Evonik met the 2023 forecast the company had reduced in the summer, despite a continuously challenging environment. The specialty chemicals company’s adjusted EBITDA amounted to €1.66 billion, within the targeted range of between €1.6 billion and €1.8 billion.

Group sales fell by 17% to €15.3 billion, also within the targeted range of €14 billion to €16 billion.

“The many crises around the world have put a damper on our results,” says Christian Kullmann, chairman of the Executive Board. “Overall, we got away with a black eye. We owe this above all to the great efforts of all our employees. However, the general conditions will not get any easier, which is why we will continue our fundamental revamp of the group.”

The focus on liquidity management proved very successful. Free cash flow in 2023 amounted to €801 million ─ even higher than in the previous year ─ thanks to prudent management of net working capital and strict investment discipline.

The cash conversion rate, the ratio of free cash flow to adjusted EBITDA, reached a strong 48%. In 2022, it was 32%.

“In difficult times, the first order of business is to keep the money together,” said Maike Schuh, CFO of Evonik. “We have retained our ability to act. This was painful at times, but it was also successful. We will therefore continue these measures in the current year.”

Volumes sold reflected the unfavorable conditions. They fell by 8% in 2023. Selling prices declined by 3%. Evonik reported a net loss of €465 million in 2023 due to exceptionally high impairments and burdens from structural measures, most of which occurred by September 30. In the previous year, Evonik reported a net income of €540 million.

Evonik does not expect an economic recovery during 2024. Hence, capital expenditures will be limited to around €750 million. The company expects an increase in adjusted EBITDA to a range between €1.7 billion and €2.0 billion, with sales between €15 billion and €17 billion. The cash conversion rate should be around 40%.

“We must not delude ourselves, even if there are slight signs of a recovery: What we are currently experiencing are not cyclical fluctuations, but massive, consequential changes of our economic environment,” said Kullmann. “We are addressing this challenge with the ‘Evonik Tailor Made’ program which will change our organizational structure for good.”

The first phase of ‘Evonik Tailor Made’ has been completed. All structures and processes of the company have been analyzed extensively over the past months. Based on this analysis, Evonik will design and establish a new organizational structure by the end of 2026.

As a result, Evonik will become leaner, faster, and have a significantly reduced cost structure. Up to 2,000 jobs will be cut worldwide, including a disproportionate number of management positions. The majority of these adjustments, around 1,500 jobs, will be made in Germany. Evonik expects cost reductions of around €400 million annually after the program’s completion in 2026.