Evonik Industries AG

Quarterly Report • May 7, 2020

QUARTERLY STATEMENT

1st quarter 2020

Solid first quarter—Forecast revised

• Sales down slightly year-on-year as a result of volumes and prices
• Solid development in the Nutrition & Care and Resource Efficiency segments
• Adjusted EBITDA fell 5 percent to €513 million
• Adjusted net income of €181 million, 27 percent below the prior-year figure, which benefited from one-time tax effects
• Free cash flow of €113 million
• Sufficient liquidity and firmly committed credit facilities
• Outlook for 2020: adjusted EBITDA now expected to be between €1.7 billion and €2.1 billion

Key figures for the Evonik Group

		1st quarter
in € million	2019a	2020
Sales	3,287	3,243
Adjusted EBITDAb	539	513
Adjusted EBITDA margin in %	16.4	15.8
Adjusted EBITc	315	273
Income before financial result and income taxes, continuing operations (EBIT)	296	247
Net income	239	130
Adjusted net income	249	181
Earnings per share in €	0.51	0.28
Adjusted earnings per share in €	0.53	0.39
Cash flow from operating activities, continuing operations	334	297
Cash outflows for investments in intangible assets, property, plant and equipment d	-175	-184
Free cash flowe	159	113
Net financial debt as of March 31	-3,419	-2,778
No. of employees (continuing operations) as of March 31	32,623	32,770

Prior-year figures restated.

Earnings before financing result, taxes, depreciation, and amortization, after adjustments, continuing operations. c

Earnings before financial result and taxes, after adjustments, continuing operations. d

Investments in intangible assets, property, plant and equipment, continuing operations. e

Cash flow from operating activities, continuing operations, less cash outflows for investments in intangible assets, property, plant and equipment.

Due to rounding, some figures in this report may not add up exactly to the totals stated.

a The methacrylates business was presented as a discontinued operation until its divestment on July 31, 2019. b

CONTENTS

Business conditions and performance	2
Business performance	2
Segment performance	5
Financial condition	10
Expected development	11
Income statement	13
Balance sheet	14
Cash flow statement	15
Segment report	16
Appendix	18
Financial calendar	22
Credits	22

Sales by segment—1st quarter

Sales by regiona—1st quarter

a By location of customer.

Business conditions and performance

1 Business performance

Major events

The coronavirus epidemic, which initially only occurred in China, spread throughout the world in the first quarter of 2020 and was declared a pandemic by the WHO on March 11, 2020.

Evonik took all necessary precautions to protect its employees at an early stage in order to prevent the virus from spreading within the company, while continuing to operate as best possible. The situation is analyzed daily at all sites worldwide by the site steering groups, and any necessary action is taken. The Evonik steering committee receives regular information, which it uses as a basis for decisions for the entire group, and issues globally valid instructions on how to deal with specific issues.

Our business performance in the first quarter was hampered by the effects of the coronavirus pandemic. We registered a slight drop in demand, especially from Asia and some customer industries, for example, the automotive, fuel, and coatings industries. Restrictions resulting from state-imposed shutdowns only affected our facilities at some smaller sites. Our supply chains are intact, and we have sufficient liquidity, as well as firmly committed credit lines that have not yet been drawn.

We postponed our Annual Shareholders' Meeting to August 31, 2020 due to the present situation.

In November 2018, Evonik signed an agreement to acquire PeroxyChem, Philadelphia (Pennsylvania, USA) from One Equity Partners, Chicago (Illinois, USA). PeroxyChem is a manufacturer of hydrogen peroxide and peracetic acid. The acquisition was initially delayed because the Federal Trade Commission (FTC) in the USA filed a lawsuit to block the transaction. The lawsuit was dismissed in January 2020, and the acquisition was then closed on February 3, 2020.

Business performance in Q1 2020

Our business developed very solidly, especially in the Resource Efficiency and Nutrition & Care growth segments. The economic slowdown, especially in Asia, which was caused by the coronavirus pandemic, had a perceptible impact on some of our businesses. However, the vast majority were only slightly affected by the coronavirus pandemic in the first quarter of 2020.

