Essen, Germany - March 6, 2024 - Chemical giant Evonik Industries (ETR: EVN) sent shockwaves through the industry today, announcing a significant workforce reduction and weaker-than-expected financial results for the fourth quarter. This move reflects the company's strategic shift to navigate a challenging market environment.
Evonik revealed plans to trim its global workforce by approximately 6%, translating to roughly 2,000 positions eliminated by 2026. This decision, driven by the company's tempered economic outlook, aims to streamline operations and reduce annual costs by a staggering €400 million (approximately $433.6 million). The restructuring will prioritize streamlining management positions, with Germany bearing the brunt of the reductions, accounting for around 1,500 job losses.
Evonik's financial performance for the final quarter of 2023 fell short of analyst expectations. The company reported a net loss of €146 million, compared to a €284 million loss in the same period of the previous year. Sales experienced a significant decline of 17% to €3.60 billion, while the company faced increased financial expenses and tax burdens. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) dropped by 24%, clocking in at €312 million.
This performance stands in stark contrast to analyst predictions. Consensus estimates provided by Vara Research anticipated a fourth-quarter net profit of €7 million, an adjusted EBITDA of €324.6 million, and sales of €3.81 billion. Evonik's downward revisions to its 2024 forecast further amplify the concerns surrounding the company's near-term prospects. Adjusted EBITDA is now projected to range between €1.7 billion and €2 billion, falling short of the €1.87 billion consensus estimate. Sales are expected to land between €15 billion and €17 billion, undershooting the anticipated figure of €15.89 billion.
Amidst the restructuring efforts, Evonik announced the second divestment within its performance-materials division. The company has reached an agreement to sell its superabsorbents business to International Chemical Investors Group (ICIG) for a sum in the low-triple-digit million euro range.
Evonik's bold decision to confront the economic headwinds through workforce reductions and strategic divestments is a testament to its commitment to long-term sustainability. However, the success of this strategy hinges upon the company's ability to navigate the immediate challenges and deliver on its revised financial projections. The coming months will be crucial in determining whether Evonik can emerge stronger and more resilient in the face of these market pressures.
