Germany- Evonik faces a challenging first quarter, yet it confirms its earnings forecast for 2023. The beginning of the year was more arduous than anticipated. Nonetheless, the company's business showed signs of recovery during Q1. In terms of operating profit, both February and March surpassed the previous month.

In Q1, the economic activity remained subdued, with weak demand and customers continuing to destock, particularly in the initial weeks of the year. The sales figures depict an overall decline of 11% to 4.0 billion euros, accompanied by a 14% fall in volumes. However, the impact of inflation was compensated for by higher prices, which managed to offset some of the lost volumes. The adjusted EBITDA witnessed a massive decline of 44%, standing at €409 million.

Despite the disappointing operating results, Evonik's free cash flow has reached €21 million. However, to meet its free cash flow targets for the year, the company will require further efforts, including a disciplined approach to managing working capital and investments. Evonik anticipates that its adjusted EBITDA for the entire year will fall towards the lower end of its projected range of €2.1 to €2.4 billion, The main reason for the decline is the decrease in prices for Methionine animal feed additive and C4 chain products.

Evonik continues to move forward with its planned portfolio adjustments, undaunted by the current challenges. The first phase of divesting the Performance Materials division involved selling the Luelsdorf site located south of Cologne in Germany. Currently, Evonik is in the process of divesting the Superabsorbents business and has already sent out investment teasers in March, with the process moving along smoothly as planned.

Evonik is making progress towards their savings target of 250 million euros through cost-adjustment measures such as reducing external consultants, business travel, and limiting hiring. However, the majority of these savings will not be seen until later this year. Alongside these efforts, Evonik is ramping up their sustainability strategy. They recently began constructing a new facility for pharmaceutical lipids in the U.S and opened a production facility for clinical quantities in Hanau, Germany. Additionally, a new plant for gas separation membranes in Austria was started up by Evonik in February.