Essen, Germany. Evonik today presented the next stage of its strategic development at its Capital Markets Day in Essen. The chemical company focuses on four strategic pillars: the differentiated setup of its portfolio in two new segments, sustainable innovations, a balanced regional footprint, and a culture of mutual respect and performance orientation.
With this strategic focus, the company aims to significantly increase its operational and financial performance by 2027. Return on capital employed, the company's key financial indicator going forward, is expected to reach around 11 percent. To this end, adjusted EBITDA is to increase by €1 billion compared to the base year 2023. This increase is expected to result equally from “Growth” and from “Optimization” of costs. The cash conversion rate, which Evonik has significantly improved in recent years, is to be maintained at the good level of over 40 percent.
“We are working consistently on two sides of the same coin – on our growth opportunities and on our costs,” says Chief Executive Officer Christian Kullmann. ”We used the economic crisis of 2023 as an opportunity to refine our strategy for the coming years and to set clear goals. These goals are ambitious – but we know the quality of our business and see additional opportunities, for example from economic stimulus programs in Germany and Europe.”
Evonik expects the approximately €500 million earnings increase from “Growth” to result from higher capacity utilization of new plants and from new products in the three Innovation Growth Areas. Evonik occupies attractive and resilient market niches such as fully biodegradable biosurfactants, catalysts for biodiesel, or innovative membranes.
Various cost-cutting programs will contribute a further €500 million on the “Optimization” side. These programs are already being implemented. They include “Evonik Tailor Made” as well as numerous initiatives in single businesses, like Animal Nutrition, Silica, and High Performance Polymers. The “ePro” program in procurement will also make a contribution.
“The majority of the measures, especially on the cost side, is in our hands,” says Chief Financial Officer Maike Schuh. “Through 2027, we will focus on implementing our growth, cost, and portfolio measures, improving our financial metrics and further strengthening our balance sheet by reducing debt,” says Schuh. “Until then, we are ruling out acquisitions – but this will create opportunities afterwards,” Schuh clarifies. ”The strong cash flow and the successful execution of the portfolio measures will make additional distributions to our shareholders an option in the coming years – in the form of share buybacks, for example.”
Two key sustainability targets are to be achieved by 2030: The share of revenue generated by “Next Generation Solutions,” Evonik products with proven superior sustainability benefits for customers, is expected to rise to 50 percent (2024: 45 percent). The company's Scope 1 and Scope 2 emissions are to be reduced by 25 percent. The remuneration of the Executive Board will be linked to the achievement of these financial and sustainability targets.
“At Evonik, we already stand for sustainable innovation and thus for the green transformation,” says Kullmann. ‘But we want to achieve even more in the future: We want to be the Superforce in our customers’ products and enable them to offer even more efficient and sustainable products with tailor-made solutions - in all market areas.”
Further documents and presentations are available on Evonik's Investor Relations website.