Sales by quarter

The Evonik Group's sales declined by 1 percent to €3,243 million. This was due to a reduction in both volumes and selling prices. By contrast, the first-time consolidation of PeroxyChem in February 2020 had a positive effect.

Year-on-year change in sales

	1st quarter
in %	2020
Volumes	-1
Prices	-2
Organic sales growth	-3
Exchange rates	–
Change in the scope of consolidation/other effects	2
Total	-1

Adjusted EBITDA by quarter

2020 2019

Adjusted EBITDA contracted by 5 percent to €513 million, mainly due to lower prices. By contrast, positive effects came from successful cost savings and the first-time consolidation of PeroxyChem.

The adjusted EBITDA margin was 15.8 percent, down from 16.4 percent in the prior-year period. Adjusted EBIT dropped 13 percent to €273 million.

Statement of income

	1st quarter
in € million	2019	2020	Change in %
Sales	3,287	3,243	-1
Adjusted EBITDA	539	513	-5
Adjusted depreciation, amortization, and impairment losses	-224	-240
Adjusted EBIT	315	273	-13
Adjustments	-19	-26
thereof attributable to
Restructuring	-4	-1
Impairment losses/reversals of impairment losses	-13	–
Acquisition/divestment of shareholdings	-4	-22
Other	2	-3
Income before financial result and income taxes,
continuing operations (EBIT)	296	247	-17
Financial result	-54	-50
Income before income taxes, continuing operations	242	197	-19
Income taxes	-27	-57
Income after taxes, continuing operations	215	140	-35
Income after taxes, discontinued operations	29	-6
Income after taxes	244	134	-45
thereof attributable to non-controlling interests	5	4
Net income	239	130	-46
Earnings per share in €	0.51	0.28

Prior-year figures restated.

The adjustments of -€26 million included -€22 million in connection with the acquisition/divestment of shareholdings. These mainly related to the purchase of PeroxyChem and comprised the sale of a Canadian investment of PeroxyChem to meet antitrust requirements as well as acquisition and integration costs.1 The restructuring expenses mainly related to the SG&A 2020 program to reduce selling and administrative expenses. The financial result improved to -€50 million. Income before income taxes, continuing operations, declined by 19 percent to €197 million. The income tax rate on the continuing operations was 29 percent, and the adjusted income tax rate was 27 percent. The corresponding figures for the first quarter of 2019 were 11 percent and 14 percent, principally due to one-time effects from the remeasurement of deferred taxes. Income after taxes, discontinued operations, amounted to -€6 million and comprised post-divestment expenses for the methacrylates business, which was sold in July 2019.

Overall, net income fell by 46 percent to €130 million.

Adjusted net income dropped 27 percent to €181 million. Adjusted earnings per share decreased from €0.53 to €0.39.

¹ See changes in the Evonik Group in the appendix.

Reconciliation to adjusted net income

		1st quarter
in € million	2019	2020	Change in %
Adjusted EBITDA	539	513	-5
Adjusted depreciation, amortization, and impairment losses	-224	-240
Adjusted EBIT	315	273	-13
Adjusted financial result	-53	-51
Amortization and impairment losses on intangible assets	32	33
Adjusted income before income taxes a	294	255	-13
Adjusted income taxes	-40	-70
Adjusted income after taxes a	254	185	-27
thereof adjusted income attributable to non-controlling interests	5	4
Adjusted net income a	249	181	-27
Adjusted earnings per share in € a	0.53	0.39

a Continuing operations.

2 Segment performance

Nutrition & Care segment

Key figures

		1st quarter
in € million	2019	2020	Change in %
External sales	1,149	1,134	-1
Adjusted EBITDA	180	174	-3
Adjusted EBITDA margin in %	15.7	15.3	–
Adjusted EBIT	103	89	-14
Capital expendituresa	43	23	-47
No. of employees as of March 31	8,166	8,017	-2

a Capital expenditures for intangible assets, property, plant and equipment.

