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Investing.com-- Evonik Industries (ETR:EVKn) saw its shares surge over 10% on Wednesday after posting a solid outlook for the first quarter of 2025, with expectations of improved performance in key divisions.
The company has already gained 12% year-to-date, reflecting investor confidence in a recovery. While fourth-quarter earnings missed estimates, Evonik maintained its full-year guidance and signaled strength in several areas of its business.
The German specialty chemicals maker reported an adjusted EBITDA of €388 million for the fourth quarter, 5% below estimates from consensus expectations of €408 million.
The underperformance was largely attributed to higher maintenance costs, healthcare inventory devaluation, and increased bonus provisions, which collectively had a negative impact of €20 million.
Group sales were €3.6 billion, surpassing J consensus forecasts of €3.56 billion, with volumes rising 4% but prices declining 2%.
Despite the weaker fourth quarter, Evonik maintained its full-year 2025 EBITDA guidance in the range of €2.0 billion to €2.3 billion, in line with consensus of €2.15 billion.
The company’s first-quarter 2025 EBITDA is expected to exceed the prior year’s figure of €522 million, with revised estimates now ranging from €525 million to €530 million, up from the previous consensus of €511 million.
Evonik’s divisional performance was mixed. Specialty Additives posted an adjusted EBITDA of €131 million, 11% below consensus.
Sales reached €828 million, in line with expectations, with volumes rising 5% but prices declining 3%.
The segment’s FY25 EBITDA is projected to be slightly above the prior year. Nutrition & Care recorded adjusted EBITDA of €126 million, missing consensus by 17%.
Sales totaled €962 million, ahead of consensus, with organic growth of 6%. Stronger demand and tighter supply in Animal Nutrition, along with healthcare sales exceeding prior-year levels, contributed to the division’s performance.
Smart Materials reported adjusted EBITDA of €106 million, 13% below consensus. Sales reached €1.11 billion, well ahead of consensus of €1.06 billion), with volumes up 6% and prices down 1%.
The segment’s FY25 EBITDA is expected to be significantly above the prior year. Technology & Infrastructure, which includes Performance Materials, saw an adjusted EBITDA of €23 million, outperforming consensus, supported by a revaluation of CO2 certificates.
Financially, fourth-quarter operating cash flow from continuing operations was €438 million, down from €703 million a year earlier.
Free cash flow for the quarter stood at €172 million, compared to €515 million in 4Q23, while full-year free cash flow reached €873 million, surpassing the consensus estimate of €823 million.
Net financial debt stood at €3.25 billion, representing 1.6 times net debt to adjusted EBITDA. The company declared a dividend of €1.17 per share, in line with Jefferies’ forecast.
Morgan Stanley (NYSE:MS) analysts noted that Evonik is positioned for a stronger first half of the year compared to its peers, aided by the stability of its portfolio.
However, they remain cautious about potential headwinds from pricing pressures, foreign exchange fluctuations, and European demand trends.
The analysts also highlighted that Evonik’s share price movement already reflects some level of anticipated recovery, which could temper further gains in the near term.