Evonik reported today that in 1Q18 its net income rose 97 percent to €291 million compared to €148 million in 1Q17. External sales grew 1 percent to €3.8 billion compared to the €3.6 billion reported in 1Q17. Despite the low increase in sales, Evonik managed to boost its net income due to a strong EBIT of €455 million in 1Q18 against €275 million 1Q17.
“The 1 percent growth is below our ambition,” said Ute Wolf, CFO of Evonik. “But for the first time since 2015 we have earnings growth in three segments. This is remarkable as earnings growth overcompensated the pretty pronounced impact of a weaker US Dollar and higher raw materials.”
Adjusted EBITDA also increased 14 percent to €679 million against the €595 million recorded in 1Q17. This was mainly caused by a steady earnings performance in all segments, a good operating performance and the positive contribution from synergies, according to the report.
“Strategy execution and earnings growth are and will remain key for us,” said Wolf. “Another element in our move to build a more balanced and more focused specialty portfolio is the investment into our new polyamide plant.”
The company’s free cash flow generation climbed to €84 million 1Q18, a 47 percent rise from €57 million in 1Q17. But the operating cashflow remained unchanged at €227 million. “This is a remarkable achievement,” said the CFO, referring to the meaningful FX headwind in all segments.
The FY18 guidance estimates a 3.3 percent global growth rate and a Euro/Dollar exchange rate of US$1.26. It also forecasts healthy underlying trends in most businesses and a synergy from air products and Huber. Cost savings are also expected to start supporting earnings.