Evonik Industries AG

Earnings Release • Aug 5, 2016

News Details

Corporate | 5 August 2016 07:00

Evonik Industries AG: Evonik specifies outlook for 2016 following a good second quarter

DGAP-News: Evonik Industries AG / Key word(s): Half Year Results

2016-08-05 / 07:00

The issuer is solely responsible for the content of this announcement.

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Embargoed until 7 a.m. on August 5, 2016

Key Financial Data:

First half/second quarter 2016

Evonik specifies outlook for 2016 following a good second quarter

– Evonik increases volumes in the first six months

– Adjusted EBITDA margin continues at very good level of 18.1 percent in the first six months

– Adjusted net income above EUR500 million

– Outlook for the full year specified: adjusted EBITDA in the upper half of the anticipated range of EUR2.0 billion to EUR2.2 billion

Essen . Demand for Evonik’s products rose worldwide in the first half of this year. “We were able to increase volumes in persistently challenging business conditions,” said Klaus Engel, Chairman of the Executive Board of Evonik Industries. “We are now confident that over the full year we will deliver adjusted EBITDA in the upper half of the anticipated range of EUR2.0 to EUR2.2 billion.”

Evonik registered considerable volume growth in the first six months of 2016, mainly as a result of growth in the second quarter. Despite the higher volumes, Group sales declined to EUR6,363 million, a drop of 8 percent compared with the first half of 2015, principally because lower raw material costs were passed on to customers. Adjusted EBITDA was also below the exceptionally strong prior-period figure at EUR1,150 million. Evonik once again posted a very good adjusted EBITDA margin of 18.1 percent in the first half of 2016.

Adjusted EBIT fell 18 percent to EUR795 million in the first six months. Adjusted net income declined 20 percent to EUR501 million. Net income was EUR405 million, down 40 percent from the high prior-year level, which contained the proceeds from the divestment of the stake in Vivawest.

Capital expenditures for property, plant and equipment were EUR371 million in the first six months of 2016, down 2 percent year-on-year. Despite the lower operating result, Evonik’s free cash flow of EUR208 million was higher than in the first half of 2015 (EUR166 million). This was due, among others, to a considerable reduction in net working capital.

Segment performance

In the Nutrition & Care segment, lower selling prices accompanied by almost unchanged volumes resulted in a drop in both sales and earnings. In the Resource Efficiency segment higher volumes increased sales and earnings. Higher volumes and lower raw material prices improved earnings in the Performance Materials segment despite a reduction in selling prices.

Outlook

Evonik still expects to report slightly lower sales in 2016 (2015: EUR13.5 billion). Thanks to its strong market positions, balanced portfolio and concentration on high-growth businesses, the company assumes continued high demand for its products and appreciable volume growth despite the difficult macro-economic conditions. The new production capacities taken into service in recent years and further intensification of sales activities are also contributing to this. Selling prices are declining considerably, especially in the Nutrition & Care and Performance Materials segments, leading to a slight reduction in overall sales. Based on the good business performance, especially in the second quarter, and the expectations for the second half of the year, Evonik is specifying its outlook for the full year : The company is confident that it can realize adjusted EBITDA in the upper half of the anticipated range of EUR2.0 to EUR2.2 billion.

Business performance in Q2 2016

In the second quarter of 2016 Group sales dropped 7 percent year-on-year to EUR3,258 million. While volumes increased in all three chemical segments, the decline in sales was principally attributable to the fact that selling prices were lower than in the prior-year period. Adjusted EBITDA was EUR585 million, 11 percent lower than in the exceptionally strong prior-year quarter.

The adjusted EBITDA margin was very good at 18.0 percent. Adjusted EBIT fell 16 percent to EUR406 million. Adjusted net income dropped 20 percent to EUR246 million. Overall, net income was EUR165 million. That was below the prior-period level of EUR418 million, which contained the proceeds from the divestment of the stake in Vivawest.

Details of segment performance

In the second quarter of 2016, the Nutrition & Care segment’s sales fell 11 percent to EUR1,111 million. This was mainly attributable to lower selling prices as volume sales increased. Adjusted EBITDA was EUR264 million, which was below the very high prior-year level of EUR381 million, mainly on price grounds. The adjusted EBITDA margin dropped to 23.8 percent. In the first six months of 2016 this segment’s sales dropped by 13 percent to EUR2,157 million. While volumes were almost unchanged, lower selling prices were the main reason for the decline. Adjusted EBITDA was 24 percent below the very strong prior-year level at EUR557 million. The adjusted EBITDA margin is still excellent at 25.8 percent.

