finnoexpert.com
Open in
urlscan Pro
2a02:4780:1:584:0:273b:f4d7:1
Public Scan
URL:
https://finnoexpert.com/2022/03/03/evonik-industries-evkif-ceo-christian-kullmann-on-q4-2021-results-earnings-call-trans...
Submission: On April 08 via api from DE — Scanned from DE
Submission: On April 08 via api from DE — Scanned from DE
Form analysis 5 forms found in the DOM
GET https://finnoexpert.com/
<form method="get" class="td-search-form" action="https://finnoexpert.com/">
<!-- close button -->
<div class="td-search-close">
<a href="#"><i class="td-icon-close-mobile"></i></a>
</div>
<div role="search" class="td-search-input">
<span>Search</span>
<input id="td-header-search-mob" type="text" value="" name="s" autocomplete="off">
</div>
</form>POST #
<form id="loginForm" action="#" method="post">
<div class="td-login-inputs"><input class="td-login-input" autocomplete="username" type="text" name="login_email" id="login_email" value="" required=""><label for="login_email">your username</label></div>
<div class="td-login-inputs"><input class="td-login-input" autocomplete="current-password" type="password" name="login_pass" id="login_pass" value="" required=""><label for="login_pass">your password</label></div>
<input type="button" name="login_button" id="login_button" class="wpb_button btn td-login-button" value="Login">
</form>POST #
<form id="forgotpassForm" action="#" method="post">
<div class="td-login-inputs"><input class="td-login-input" type="text" name="forgot_email" id="forgot_email" value="" required=""><label for="forgot_email">your email</label></div>
<input type="button" name="forgot_button" id="forgot_button" class="wpb_button btn td-login-button" value="Send My Password">
</form>GET https://finnoexpert.com/
<form method="get" class="tdb-search-form" action="https://finnoexpert.com/">
<div class="tdb-search-form-inner"><input class="tdb-head-search-form-input" type="text" value="" name="s" autocomplete="off">
<div class="tdb-head-search-placeholder">type here...</div><button class="wpb_button wpb_btn-inverse btn tdb-head-search-form-btn"
type="submit"><span>Search</span><i class="tdb-head-search-form-btn-icon tdc-font-tdmp tdc-font-tdmp-arrow-cut-right"></i></button>
</div>
</form>POST https://finnoexpert.com/wp-comments-post.php
<form action="https://finnoexpert.com/wp-comments-post.php" method="post" id="commentform" class="comment-form" novalidate="">
<div class="clearfix"></div>
<div class="comment-form-input-wrap td-form-comment">
<textarea placeholder="Comment:" id="comment" name="comment" cols="45" rows="8" aria-required="true"></textarea>
<label for="comment" class="is-visually-hidden">Comment:</label>
<div class="td-warning-comment">Please enter your comment!</div>
</div>
<div class="comment-form-input-wrap td-form-author">
<input class="" id="author" name="author" placeholder="Name:*" type="text" value="" size="30" aria-required="true">
<label for="author" class="is-visually-hidden">Name:*</label>
<div class="td-warning-author">Please enter your name here</div>
</div>
<div class="comment-form-input-wrap td-form-email">
<input class="" id="email" name="email" placeholder="Email:*" type="text" value="" size="30" aria-required="true">
<label for="email" class="is-visually-hidden">Email:*</label>
<div class="td-warning-email-error">You have entered an incorrect email address!</div>
<div class="td-warning-email">Please enter your email address here</div>
</div>
<div class="comment-form-input-wrap td-form-url">
<input class="" id="url" name="url" placeholder="Website:" type="text" value="" size="30">
<label for="url" class="is-visually-hidden">Website:</label>
</div>
<p class="comment-form-cookies-consent">
<input id="wp-comment-cookies-consent" name="wp-comment-cookies-consent" type="checkbox" value="yes">
<label for="wp-comment-cookies-consent">Save my name, email, and website in this browser for the next time I comment.</label>
</p>
<p class="form-submit"><input name="submit" type="submit" id="submit" class="submit" value="Post Comment"> <input type="hidden" name="comment_post_ID" value="71746" id="comment_post_ID">
<input type="hidden" name="comment_parent" id="comment_parent" value="0">
</p>
</form>Text Content
* Homepage
* market
* Trend
* news
* IND
* US
* Asia
* Business
* Entertainment
* Health
* Finance
* Politics
* Europe
* Opinion
* National
* Sci & Space
* Travel
* Sports
* Tech
* World
* Contact
* Privacy Policy
* Owners Info
* Disclaimer
Search
FINNOEXPERT
FINNOEXPERT
Sign in
Welcome! Log into your account
your username
your password
Forgot your password? Get help
Password recovery
Recover your password
your email
A password will be e-mailed to you.
