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Strong business performance continued - Record earnings expected in 2010
Key Financial Data January 1 - September 30, 2010 / Q3 2010
- Net income almost quadrupled in the first nine months
- New historical earnings record for Chemicals
- Increase in cash flow, further reduction in net financial debt
- Investment for further growth under way
"The third quarter remained strong; the first nine months were excellent. We are very pleased with our business," commented Klaus Engel, Chairman of the Executive Board of Evonik Industries AG today, when the Group published its key financial figures for the third quarter and first nine months of 2010. In the Chemicals Business Area in particular higher global demand, a substantial improvement in capacity utilization and effective action to raise efficiency lifted earnings considerably. "At the end of the first nine months earnings in our Chemicals Business Area are on course for a historical record," commented Engel. The Energy Business Area also posted a considerable improvement.
Evonik expects the business trend to remain positive in the fourth quarter and also gave more detailed guidance for the full year: "We anticipate excellent results with sales growth of more than 20 percent," said Engel. At the same time, Evonik has initiated strategically important investment projects to ensure that the growth trajectory continues in the long term. These include the planned construction of a production facility for methionine for feed additives in Singapore and increasing capacity for precipitated silica for the tire, feed, food, coatings and colorants sectors in Asia and Europe. Evonik already ranks among the global market leaders in both businesses and now aims to strengthen them selectively in growth markets.
The positive business trend in the first nine months of 2010 enabled Evonik to grow both sales and all earnings parameters significantly compared with the first nine months of 2009. The Group's sales climbed 24 percent to €11,887 million (9M 2009: €9,590 million). EBITDA (earnings before interest, taxes, depreciation and amortization) surged 55 percent to €2,276 million in the first nine months of 2010 (9M 2009: €1,468 million) and the EBITDA margin was 19.1 percent, well above the year-back level of 15.3 percent. EBIT (earnings before interest and taxes) increased 93 percent to €1,689 million (9M 2009: €873 million), driven by considerably higher demand and improved margins. All three business areas, especially Chemicals, contributed to this rise.
The non-operating loss of €165 million principally comprised expenses for pensions in the UK and for the On Track efficiency enhancement program. Income before income taxes from the continuing activities was €1,118 million. That was €745 million (199 percent) more than in the previous year. Overall, the net income of the Evonik Group almost quadrupled to €790 million in the first nine months of 2010 (9M 2009: €211 million).
The considerable rise in the operating result in the first nine months of 2010 brought a significant increase in the cash flow from operating activities to €1,360 million. That was €101 million above the good yearback figure despite the rise in net working capital as a result of the significant upturn in business. Capital expenditures amounted to €479 million. A pilot plant for the manufacture of key ultra-high purity products for the semiconductor sector was started up successfully in Rheinfelden (Germany) and preparations are now under way to raise output. In Nanning (China) Evonik started up a new production facility for pharmaceutical active ingredients. In addition, a new production facility for precious metal powder catalysts for the pharmaceuticals sector and for fine and industrial chemicals came into service in Shanghai (China). Evonik used the cash flow to finance investments, pay the dividend of €320 million for fiscal 2009, and reduce net debt substantially. Net financial debt has decreased to €3,027 million, a drop of €404 million since year end 2009 and €1,556 million lower than at the start of 2009.
Group's third quarter performance improved considerably year-on-year
The good business trend seen in the first six months continued unabated in the third quarter of 2010. Group sales increased 24 percent to €4,088 million (Q3 2009: €3,309 million) due to higher demand worldwide. EBITDA advanced 18 percent to €744 million (Q3 2009: €629 million). EBIT improved 26 percent to €541 million (Q3 2009: €430 million) as a result of higher earnings contributions from all three business areas. Net income rose 55 percent to €260 million (Q3 2009: €168 million).
All three business areas posted an improvement in the first nine months of 2010
The Chemicals Business Area developed extremely well in the first nine months. Sales grew 31 percent to €9,593 million (9M 2009: €7,316 million) thanks to increased volume sales (18 percentage points) and higher selling prices (10 percentage points), principally because this business area was able to pass on higher raw material costs to customers. EBITDA increased by €707 million to €1,874 million (9M 2009: €1,167 million). EBIT grew €710 million to €1,400 million (9M 2009: €690 million), driven mainly by higher volumes, improved capacity utilization and better margins. All business units increased their earnings considerably year-on-year.
The Energy Business Area also reported a significant improvement yearon- year. Sales increased 7 percent in the first nine months to €1,977 million (9M 2009: €1,849 million) driven by higher volumes and rising coal prices. EBITDA rose by €124 million to €389 million (9M 2009: €265 million). EBIT climbed €128 million to €326 million (9M 2009: €198 million). Alongside higher earnings contributions from German and foreign power plants, this was principally attributable to coal trading, which was held back by one-off factors in the first nine months of 2009.
In the Real Estate Business Area, sales were essentially unchanged yearon- year at €280 million in the first nine months (9M 2009: €279 million). EBITDA increased by €5 million year-on-year to €138 million. EBIT was €103 million, €5 million above the prior-year figure, mainly because of the favorable development of property management.
Outlook: Excellent results expected in FY 2010
The Evonik Group expects the positive business trend to continue in the fourth quarter, although seasonal factors mean that it will not match the very good figures reported for the previous quarters. Overall, Evonik assumes that it will report an excellent performance in fiscal 2010. Thanks to sustained high global demand, it expects to grow sales by more than 20 percent over the full year. EBITDA and EBIT will be considerably higher than in the previous year. The Group anticipates that the Chemicals Business Area will post an especially successful development and report a historical EBIT record.
In so far as forecasts or expectations are expressed in this press release or where our statements concern the future, these forecasts, expectations or statements may involve known or unknown risks and uncertainties. Actual results or developments may vary, depending on changes in the operating environment. Neither Evonik Industries AG nor its group companies assume an obligation to update the forecasts, expectations or statements contained in this release.
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