Evonik’s Q1 earnings up 25% on higher selling prices

LONDON (ICIS)–Evonik’s first-quarter (Q1) earnings rose 25%, year on year, as higher selling prices more than offset higher input costs, the German chemicals major said on Thursday.

Preliminary results (€/million)	Q1 2022	Q1 2021	Change
Sales	4,500	3,358	34%
Adjusted EBITDA	735	588	25%

Evonik’s Q1 earnings before interest, taxes, depreciation and amortisation (EBITDA) came in above analysts’ consensus at €652m.

“Across all divisions, we were able to adjust selling prices successfully and therefore offset the increase in variable costs. Although business conditions were dominated by uncertainty and bottlenecks, Evonik made a good start to the year,” said Christian Kullmann, Evonik’s CEO.

The company’s performance materials division posted healthy growth in Q1 thanks to higher demand and improved selling process for C4 products, the company said.

The nutrition and care divisions posted strong growth as essential amino acids for animal nutrition benefitted from rising demand and higher selling prices.

The segment also benefitted from significant earnings growth from drug delivery systems and for active ingredients for cosmetics applications, said the company.

The war in Ukraine has pushed energy prices higher over the first quarter, and Evonik’s naphtha-based price clauses have helped the producer to pass costs downstream.

Although raw material costs have risen, the company has increased its inventory levels as a precaution in the face of volatile supply chains which could disrupt production and send feedstock costs even higher.

“We are living in a period of unusual economic uncertainty. Higher energy prices and considerable uncertainty about the supply of raw materials are weighing on industry and the entire economy,” said Kullmann.

“Based on our strong start to the year and assuming there will be no further escalation in the geopolitical situation, we are confirming our outlook for the full year.”

Evonik has now revised its outlook for 2022, with EBITDA expected between €2.5-2.6bn, up from €2.38bn in 2021.

It expects annual sales between €15.5-16.5bn, up from €15bn in 2021.

In related news, German specialty chemicals producer LANXESS also revised up its growth expectations for the first quarter earlier this week.

This could reflect a wider trend for specialty producers in Europe for the first quarter, according to chemicals equity analysts at Germany’s Baader Bank.

“The first quarter will be the strongest quarter for the chemical sector for a longer time,” said the bank.

Evonik is due to publish its audited Q1 financial results on 6 May.

Front page picture: Evonik’s headquarters in Essen, Germany
Source: Evonik