The Nutrition & Care segment reported a 1 percent drop in sales to €1,134 million in the first quarter of 2020. This slight reduction was caused by declining selling prices, while higher volumes and currency effects proved positive.

There was a significant rise in demand for essential amino acids for animal nutrition, especially methionine, resulting in a perceptible rise in sales, while selling prices were almost stable. Additives for polyurethane foam also benefited from higher sales volumes, partly because customers increased inventories, resulting in a considerable increase in sales. The healthcare business registered a very pleasing development in pharmaceuticals and food ingredients, and sales were higher. By contrast, there was a significant drop in sales in the baby care business as the persistently tough competitive situation on the superabsorbents market had a negative effect.

Sales Nutrition & Care segment

Adjusted EBITDA fell by 3 percent to €174 million, mainly due to lower selling prices. The adjusted EBITDA margin was 15.3 percent, which was below the prior-period margin of 15.7 percent.

Adjusted EBITDA Nutrition & Care segment

Evonik acquired the US company Wilshire Technologies, Inc., Princeton (New Jersey) on January 16, 2020. Wilshire has developed a technology that can be used to obtain products from renewable, non-animal sources for use as cosmetic active ingredients. This acquisition extends Evonik's portfolio of sustainable active ingredients for cosmetics and strengthens the Health & Care growth engine.

Resource Efficiency segment

Key figures

		1st quarter
in € million	2019	2020	Change in %
External sales	1,438	1,437	–
Adjusted EBITDA	330	344	4
Adjusted EBITDA margin in %	22.9	23.9	–
Adjusted EBIT	253	258	2
Capital expendituresa	46	91	98
No. of employees as of March 31	10,262	10,597	3

Prior-year figures restated.

a Capital expenditures for intangible assets, property, plant and equipment.

In the Resource Efficiency segment, sales were €1,437 million in the first quarter of 2020, the same level as in the prior-year period. Lower volumes and a slight drop in selling prices were offset by the first-time consolidation of PeroxyChem and positive currency effects.

The good business development at the start of the year was held back by the impact of the coronavirus pandemic, especially the economic slowdown in Asia, and declining demand in the wake of production restrictions and shutdowns by customers in the automotive and coatings sectors, as well as other industries. Businesses affected included, in particular, coating additives, silica for the tire industry, and high-performance polymers, where sales were slightly lower. Crosslinkers posted a positive trend in products for the wind energy market. Sales of active oxygen products increased due to the first-time consolidation of PeroxyChem and a good performance in both conventional applications and specialties, for example, for disinfectants.

Sales Resource Efficiency segment

Prior-year figures restated.

Adjusted EBITDA improved by 4 percent to €344 million thanks to successful cost savings and the first-time consolidation of PeroxyChem. The adjusted EBITDA margin increased from 22.9 percent in the prior-year period to 23.9 percent.

Adjusted EBITDA Resource Efficiency segment

2020 2019 Prior-year figures restated.

Performance Materials segment

Key figures

		1st quarter
in € million	2019	2020	Change in %
External sales	520	472	-9
Adjusted EBITDA	53	23	-57
Adjusted EBITDA margin in %	10.2	4.9	–
Adjusted EBIT	29	-1	-103
Capital expendituresa	10	10	–
No. of employees as of March 31	1,610	1,612	–

Prior-year figures restated.

a Capital expenditures for intangible assets, property, plant and equipment.

In the Performance Materials segment, sales were 9 percent lower at €472 million in the first quarter of 2020 due to considerably lower prices and volumes.

Sales of performance intermediates declined as a result of lower demand, especially from the automotive and fuel sectors. Another downside factor was the massive drop in the oil price. Within the Functional Solutions unit, alkoxides posted a very pleasing performance, with sales around the prior-year level.

Sales Performance Materials segment

Adjusted EBITDA fell by 57 percent to €23 million as a result of lower selling prices and volumes, and a reduction in the value of inventories caused by the sharp drop in the oil price. The adjusted EBITDA margin was 4.9 percent, down from 10.2 percent in the prior-year period.

in € million
Q1	23	53
Q2			74
Q3		47
Q4		50
0		50		100

Adjusted EBITDA Performance Materials segment

2020 2019 Prior-year figures restated.

