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Methionine price declines to level out: Evonik

By Jane Byrne

03-Mar-2017

© istock/ermetico72
© istock/ermetico72

Evonik said lower prices in its animal nutrition business was one of the main reason for a 13% drop in fourth quarter earnings in 2016.

The average selling prices for methionine were lower than 2015, said the German chemical company.

The amino acid producer predicted that price declines, though, would level out early in 2017.

Q4 2016 earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for one-offs, declined to €437m ($460m).

Adjusted net income for FY2016 decreased 18% to €930m, said Evonik. 

Its adjusted FY2016 EBITDA was €2.165bn, a 12% reduction from the previous year’s results. Volumes grew by 3% in 2016 but sales dipped 6% to €12.7bn.

Animal nutrition volume hike

Ute Wolf, Evonik CFO, speaking on a call with analysts, said Q4 volume growth in animal nutrition was above its nutrition and care segment average.

“For methionine, we also expect sequentially slightly lower volumes in Q1 [2017] after this strong Q4,” she added.

In Q1, the CFO said the company expects continued strong development in the majority of its nutrition and care businesses.

“Overall, we are convinced that the underlying growth drivers and the supply-demand trends of the industry are well in check,” said Wolf.

In terms of outlook, from the macroeconomic perspective, the CFO said Evonik expects slightly more positive dynamics coupled with increased uncertainties:

“This [perspective] is not only due to specific challenges in various emerging countries - here we expect only Brazil and Russia to come out of recession in 2017 - but [it is] also due to a higher political risk in North America and Europe. In this environment, we are, nonetheless, convinced that our businesses will continue on their successful paths.”

The company forecasts solid earnings growth for 2017 and expects an adjusted EBITDA in the range of €2.2bn to €2.4bn. 

Executive changes

Evonik CEO, Klaus Engel, is to step down after the company’s annual shareholders meeting on 23 May. He has had that position at the Essen headquartered company since 2009.

Current Evonik strategy chief, Christian Kullmann, is to replace Engel as CEO.

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