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Evonik says recovery unlikely in 2024, plans 2,000 job cuts

Credit: REUTERS/Fabrizio Bensch

By Anastasiia Kozlova and Matteo Allievi

March 4 (Reuters) - German chemicals group Evonik Industries EVKn.DE said on Monday it did not expect an economic recovery in 2024 and announced up to 2,000 job cuts worldwide by 2026.

The job cuts are expected to reduce costs by 400 million euros ($434.04 million) annually, the company said, adding that the majority - some 1,500 - would be in Germany.

Chemical companies have been under pressure for more than a year, forced to reduce inventories on lower demand from industrial clients as energy prices soared.

"We will have to be prepared for the economic storm to continue in the global economy," said CEO Christian Kullmann on a conference call, adding that the company hopes customers will be in a position to benefit from the more recent fall in energy prices.

Evonik, whose products are used in items from animal feed and diapers to Pfizer/BioNTech's COVID-19 vaccine, expects 2024 adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) in the range of 1.7 billion to 2.0 billion euros ($1.84 billion-$2.17 billion).

This compares with a 2023 result of 1.66 billion euros which fell short of the 1.7 billion expected by analysts.

The 2024 guidance is close to consensus and should reassure investors, JP Morgan said in a note.

Evonik, a market leader in the production of amino acids used in poultry feeds, said on Monday it would sell its superabsorbents business to the International Chemical Investors Group (ICIG) for a price in the low triple-digit million-euro range.

The Essen-based company also said it would buy back shares worth up to 113.8 million euros including transaction costs.

The group will propose an annual dividend of 1.17 euros per share, unchanged from the last year.

Its 2023 sales fell 17% to 15.3 billion euros.

Sales at its performance materials division, which accounted for around 13% of the total, fell by 22% to 2.55 billion euros after the company sold a production site in Luelsdorf in June.

Evonik shares rose 3.7% at the market open before paring gains to stand 0.9% higher at 1111 GMT.

($1 = 0.9216 euros)

(Reporting by Anastasiia Kozlova and Matteo Allievi in Gdansk; editing by Jason Neely, Kirsten Donovan)

((Anastasiia.Kozlova@thomsonreuters.com; Matteo.Allievi@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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