Services segment

Key figures

		1st quarter
in € million	2019	2020	Change in %
External sales	174	191	10
Adjusted EBITDA	31	29	-6
Adjusted EBITDA margin in %	17.8	15.2	–
Adjusted EBIT	-7	-10	-43
Capital expendituresa	22	73	232
No. of employees as of March 31	12,071	12,060	–

a Capital expenditures for intangible assets, property, plant and equipment.

Sales rose 10 percent to €191 million in the first quarter of 2020. The main reason for this was the divestment of the methacrylates business in July 2019. This business now uses Evonik's site services as an external customer. Adjusted EBITDA was €29 million in the first quarter, which was below the prior-year level.

Financial condition

The cash flow from operating activities, continuing operations, decreased by €37 million to €297 million, principally because of the lower operating result and higher tax payments. Together with higher cash outflows for property, plant and equipment, this reduced the free cash flow by €46 million to €113 million.

Cash flow statement (excerpt)

		1st quarter
in € million	2019	2020
Cash flow from operating activities, continuing operations	334	297
Cash outflows for investments in intangible assets, property, plant and equipment	-175	-184
Free cash flow	159	113
Cash flow from other investing activities, continuing operations	-10	-105
Cash flow from financing activities, continuing operations	-71	-164
Cash flow from discontinued operations	13	–
Change in cash and cash equivalents	91	-156

The cash outflow of €105 million for other investing activities, continuing operations, contains the cash outflow of €282 million for the acquisition of PeroxyChem, while the sale of current securities had a counter-effect. The cash outflow of €164 million for financing activities related to a loan repayment of €298 million in connection with the acquisition of PeroxyChem. This was countered by short-term borrowing. The cash flow from discontinued operations in the prior-year period related to the methacrylates business.

Net financial debt was €2,778 million, an increase of €637 million compared with December 31, 2019. This was principally attributable to the acquisition of PeroxyChem, which resulted in a cash outflow of €576 million, taking into account repayment of an acquired loan, currency hedging, and the acquired cash and cash equivalents.

Net financial debt

	Dec. 31,	Mar. 31,
in € million	2019	2020
Non-current financial liabilitiesa	-3,712	-3,169
Current financial liabilitiesa	-806	-1,661
Financial debt	-4,518	-4,830
Cash and cash equivalents	1,165	999
Current securities	1,203	1,031
Other financial investments	9	22
Financial assets	2,377	2,052
Net financial debt	-2,141	-2,778

a Excluding derivatives and excluding the refund liability for rebate and bonus agreements.

In the first quarter of 2020, capital expenditures for property, plant and equipment increased to €198 million (Q1 2019: €124 million). In principle, there is a slight timing difference in outflows for property, plant and equipment. One major reason for the increase is the start of construction of a production complex for the specialty polymer polyamide 12 in 2019. Work is on schedule and the facility is expected to come into service in early 2021.

Expected development

The worldwide coronavirus crisis is having a far stronger impact on the global economy than either we or the economic research institutes had expected at the start of the year. The measures to combat the global spread of the virus are causing a simultaneous supply and demand shock in almost all countries. It is foreseeable that this will result in a massive global recession affecting all regions. We have therefore reduced our forecast for global growth in 2020 significantly from 2.5 percent to -3.0 percent (2019: 2.6 percent).

Our forecast is based on the following assumptions:

• Economic development -3.0 percent (previously: 2.5 percent)
• Euro/US dollar exchange rate: US\$1.12 (2019: US\$1.12)
• Internal raw material index significantly lower than the prior year (previously: slightly below the prior year)

Sales and earnings2

Due to the global spread of coronavirus and the related impact on the global economy, we have revised the forecast for 2020 published in the 2019 financial report:

² Including PeroxyChem, which was acquired in February 2020.

