ESSEN (dpa-AFX) - The chemical company Evonik is cutting many jobs as part of an administrative reorganization. Up to 2,000 of a total of around 33,000 jobs will be cut, around 1,500 of them in Germany, as the MDax-listed company announced in Essen on Monday. Once the program is completed in 2026, annual costs are expected to be around 400 million euros lower than before, with the first effects already being felt in 2024. Thanks to these and other savings, the Essen-based company aims to at least slightly increase its operating profit in 2024 in a persistently difficult environment. The share price rose by 1.8 percent to €17.48 in the morning.

Evonik had already announced in September that it wanted to significantly streamline its administration on the basis of a model to be developed. "The first phase has now been completed," the company said on Monday when presenting its business figures for 2023. The new organization is to be established by the end of 2026. The number of hierarchical levels below the Management Board will be reduced to a maximum of six, and review and approval procedures will be significantly accelerated.

The approach is similar to that of the pharmaceutical and agrochemical group Bayer, which is also currently streamlining its administration in order to reduce bureaucracy and become more agile. As at Bayer, a disproportionate number of management positions at Evonik will also be affected by the cuts. "The Executive Board and co-determination will negotiate in the coming weeks how the planned job cuts will be organized in a socially responsible manner," Evonik explained.

Also on Monday, Evonik announced that it had found a buyer for its business in absorbent materials for diapers, for example. The superabsorbent business will be sold to the International Chemical Investors Group (ICIG) for a low three-digit million euro amount. The long-announced sale is part of the Group's reorganization with the intended separation from the standard chemicals business of the Performance Materials division, which, in addition to the superabsorbents, also includes the C4 network of petrochemical additives for rubber, plastics and specialty chemicals.

Looking at day-to-day business, Evonik CEO Christian Kullmann does not expect a quick recovery. Global growth will once again fall short of previous years - high inflation and restrictive monetary policy are having a negative impact, according to the annual report. Demand will therefore remain weak. "We must not delude ourselves, even if there are slight signs of recovery: What we are currently experiencing is not an economic fluctuation, but a massive, consistent change in our economic environment," said Kullmann according to the statement.

With expected sales of 15 to 17 billion euros, he is aiming for earnings before interest, taxes, depreciation and amortization (EBITDA) adjusted for special effects of 1.7 to 2.0 billion euros in 2024. This would be at least a slight improvement in operating profit. The average analyst estimates are within the ranges.

A recovery in the Animal Nutrition business with the animal feed protein methionine should help, while sales prices in the specialty chemicals businesses should remain stable or fall slightly. In this environment, Evonik intends to continue to cut costs. As early as 2023, vacant positions were not filled, external service providers were dispensed with, as were many business trips. The target of saving €250 million through such measures was achieved. In addition, investments last year were a fifth below the original plan.

Analyst Gunther Zechmann from Bernstein Research spoke of a deliberately cautious outlook, also because the first quarter got off to a very good start. Evonik said that the start to the year underpinned its targets for 2024, with the operating result for the first three months likely to exceed the €409 million achieved in the same period last year.

In 2023 as a whole, Evonik suffered a 17 percent decline in sales to just under €15.3 billion, with the operating result falling by a third to €1.66 billion. According to the information provided, the company can now look back on seven quarters without a noticeable upturn in sales.

The bottom line is a loss of 465 million euros - after a surplus of 540 million in the previous year. The loss is also the result of impairment losses on parts of the business.

Nevertheless, the dividend is to remain stable at 1.17 euros per share. The good free cash flow continues to allow such a distribution, said CFO Maike Schuh. The free cash flow increased slightly to 801 million euros in 2023 despite the decline in operating profit. This was also due to the reduction in net working capital, with inventories and receivables from customers falling./mis/mne/stk