Evonik trims capex as Q2 free cash flow falls on weak demand
Evonik Industries (ETR:EVKn) on Friday said it will reduce its 2025 capital expenditures by €100 million after reporting negative free cash flow in the second quarter, citing weaker demand, adverse currency effects and prolonged maintenance shutdowns, News.Az reports citing Reuters.
Free cash flow dropped to negative €211 million in the quarter ended June 30, down from €217 million a year earlier.
The German specialty chemicals company said the decline was due to increased net working capital and significantly higher variable compensation payouts for 2024.
Capex will be cut to about €750 million this year, down from the previous estimate.
Adjusted EBITDA fell 12% year-over-year to €509 million from €578 million, while revenue declined 11% to €3.50 billion from €3.93 billion.
More than half the revenue decrease was attributed to negative currency effects and the divestment of the superabsorbents business, which was still part of the portfolio in the year-ago quarter.
Sales volumes fell 4%, while prices remained largely stable. Longer-than-expected maintenance shutdowns, including at the polyamide 12 plant, also impacted performance.
“The economic situation clearly deteriorated in May and June,” said chief financial officer Maike Schuh.
Chief executive Christian Kullmann added that the quarter was marked by “weak demand and high uncertainty.”
Despite the weaker quarter, Evonik maintained its full-year guidance for adjusted EBITDA but now expects results at the lower end of its projected range of €2 billion to €2.3 billion, assuming the global economy does not weaken further.
Net income improved to €120 million, compared with a €5 million loss in the second quarter of 2024, which had been impacted by provisions related to the company’s cost-cutting program.
Return on capital employed is expected to be in line with last year’s 7.1%. The company still targets a full-year cash conversion rate of around 40%.
In the Custom Solutions segment, revenue declined 7% to €1.37 billion, driven by lower volumes and currency effects.
Demand was weaker for additives used in polyurethane foams, consumer durables and coatings. Adjusted EBITDA fell 10% to €254 million, with the margin slipping to 18.6% from 19.1%.
The Advanced Technologies segment reported a 1% decline in revenue to €1.51 billion.
While Animal Nutrition volumes increased and the hydrogen peroxide business benefited from a license agreement, overall sales in the Inorganics division were down due to demand weakness.
Organics sales declined amid competitive pressure and a planned maintenance shutdown.
Adjusted EBITDA was flat at €266 million, supported by contractually agreed one-off income. The margin edged up to 17.6% from 17.4%.
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