Business continued to develop pleasingly in the Resource Efficiency segment in the second quarter: Sales rose 4 percent to EUR1,156 million. The main drivers were higher global demand and the activities acquired in 2015. This was countered by a slight reduction in selling prices. Adjusted EBITDA improved 6 percent to EUR270 million, mainly as a consequence of higher volumes, favorable raw material costs and positive currency effects. The adjusted EBITDA margin improved to a very good 23.4 percent. In the first six months of the year, this segment’s sales rose 2 percent to EUR2,276 million, driven principally by higher volumes. Lower selling prices had a counter-effect. Adjusted EBITDA increased 6 percent to EUR526 million. The adjusted EBITDA margin improved to 23.1 percent (H1 2015: 22.3 percent).

In the Performance Materials segment, sales dropped 12 percent to EUR829 million in the second quarter, principally owing to lower selling prices as a result of the reduction in raw material prices. By contrast, volumes rose considerably thanks to good demand. Adjusted EBITDA rose by 28 percent to EUR105 million. This was principally due to a rise in volumes, improved raw material efficiency and systematic cost management. The adjusted EBITDA margin was 12.7 percent, up from 8.7 percent in the second quarter of 2015. Sales in the Performance Materials segment fell 10 percent to EUR1,601 million in the first six months of 2016. With volumes up, the decline was caused by the oil-driven drop in selling prices. Adjusted EBITDA improved 10 percent to EUR169 million. The adjusted EBITDA margin improved to 10.6 percent.

Evonik Group: Excerpt from the income statement

(in EUR million)	Q2 2016	Q2 2015	Change in %	H1 2016	H1 2015	Change in %
Sales	3,258	3,519	-7	6,363	6,944	-8
Adjusted EBITDA	585	661	-11	1,150	1,311	-12
Adjusted EBIT	406	486	-16	795	971	-18
Adjustments	-47	122		-59	85
Financial result	-93	-51		-128	-114
Income before income taxes, continuing operations	266	557	-52	608	942	-35
Income taxes	-97	-133		-195	-249
Income after taxes, continuing operations	169	424	-60	413	693	-40
Income after taxes, discontinued operations	-1	-5		-1	-15
Income after taxes	168	419	-60	412	678	-39
thereof attributable to non-controlling interests	3	1		7	4
Net income	165	418	-61	405	674	-40
Adjusted net income	246	307	-20	501	627	-20

Prior-year figures restated

Segment performance

		Sales Q2			Adjusted EBITDA Q2
	2016	2015	Change	2016	2015	Change
	EUR million	EUR million	in %	EUR million	EUR million	in %
Nutrition & Care	1,111	1,248	-11	264	381	-31
Resource Efficiency	1,156	1,110	4	270	254	6
Performance Materials	829	938	-12	105	82	28
Services	163	211	-23	33	28	18
Other operations / consolidation	-1	12	–	-87	-84	-4
Group	3,258	3,519	-7	585	661	-11
		Sales H1			Adjusted EBITDA H1
	2016	2015	Change	2016	2015	Change
	EUR million	EUR million	in %	EUR million	EUR million	in %
Nutrition & Care	2,157	2,476	-13	557	734	-24
Resource Efficiency	2,276	2,233	2	526	498	6
Performance Materials	1,601	1,788	-10	169	154	10
Services	330	419	-21	68	74	-8
Other operations / consolidation	-1	28	–	-170	-149	-14
Group	6,363	6,944	-8	1,150	1,311	-12

Employees by segment

	June 30, 2016	Dec. 31, 2015
Nutrition & Care	7,369	7,165
Resource Efficiency	8,758	8,662
Performance Materials	4,376	4,380
Services	12,737	12,668
Other operations	502	701
Group	33,742	33,576

Company information

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 2015 more than 33,500 employees generated sales of around EUR13.5 billion and an operating profit (adjusted EBITDA) of about EUR2.47 billion.

Disclaimer

In so far as forecasts or expectations are expressed in this Investor Relations News 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.

Contact:

Tim Lange Head of Investor Relations Phone +49 201 177-3150 tim.lange@evonik.com
Evonik Industries AG Rellinghauser Straße 1-11 45128 Essen Germany Phone +49 201 177-01 Telefax +49 201 177-3475 www.evonik.com Supervisory Board Dr. Werner Müller, Chairman Executive Board Dr. Klaus Engel, Chairman Christian Kullmann, Deputy Chairman Dr. Ralph Sven Kaufmann Thomas Wessel Ute Wolf Registered office Essen Registered court Essen local court Commercial registry B 19474 VAT ID no. DE 811160003

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2016-08-05 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG.

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Language:	English
Company:	Evonik Industries AG
	Rellinghauser Straße 1-11
	45128 Essen
	Germany
Phone:	+49 (0) 201 177-01
Fax:	+49 (0) 201 177-3475
E-mail:	investor-relations@evonik.com
Internet:	www.evonik.com
ISIN:	DE000EVNK013, XS0911405784
WKN:	EVNK01, A1TM7T
Indices:	MDAX
Listed:	Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange; Luxemburg

End of News	DGAP News Service