At present, we anticipate that sales will be between €11.5 billion and €13.0 billion (previously: stable; 2019: €13.1 billion), and expect adjusted EBITDA to be between €1.7 billion and €2.1 billion (previously: between €2.0 billion and €2.3 billion; 2019: €2.153 billion).

In the Nutrition & Care segment, we expect business in the consumer goods, nutrition, and healthcare units to be stable with relatively low cyclical exposure. The recent positive volume and price trends for essential acids for animal nutrition should continue.

Business in the Resource Efficiency segment will be influenced primarily by lower demand from the automotive and coatings end-markets as a consequence of the coronavirus. By contrast, other businesses such as hydrogen peroxide, catalysts, and crosslinkers should develop well.

The drastic drop in the oil price will have a clearly negative impact on the Performance Materials segment.

We will continue the systematic implementation of our efficiency enhancement programs. At the same time, in the present tense global economic situation, we are focusing particularly on maintaining our strong liquidity position. That includes continued high capital expenditure discipline and consistent management of net working capital. We will align cash outflows for capital expenditures3 flexibly to the present volatile conditions. From the present standpoint, we expect the cash outflows for capital expenditures to remain low at around last year's level (2019: €880 million).

Looking at the free cash flow (2019: €717 million4), we anticipate that the cash conversion ratio (defined as free cash flow/adjusted EBITDA) will be stable year-on-year at around 30 percent (2019: 33.3 percent).

The return on capital employed (ROCE) ultimately depends on the level of earnings that can be achieved, but it will be below the prior-year level in 2020 (2019: 8.6 percent).

Forecast for 2020

Forecast performance indicators	2019	Forecast for 2020a	Revised forecast for 2020
			Between €11.5 billion
Group sales	€13.1 billion	Stable	and €13.0 billion
		Between €2.0 billion	Between €1.7 billion
Adjusted EBITDA	€2.15 billion	and €2.3 billion	and €2.1 billion
ROCE	8.6%	At the prior-year level	Below the prior-year level
Cash outflows for investments in intangible assets,
property, plant and equipment	€880 million	At the prior-year level	At the prior-year level
Free cash flow	€717 millionb	Slightly higher	Below the prior-year level

a As in the financial report 2019.

b Before tax payments relating to the carve-out of the methacrylates business.

³ In view of our sharper focus on free cash flow—partly due to the coronavirus pandemic—we are giving greater priority to the cash outflows for capital expenditures for intangible assets, property, plant and equipment, instead of the previous indicator capital expenditures. We have adjusted our forecast accordingly.

⁴ Before tax payments relating to the carve-out of the methacrylates business.

Income statement

		1st quarter
in € million	2019	2020
Sales	3,287	3,243
Cost of sales	-2,312	-2,324
Gross profit on sales	975	919
Selling expenses	-380	-394
Research and development expenses	-107	-109
General administrative expenses	-148	-125
Other operating income	55	45
Other operating expense	-89	-94
Result from investments recognized at equity	-10	5
Income before financial result and income taxes, continuing operations	296	247
Interest income	6	7
Interest expense	-55	-47
Other financial income/expense	-5	-10
Financial result	-54	-50
Income before income taxes, continuing operations	242	197
Income taxes	-27	-57
Income after taxes, continuing operations	215	140
Income after taxes, discontinued operations	29	-6
Income after taxes	244	134
thereof attributable to
Non-controlling interests	5	4
Shareholders of Evonik Industries AG (net income)	239	130
Earnings per share in € (basic and diluted)	0.51	0.28
thereof attributable to
Continuing operations	0.45	0.29
Discontinued operations	0.06	-0.01

Prior-year figures restated.

