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Germany's Evonik expects 2022 earnings to rise despite economic weakening

FILE PHOTO: The logo of German specialty chemical company Evonik Industries AG is pictured at their plant in Bitterfeld

By Karol Badohal and Antonis Pothitos

(Reuters) -German chemicals group Evonik Industries, which makes ingredients for Pfizer/BioNTech's COVID-19 vaccine, on Tuesday said it expected a rise in 2022 earnings despite a weakening economy, after third-quarter profit broadly met expectations.

The company, which also makes ingredients for animal feed and diapers, sees full-year adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) between 2.5 billion to 2.6 billion euros, above the 2021 figure of 2.38 billion euros.

It had previously pointed to the upper end of the range.

Adjusted EBITDA in the third quarter fell 5% on the year to 615 million euros ($615 million), with analysts expecting 608 million euros in a company-provided poll.

Sales jumped 26% to 4.88 billion euros despite lower volumes thanks to price hikes across all divisions which offset higher variable costs.

"While it is becoming more challenging to push for further price increases, we do not yet see prices coming down on a broad basis," Chief Financial Officer Ute Wolf said on a conference call.

She noted that raw material and logistic costs have started to fall as supply challenges eased and that maintaining attractive price levels in a slowing environment would be the next proof of Evonik's specialty portfolio.

Evonik has reduced its natural gas needs in Germany by 40%, shifting towards liquefied petroleum gas, a measure Chief Executive Christian Kullmann said gave the company confidence of secure power supply and cost control.

"We have done our whole work on the energy side and we are in the driver seat" he said.

Still, the company was preparing for a looming recession and announced plans to cut costs in 2023 by a three-digit million-euro figure, with measures including restrictions on business travel and trade shows, limiting the use of external consultants, and disciplined hiring.

Efficiency drives have become the order of the day across corporate Europe, as the war in Ukraine drives up energy costs, causing decades-high inflation.

At 1240 GMT the company's shares were up 1.4% after dipping 2.7% earlier, which Berenberg analyst Sebastian Bray attributed to possible profit-taking.

($1 = 1.0000 euros)

(Reporting by Karol Badohal and Antonis Pothitos in Gdansk; editing by Uttaresh.V and Emelia Sithole-Matarise)