MOSCOW (MRC) -- Evonik Industries has reported preliminary adjusted net profit in the third quarter of EUR186.0 million (USD217.7 million), a decline of 4.6% year on year (YOY) but beating analysts' consensus estimates by EUR18 million, reported Chemweek.
Sales totaled EUR2.92 billion, down 9.6% YOY, while adjusted EBITDA was EUR519 million, EUR24 million or 4.4% less than in the prior-year period, but €48 million higher than the consensus estimate of EUR471 million, as compiled by Vara Research. "This result is clearly above market expectations and is therefore pre-released today," it says.
During the third quarter, an improving month-on-month trend became apparent, which further accelerated in September and produced the better-than-expected results, according to Evonik. The main drivers were the specialty additives and smart materials divisions, it says. Specialty additive sales fell by 10% YOY to EUR777 million, while adjusted EBITDA declined by 8% to EUR214 million, but beating consensus. Sales of smart materials declined 5% YOY to EUR790 million, with adjusted EBITDA dropping 13% to EUR137 million, also beating analysts' consensus expectations.
Evonik’s nutrition and care business recorded sales that were 2% lower YOY at EUR715 million, but with an 18% increase in adjusted EBITDA to EUR140 million, slightly below consensus. Sales of its performance materials decreased 27% YOY to EUR444 million, with adjusted EBITDA down 43% to EUR28 million, beating consensus.
The company has also provided an updated outlook for 2020, saying it now expects adjusted EBITDA to be in the range EUR1.8–2.0 billion, compared with EUR2.15 billion in 2019. The sales outlook remains unchanged at EUR11.5–13.0 billion, compared with EUR13.1 billion in 2019, it says.
Free cash flow for the first nine months of 2020 is expected to be at least on a level with the prior-year period at around EUR417 million, despite lower earnings. For the full year, it has also increased its forecast and expects free cash flow to be around EUR700 million. This is attributed to structural cost savings implemented by the company, lower bonus and tax payments over the course of the year, and a positive development in net working capital expected for the remainder of the year, Evonik says.
The company is scheduled to publish its third-quarter financials on 3 November.
The results so far this year reflect "the benefits from the structural changes and strategic measures implemented over the last years,” says Christian Kullmann, Evonik's chairman.
As MRC reported before, Dow and Evonik have recently 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 reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
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 36,000 employees.
MRC