Balance sheet

	Dec. 31,	Mar. 31,
in € million	2019	2020
Intangible assets	5,858	6,241
Property, plant and equipment	6,435	6,589
Right-of-use assets	640	691
Investments recognized at equity	45	55
Other financial assets	625	516
Deferred taxes	1,718	1,694
Other income tax assets	12	12
Other assets	82	82
Non-current assets	15,415	15,880
Inventories	1,884	1,983
Trade accounts receivable	1,569	1,678
Other financial assets	1,278	1,141
Other income tax assets	325	334
Other assets	387	437
Cash and cash equivalents	1,165	999
Current assets	6,608	6,572
Total assets	22,023	22,452
Issued capital	466	466
Capital reserve	1,167	1,171
Retained earnings including distributable profit	7,341	7,642
Treasury shares	–	-15
Other equity components	-4	-123
Equity attributable to shareholders of Evonik Industries AG	8,970	9,141
Equity attributable to non-controlling interests	90	89
Equity	9,060	9,230
Provisions for pensions and other post-employment benefits	3,967	3,787
Other provisions	779	773
Other financial liabilities	3,713	3,171
Deferred taxes	537	555
Other income tax liabilities	320	298
Other payables	93	111
Non-current liabilities	9,409	8,695
Other provisions	778	824
Trade accounts payable	1,324	1,294
Other financial liabilities	918	1,785
Other income tax liabilities	59	55
Other payables	475	569
Current liabilities	3,554	4,527
Total equity and liabilities	22,023	22,452

Cash flow statement

	1st quarter
in € million	2019	2020
Income before financial result and income taxes, continuing operations	296	247
Depreciation, amortization, impairment losses/reversal of impairment losses on non-current assets	221	240
Result from investments recognized at equity	10	-5
Gains/losses on the disposal of non-current assets	-5	15
Change in inventories	-65	-90
Change in trade accounts receivable	-166	-94
Change in trade accounts payable	27	-18
Change in provisions for pensions and other post-employment benefits	-23	18
Change in other provisions	24	23
Change in miscellaneous assets/liabilities	80	54
Cash inflows from dividends	2	13
Cash inflows/outflows for income taxes	-67	-106
Cash flow from operating activities, continuing operations	334	297
Cash flow from operating activities, discontinued operations	25	–
Cash flow from operating activities	359	297
Cash outflows for investments in intangible assets, property, plant and equipment	-175	-184
Cash outflows to obtain control of businesses	–	-294
Cash outflows for investments in other shareholdings	-10	-9
Cash inflows from divestments of intangible assets, property, plant and equipment	9	6
Cash inflows/outflows from divestment of other shareholdings	–	40
Cash inflows/outflows relating to securities, deposits, and loans	-13	146
Cash inflows from interest	4	6
Cash flow from investing activities, continuing operations	-185	-289
Cash flow from investing activities, discontinued operations	-10	–
Cash flow from investing activities	-195	-289
Cash inflows/outflows relating to capital contributions	–	3
Cash outflows for dividends to non-controlling interests	-5	-6
Cash outflows for the purchase of treasury shares	-11	-15
Cash inflows from the addition of financial liabilities	45	228
Cash outflows for repayment of financial liabilities	-81	-351
Cash inflows/outflows in connection with financial transactions	-1	-8
Cash outflows for interest	-18	-15
Cash flow from financing activities, continuing operations	-71	-164
Cash flow from financing activities, discontinued operations	-2	–
Cash flow from financing activities	-73	-164
Change in cash and cash equivalents	91	-156
Cash and cash equivalents as of January 1	988	1,165
Change in cash and cash equivalents	91	-156
Changes in exchange rates and other changes in cash and cash equivalents	6	-10
Cash and cash equivalents as of March 31	1,085	999
Cash and cash equivalents included in assets held for sale	-6	–
Cash and cash equivalents as on the balance sheet as of March 31	1,079	999

Segment report

Segment report by operating segments—1st quarter

	Nutrition & Care		Resource Efficiency			Performance Materials
in € million	2019	2020	2019	2020	2019	2020
External sales	1,149	1,134	1,438	1,437	520	472
Internal sales	9	5	14	17	27	24
Total sales	1,158	1,139	1,452	1,454	547	496
Adjusted EBITDA	180	174	330	344	53	23
Adjusted EBITDA margin in %	15.7	15.3	22.9	23.9	10.2	4.9
Adjusted EBIT	103	89	253	258	29	-1
Capital expendituresa	43	23	46	91	10	10
Financial investments	13	20	8	291	–	–
No. of employees as of March 31	8,166	8,017	10,262	10,597	1,610	1,612

Prior-year figures restated.

a For intangible assets, property, plant and equipment.

