Germany's Evonik sees lower 2023 core profit as animal feed prices decline

By Antonis Pothitos and Tristan Chabba

(Reuters) - German chemicals company Evonik Industries on Thursday forecast a fall in its 2023 core profit on lower animal feed prices and as the effects of elevated levels of inflation and fluctuating energy prices persist.

The company, which in the middle of a strategic shift towards higher-margin speciality chemicals, said it experienced a difficult second half of 2022 in part due to falling prices for animal feed as clients cut inventories.

Evonik expects some of the negative trends to continue into the first quarter of 2023, followed by a gradual improvement from the second quarter.

The company's methionine business will remain part of the group, Evonik Chief Executive Christian Kullmann said on a conference call following results.

Methionine, an amino acid that Evonik produces, is used as an animal-feed additive.

Evonik, whose products are used in items from animal feed and diapers to Pfizer/BioNTech's COVID-19 vaccine, forecast annual adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) between 2.1 billion euros ($2.22 billion) and 2.4 billion euros.

The company reported an adjusted EBITDA of 2.49 billion euros last year.

"The company will likely need a stronger earnings recovery in the rest of the year to deliver FY23 adj EBITDA in line with midpoint/consensus," JPMorgan analysts said.

Evonik's adjusted EBITDA fell 18% to 413 million euros in the fourth quarter, compared with Vara Research estimates of 451.1 million euros, hurt mainly by a 39% slump in adjusted core earnings at the company's Nutrition & Care business.

The company also said it plans to save 250 million euros in fiscal 2023 through measures including restrictions on business travel and disciplined hiring.

($1 = 0.9441 euros)

(Reporting by Antonis Pothitos and Tristan Chabba in Gdansk; Editing by Milla Nissi and Shounak Dasgupta)