May 7, 2020 / 5:59 AM / in 2 months

Evonik cuts 2020 outlook after first quarter core profit beat

FILE PHOTO: The logo of German specialty chemical company Evonik Industries AG is pictured at their plant in Bitterfeld, Germany, February 29, 2016. REUTERS/Fabrizio Bensch

(Reuters) - German chemicals group Evonik Industries (EVKn.DE) lowered on Thursday its full-year outlook, citing challenges in logistics and production from the coronavirus pandemic after reporting smaller-than-expected drop in first quarter core profit.

The group, whose products find use in items from animal feed to diapers, said its supply chains remained intact and there were hardly any restrictions on production worldwide, but trimmed its 2020 goals because of an expected hit to the global economy from the pandemic.

Evonik now expects 2020 sales between 11.5 billion and 13.0 billion euros, down from around 13 billion predicted in March. It trimmed its outlook for adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) to between 1.7 billion and 2.1 billion euros from the earlier 2.0-2.3 billion euro range.

For the second quarter, the company expects adjusted EBITDA of around 400 million euros, below last-year’s figure of 566 million euros.

First-quarter EBITDA, adjusted for one-offs, fell 5% to 513 million euros ($554 million), above the analysts’ forecast of 506 million euros in a company-provided poll.

The company said its previously announced reorganization, which would result in current operating segments being transferred into four divisions from July 1, would lead to a total headcount cut of around 150 by the end of 2021, and annual savings of 25 million euros.

“Our efforts in the last three years to cut costs and increase efficiency at the company are now paying off,” Ute Wolf, Chief Financial Officer said.

Last year, Chief Executive Christian Kullmann said Evonik was less exposed to economic cycles thanks to the company’s strategy of investing in areas with stable growth prospects and selling off cyclical businesses at the right time.

Reporting by Bartosz Dabrowski and Milla Nissi in Gdansk; Editing by Clarence Fernandez and Tomasz Janowski

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