Segment report by regions—1st quarter

	Western Europe		Eastern Europe			North America
in € million	2019	2020	2019	2020	2019	2020
External salesa	1,438	1,364	202	202	733	775
Goodwill as of March 31b	2,282	2,289	50	50	1,932	2,317
Other intangible assets, property, plant and equipment, and right-of-use assets as of March 31b	4,302	4,461	32	40	1,954	2,201
Capital expenditures	82	125	3	2	22	61
No. of employees as of March 31	21,857	21,831	524	491	4,326	4,658

Prior-year figures restated.

a External sales Western Europe: thereof Germany €592 million (Q1 2019: €579 million).

b Non-current assets according to IFRS 8.33 b.

							Total Group
Services		Other operations		Corporate, consolidation			(continuing operations)
2019	2020	2019	2020	2019	2020	2019	2020
174	191	6	9	–	–	3,287	3,243
488	443	9	10	-547	-499	–	–
662	634	15	19	-547	-499	3,287	3,243
31	29	-12	-16	-43	-41	539	513
17.8	15.2	–	–	–	–	16.4	15.8
-7	-10	-18	-21	-45	-42	315	273
22	73	3	1	–	–	124	198
2	2	–	–	–	–	23	313
12,071	12,060	235	227	279	257	32,623	32,770

Central & South America			Asia-Pacific		Middle East & Africa		Total Group (continuing operations)
2019	2020	2019	2020	2019	2020	2019	2020
146	139	656	679	112	84	3,287	3,243
32	35	257	255	19	20	4,572	4,966
158	116	1,800	1,730	7	6	8,253	8,554
1	1	16	9	–	–	124	198
667	652	5,096	4,997	153	141	32,623	32,770

Appendix

1 Restatement of prior-year figures

Restatement in the income statement

The operating income from the methacrylates business in the first quarter of 2019 has changed compared with the amount reported in the quarterly statement as of March 31, 2019, because the calculation of the data has been adjusted to the point in time when the criteria for recognition as a discontinued operation were first met. As a result, the operating income of the methacrylates business before taxes is €13 million lower, and the operating income after taxes is €10 million lower.

Restatement in the segment report

In connection with the divestment of the methacrylates business, the application monomers business was integrated into the Resource Efficiency segment (previously it was allocated to the Performance Materials segment). The impact of the change of segment on consolidation in the first quarter of 2019 was immaterial. The following table shows the impact of this retrospective adjustment on the key figures as a result of this reclassification.

Retrospective reclassification of the application monomers business—1st quarter 2019

in € million	Resource Efficiency	Performance Materials
External sales	39	-39
Internal sales	2	-2
Total sales	37	-37
Adjusted EBITDA	6	-6
Adjusted EBIT	5	-5
Capital expenditures	1	-1

The Asia-Pacific North and Asia-Pacific South regions were combined on January 1, 2020, so they can operate successfully as one region in the future and respond to future challenges. The prior-year figures have been restated.

2 Changes in the Evonik Group

Acquisition of Wilshire Technologies, Inc.

Evonik acquired all shares in Wilshire Technologies, Inc. (Wilshire Technologies), Princeton (New Jersey, USA) on January 16, 2020. This company has developed a technology that can be used to obtain products from renewable, nonanimal sources for use in cosmetic active ingredients. The acquisition extends Evonik's portfolio of sustainable active ingredients for cosmetics. Wilshire Technologies has been integrated into the Nutrition & Care segment.

The provisional purchase price pursuant to IFRS 3 is €19 million. €12 million of this amount was settled in cash and cash equivalents. A further €7 million comprises purchase price components that are expected to result in payments in the next two years. The purchase price was agreed in US dollars.

A report on the purchase price allocation is not yet available. Changes in the purchase price could result from the finalization of the agreed purchase price adjustments and the final assessment of the purchase price components mentioned above.

