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Evonik's quarterly profit beats estimates on higher prices, currency effects

(Reuters) -German chemicals group Evonik Industries on Wednesday reported higher-than-expected core profit for the second quarter, on the back of higher selling prices across all divisions and positive currency effects, and despite slightly lower volumes.

Evonik, which makes ingredients for products ranging from animal feed and diapers to Pfizer/BioNTech's COVID-19 vaccine, reported adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of 728 million euros ($743 million) in the three months to June 30, up 12% on the year and above analysts' forecast of 700 million in a company-provided poll.

"We had a strong first half of the year ... Regarding the increasing uncertainties, especially on the energy side, we reckon these challenges will prevail and potentially even accelerate in the second half of the year," Chief Executive Christian Kullmann said in a statement.

German chemical companies, which are highly dependent on Russian gas imports, are scrambling to prepare for further gas supply cuts in response to Western sanctions imposed following Russia's invasion of Ukraine.

Evonik said on Monday it was substituting up to 40% of natural gas at its German sites with alternative sources including liquefied petroleum gas and coal, while energy supplies to its sites abroad were largely independent of gas supplies from Russia.

The company raised its 2022 sales outlook to between 17 billion and 18 billion euros from an earlier forecast of 15.5 billion to 16.5 billion euros.

It also said the upper end of its 2.5 billion to 2.6 billion euro adjusted EBITDA guidance was "well underpinned".

Evonik's free cash outflow was 239 million euros in the quarter against an inflow of 101 million last year, due to a build-up in net working capital caused by increased raw material prices and higher inventory levels. Analysts had expected an outflow of 167 million euros.

Germany is Europe's largest producer of chemicals.

($1 = 0.9793 euros)

(Reporting by Karol Badohal and Bartosz Dabrowski in Gdansk; editing by Milla Nissi)