Evonik Delivers Robust Earnings in Difficult Environment in 2022

After a challenging 2022, Evonik is cautiously optimistic for 2023.

“The effects of war, high inflation and heavily fluctuating energy prices demanded a lot from us-and they still do,” says Christian Kullmann, chairman of the Executive Board. “Nevertheless, we were able to achieve the best operating result in the past 10 years. Evonik is well-positioned for difficult times. This will also pay off in the current year.”

The past year was characterized by a very successful first six months, followed by a much more difficult second half. Overall, sales increased by 24% to €18.5 billion. Volumes declined slightly, and prices for raw materials and energy rose sharply in some cases. Evonik was able to pass on most of the prices increases. Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) rose by 4%, narrowly meeting the lower end of the forecast range of €2.5 bil-lion to €2.6 billion. At €2.49 billion, earnings were the highest since 2012.

Free cash flow reached €785 million. This corresponds to a cash conversion rate of 32%, slightly above the target that Evonik had adjusted to 30% during the year.

“The two very different business environments in the first and second half of 2022 made it difficult for us to manage inventories,” said CFO Ute Wolf. “At the end of the year, we lasered in on these issues. This fully paid off with a very strong free cash flow in the final quarter.”

Despite numerous uncertainties, Evonik is cautiously optimistic for 2023. Much will depend on how sustainably energy prices and inflation will soften, and how strong the recovery of the global economy is going to be, especially with respect to China. In the first quarter of 2023 in particular, the negative trend of the second half of 2022 will likely continue. From the second quarter onward, the situation should gradually improve.

For 2023, Evonik expects sales in a range from €17 billion to €19 billion. Adjusted EBITDA should amount to between €2.1 billion and €2.4 billion. Free cash flow is expected to increase, and the cash conversion rate should improve toward the target of around 40%.

“Our guidance range is wider than last year in view of the ongoing uncertainties. We have set am-bitious targets and intend to achieve them with joint efforts,” said Kullmann.