Acquisition of PeroxyChem

On November 7, 2018, Evonik signed an agreement to acquire PeroxyChem, Philadelphia (Pennsylvania, USA) from One Equity Partners, Chicago (Illinois, USA). PeroxyChem is a manufacturer of hydrogen peroxide and peracetic acid. The acquisition was initially delayed because the Federal Trade Commission (FTC) in the USA filed a lawsuit to block the transaction. The lawsuit was dismissed in January 2020, and the acquisition was then closed on February 3, 2020.

The acquisition comprised the purchase of 100 percent of the shares in 16 companies, a 50 percent share deal, and a 20 percent share deal. To meet antitrust requirements, the 100 percent stake in a Canadian PeroxyChem company had to be sold immediately. This is presented in other current financial assets in the balance sheet for first-time consolidation.

PeroxyChem has been integrated into the Resource Efficiency segment. This acquisition extends Evonik's portfolio of environment-friendly, high-growth specialty applications. The business has above-average growth rates, low capital intensity, and low cyclical exposure.

				Provisional purchase price allocation for PeroxyChem as of the date of acquisition
--	--	--	--	------------------------------------------------------------------------------------

	Carrying
in € million	amount
Intangible assets	6
Property, plant and equipment	175
Right-of-use assets	24
Investments recognized at equity	8
Other financial assets	6
Other assets	14
Non-current assets	233
Inventories	27
Trade accounts receivable	45
Other financial assets	19
Cash and cash equivalents	6
Current assets	97
Total assets	330
Provisions for pensions and other post-employment benefits	3
Other provisions	2
Other financial liabilities	39
Non-current liabilities	44
Other provisions	9
Trade accounts payable	23
Other financial liabilities	303
Other payables	7
Current liabilities	342
Total liabilities	386
Provisional net assets	-56
Provisional goodwill	344
Provisional purchase price pursuant to IFRS 3	288

A report on the purchase price allocation is not yet available. The difference between the purchase price and the acquired net assets was initially allocated entirely to goodwill. Initial, provisional analyses by external valuation experts indicate that the hidden reserves to be disclosed in connection with the purchase price allocation mainly relate to intangible assets such as customer relationships and technology, and to property, plant and equipment, and inventories.

The acquired other financial liabilities contain a loan of €298 million, which has been taken into account as a purchase price adjustment. The loan has been completely repaid. The repayment is presented in the cash flow statement in the cash flow from financing activities.

Provisional purchase price for the acquisition of PeroxyChem

in € million
Purchase price before purchase price adjustments and currency hedging effects	565
Provisional purchase price adjustments	-274
Currency hedging effects transferred to the acquired assets	-3
Provisional purchase price pursuant to IFRS 3	288
Acquired cash and cash equivalents	-6
Cash outflow as per cash flow statement	282

The purchase price was agreed in US dollars and was settled out of cash and cash equivalents. Changes in the purchase price could result from the finalization of the agreed purchase price adjustments, which relate, among other things, to net working capital, cash and cash equivalents, and liabilities as of the acquisition date.

The costs presented in other operating expense in connection with the acquisition are contained in the adjustments. Their breakdown is as follows:

Costs relating to the acquisition of PeroxyChem

			1st quarter
in € million	Fiscal 2018	Fiscal 2019	2020
Acquisition costs	8	22	3
Integration costs	–	–	2
	8	22	5

Since the date of acquisition, PeroxyChem's sales have amounted to €47 million and income after taxes was -€13 million. Income after taxes contains a loss of €15 million resulting from the sale of a stake in a Canadian PeroxyChem company, which was necessary to meet antitrust requirements. This amount is recognized in other operating expense and contained in the adjustments.

Financial calendar

Financial calendar 2020

Event	Date
Interim report Q2 2020	August 4, 2020
Annual Shareholders' Meeting 2020	August 31, 2020
Interim report Q3 2020	November 3, 2020

Credits

Published by

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Contact

Communications Phone +49 201 177-3315 presse@evonik.com

Investor Relations Phone +49 201 177-3146 investor-relations@evonik.com