Evonik to cut 2000 jobs and sell superabsorbents business to ICIG amid economic headwinds
04 Mar 2024 --- Evonik is on a mission to cut costs, as it does not see the economy rebounding this year. Chairman Christian Kullmann says in a company press release, “The many crises around the world have put a damper on our results.”
Evonik plans to cut up to 2,000 jobs globally, which represents about 6% of its workforce, or €400 million (US$434 million). The company reported a net loss of €465 million (US$504 million).
By the end of 2026, Evonik says it will have completely restructured the company’s organization by “cutting down hierarchy levels, expediting decision-making and emphasizing core business operations.”
The German specialty chemicals giant is also selling its superabsorbents business — specializing in sanitary and non-hygiene applications — to the International Chemical Investors Group (ICIG). The move marks its second phase of divestment for its Performance Materials Division.
Divestment strategy
Evonik is selling five production facilities in Germany and the US, and the purchase price is expected to be in the low triple-digit million euro range. The closing is scheduled for later this year, pending approval by competition authorities.
In April 2023, ICIG previously acquired Evonik’s Luelsdorf site and associated businesses in Wesseling.
“In terms of its profile, the superabsorbents business no longer fits our character as a specialty chemicals company,” says Christian Kullmann, CEO of Evonik. “We have sought and found a reliable investor for it. Our company is thus taking the second step in divesting our Performance Materials Division.”
The superabsorbents business generated sales of €892 million (US$968 million) in 2023. Meanwhile, Evonik says ICIG has more than 6,200 employees and an annual sales figure exceeding €4.6 billion (US$5 billion). The group will acquire the entire division, including approximately 1,000 employees.
“ICIG has already proven to be a trustworthy partner in Luelsdorf that also keeps all its promises to employees,” says Dr. Achim Riemann, chairman of the supervisory board of ICIG.
“We know from experience that the superabsorber business is in good hands. With its high technological quality as a new platform within ICIG, the superabsorbents business will offer our group new opportunities for further growth.”
Evonik’s divestment strategy seeks to align its business portfolio with its “core strengths.”
Economic headwinds expected
Evonik does not expect to see an economic recovery this year.
Evonik does not expect an economic recovery this year.
“Overall, we got away with a black eye. We owe this, above all, to the great efforts of all our employees. However, the general conditions will not get any easier, which is why we will continue our fundamental revamp of the group,” says Kullmann.
Maike Schuh, chief financial officer at Evonik, adds: “In difficult times, the first order of business is to keep the money together. We have retained our ability to act. This was painful at times, but it was also successful. We will, therefore, continue these measures in the current year.”
In 2023, there was an 8% decrease in sales volumes and a 3% decrease in selling prices. High impairments and structural measures were the leading causes of Evonik’s net loss . This contrasts with the previous year’s net income of €540 million (US$586 million).
Nutrition & Care performance
Sales in the Nutrition & Care division dropped by 15% to €3.61 billion (US$4 billion), mainly due to negative exchange rate effects and decreased prices in the animal nutrition sector, highlights Evonik.
Overall, sales for Animal Nutrition were much lower than the year before.
While prices slightly improved, revenue in Health & Care fell due to lower volumes. The demand for pharmaceutical lipids for mRNA-based vaccines decreased, but active cosmetic ingredients performed well.
In previous updates, Evonik partnered with Jland Biotech last month to commercialize vegan collagen for cosmetic and personal care applications and invested in the Chinese company through its Venture Capital group.
By Venya Patel
