By Anastasiia Kozlova
(Reuters) -German chemicals group Evonik Industries reported a consensus-beating third quarter profit and reiterated its 2024 targets on Wednesday, saying its cost cutting initiatives were paying off.
However, its shares slid 4% by 1044 GMT, with J.P.Morgan citing weak results of its Performance Materials division which mainly supplies commodity products.
Evonik posted a 19% rise in quarterly adjusted core earnings (EBITDA) to 577 million euros ($622 million), ahead of analysts’ median forecast of 572.7 million euros in a Vara consensus poll.
J.P.Morgan analysts said in a note that the beat was modest, while Performance Materials saw its earnings deteriorate, which might result in a 3-5% cut to fourth quarter adjusted EBITDA consensus.
Core profit in the Performance Materials unit slumped 44% to 19 million euros in the third quarter, impacted by the sale of Evonik’s superabsorbents business finalised on Aug. 31.
Evonik is also planning to sell its larger C4 business, though CEO Christian Kullmann said it was not the right time to initiate the sale process considering the tough market backdrop.
Like its rivals, Evonik has been suffering from subdued demand, as in times of high inflation customers prefer to first de-stock inventories.
“Looking into Q4, we see the usual year-end seasonality, which is only somewhat more pronounced in performance materials,” Chief Financial Officer Maike Schuh said in a conference call.
“So we will have a quite solid finish of what it is a pretty decent year for Evonik,” she added.
The company in March said it would cut up to 2,000 jobs worldwide by 2026, with some 1,500 of them in Germany, to reduce annual costs by 400 million euros.
In October, it said it planned to scale back its adhesives and health care lines to focus on the core parts of those businesses, while shedding other non-core operations.
($1 = 0.9276 euros)
(Reporting by Anastasiia Kozlova in Gdansk; editing by Milla Nissi)
