August 1, 2019 / 4:59 AM / 4 months ago

Evonik confirms 2019 outlook despite 'gloomy' economy, weaker second-quarter

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 (EVKn.DE) reported lower second-quarter core profit and sales on Thursday, but said it was on track to hit its 2019 targets despite “an increasingly gloomy economic environment.”

Second-quarter earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for one-offs, fell 8% to 566 million euros (£515.7 million), below the average analyst estimate of 575 million euros in a Refinitiv poll. Sales were down 3% at 3.31 billion euros, also below analysts’ forecasts.

“The cooling of world trade and an increasing weakness in major industries isn’t making it easier. Still, we are confident for the remainder of the year,” chief executive Christian Kullmann said in a statement. Kullmann said the company’s strategy of investing in areas with stable growth perspectives and selling off cyclical businesses at the right time made it less exposed to economic cycles.

The maker of specialty chemicals said it expected adjusted EBITDA to at least reach last year’s level of 2.15 billion euros, excluding its methacrylates unit - the maker of plastics for clear acrylic sheet, which was sold to buyout group Advent.

Evonik said the deal closed on July 31.

The company is a producer of specialty chemicals used in numerous industries, and its products range from amino acids used in animal feed to super-absorbers for diapers.

The guidance confirmation comes against a backdrop of a slowing economy and market uncertainty caused by trade conflicts, which led German chemical industry body VCI to cut its 2019 sales outlook for the sector early last month.

Also last month, shares of Evonik came under pressure after its larger rival BASF (BASFn.DE) issued its second profit warning in seven months, citing global economic slowdown and trade war between the United States and China.

Evonik shares have been up 19% so far this year, which is a better performance than that of BASF, but is lagging peers such as Lanxess (LXSG.DE) and DSM (DSMN.AS).

Reporting by Bartosz Dabrowski in Gdynia; Editing by Tomasz Janowski

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