Relevant Persons”). This document is directed only at Relevant Persons and must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this document relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.
In so far as forecasts or expectations are expressed in this press release or where our statements concern the future, these forecasts, expectations or statements may involve known or unknown risks and uncertainties. Actual results or developments may vary, depending on changes in the operating environment. Neither Evonik Industries AG nor its group companies assume an obligation to update the forecasts, expectations or statements contained in this release.
Evonik, the creative industrial group from Germany, is one of the world leaders
in specialty chemicals. Profitable growth and a sustained increase in the value of the company form the heart of Evonik’s corporate strategy. Its activities focus on the key megatrends health, nutrition, resource efficiency and globalization. Evonik benefits specifically from its innovative prowess and integrated technology platforms.
Evonik is active in over 100 countries around the world. In fiscal 2012 more than 33,000 employees generated sales of around €13.6 billion and an operating profit (adjusted EBITDA) of about €2.6 billion.