ESSEN (dpa-AFX) - The long-running cost-cutting program and the sales trend in the Specialty Additives Business Unit are making the specialty chemicals group Evonik more confident about its earnings performance in the current year. Added to this is a price recovery in the Animal Nutrition Business Unit for the animal feed protein methionine. However, there was only limited tailwind from the economy, as a broad macro recovery has not yet materialized. Analysts had already expected the MDax group to continue its recovery. The share price fell on Monday, most recently by 1.8 percent.

Adjusted for one-off effects, earnings before interest, taxes, depreciation and amortization (EBITDA) are expected to be between 1.9 and 2.2 billion euros in 2024, compared to the previous target of 1.7 to 2.0 billion euros, as the Essen-based company announced on Monday.

According to data provided by the company, analysts' estimates as at the end of May were already at the upper end of the old range. Since then, however, there have been increasingly positive comments, such as last week from expert Chetan Udeshi from the bank JPMorgan.

Udeshi had pointed to a likely continuation of the earnings recovery in the second quarter, which would generally no longer be a surprise. In view of the bumpy development of demand at some other chemical companies, investors are therefore likely to wait for further improvements in the second half of the year before Evonik shares can continue to outperform.

In the current year, the shares have outperformed the Stoxx Europe 600 Chemicals with a plus of just under one percent compared to a minus of 2.7 percent. The shares of the chemical companies Lanxess and Wacker Chemie, which are also listed on the MDax, have lost around 20 and a good 9 percent respectively over the course of the year.

Based on preliminary figures, Evonik's operating profit rose by 29 percent year-on-year to €578 million in the second quarter, which was more than analysts had expected at the end of May. Sales stagnated at around €3.9 billion. Evonik plans to publish its final business figures on August 1.

According to analyst Chris Counihan from investment firm Jefferies, the strength in the second quarter was mainly due to factors specific to Evonik, and the signal effect for other chemical companies is therefore limited.

Looking at the business units, Specialty Additives' operating profit continued to recover thanks to higher sales volumes, better plant utilization and lower raw material prices. Adjusted EBITDA rose by 11 percent year-on-year to 220 million euros. Last year, the division had suffered greatly from weak demand, for example for additives for materials for the construction and automotive industries.

The Smart Materials division, which focuses on innovative materials for electromobility, disinfectants and accelerators for chemical processes, increased its operating profit by as much as 40 percent to 171 million euros. However, a year ago, a planned shutdown of a production plant for the high-performance plastic polyamide 12 had had a negative impact on top of the sluggish economy and high raw material prices.

Nutrition & Care doubled its adjusted EBITDA to 140 million euros and the Performance Material division with the C4 network of petrochemical additives for rubber, plastics and specialty chemicals increased its profit by almost 16 percent to 52 million euros.

In order to counter a difficult business environment, Evonik's management has been putting the brakes on costs for some time now, for example by not filling vacant positions and by cutting back on external service providers and business trips.

Irrespective of this, the Group is reorganizing its administration in order to adapt it to the corporate structure. As announced in March, up to 2,000 of a total of around 33,000 jobs will therefore be eliminated, around 1,500 of them in Germany. Once the program is completed in 2026, annual costs are expected to be around 400 million euros lower than before, and the first effects will already be felt in 2024./mis/lew/jha/