* Homepage
* market
* Trend
* news
* IND
* US
* Asia
* Business
* Entertainment
* Health
* Finance
* Politics
* Europe
* Opinion
* National
* Sci & Space
* Travel
* Sports
* Tech
* World
* Contact
* Privacy Policy
* Owners Info
* Disclaimer
Sign in / Join
10.8 C
Munich
FINNOEXPERT
Saturday, April 9, 2022
Facebook
Twitter
Youtube
type here...
Search
* Homepage
* market
* Trend
* news
* IND
* US
* Asia
* Business
* market
S&P 500, Nasdaq Fall While Bonds Extend Selloff
SamarthPophale - April 9, 2022
market
Former Goldman Sachs Banker Convicted of Bribery, Money-Laundering in 1MDB
Case
SamarthPophale - April 9, 2022
market
Robinhood, EPAM Systems, Kroger and more
SamarthPophale - April 8, 2022
market
Peter Thiel Deems Buffett, Dimon, Fink Enemies of Bitcoin
SamarthPophale - April 8, 2022
market
Russia Cuts Interest Rate as Financial System Stabilizes
SamarthPophale - April 8, 2022
* Entertainment
* Health
* Finance
* Politics
* Europe
* EU Energy
Senate moves to ban Russian oil, revoke normal trade relations
SamarthPophale - April 7, 2022
EU Energy
Ukraine: EU must protect all children fleeing the war | News
SamarthPophale - April 7, 2022
EU Energy
Democrats spar with oil industry on gas prices, but GOP blames Biden
SamarthPophale - April 6, 2022
EU Energy
EPA moves to ban asbestos after decades of failures
SamarthPophale - April 5, 2022
EU Energy
Green Deal: Modernising EU industrial emissions rules to steer large
industry in long-term green transition
SamarthPophale - April 5, 2022
* Opinion
* National
* Sci & Space
* Travel
* Sports
* Tech
* World
* Contact
* Privacy Policy
* Owners Info
* Disclaimer
FINNOEXPERT
* Homepage
* market
* Trend
* news
* IND
* US
* Asia
* Business
* market
S&P 500, Nasdaq Fall While Bonds Extend Selloff
SamarthPophale - April 9, 2022
market
Former Goldman Sachs Banker Convicted of Bribery, Money-Laundering in 1MDB
Case
SamarthPophale - April 9, 2022
market
Robinhood, EPAM Systems, Kroger and more
SamarthPophale - April 8, 2022
market
Peter Thiel Deems Buffett, Dimon, Fink Enemies of Bitcoin
SamarthPophale - April 8, 2022
market
Russia Cuts Interest Rate as Financial System Stabilizes
SamarthPophale - April 8, 2022
* Entertainment
* Health
* Finance
* Politics
* Europe
* EU Energy
Senate moves to ban Russian oil, revoke normal trade relations
SamarthPophale - April 7, 2022
EU Energy
Ukraine: EU must protect all children fleeing the war | News
SamarthPophale - April 7, 2022
EU Energy
Democrats spar with oil industry on gas prices, but GOP blames Biden
SamarthPophale - April 6, 2022
EU Energy
EPA moves to ban asbestos after decades of failures
SamarthPophale - April 5, 2022
EU Energy
Green Deal: Modernising EU industrial emissions rules to steer large
industry in long-term green transition
SamarthPophale - April 5, 2022
* Opinion
* National
* Sci & Space
* Travel
* Sports
* Tech
* World
* Contact
* Privacy Policy
* Owners Info
* Disclaimer
Finance
EVONIK INDUSTRIES’ (EVKIF) CEO CHRISTIAN KULLMANN ON Q4 2021 RESULTS – EARNINGS
CALL TRANSCRIPT
By SamarthPophale
March 3, 2022
0
25
Share
Facebook
Twitter
Pinterest
WhatsApp
MUST READ
YANKEES BEAT RED SOX AFTER FAILING TO EXTEND AARON JUDGE
April 9, 2022
DISCOVERY COMPLETES ITS MERGER WITH WARNERMEDIA AMID FEAR OF ‘BLOODBATH’ OF
LAYOFFS
April 9, 2022
SC PULLS UP PROBE AGENCIES: ‘DO YOU WANT EVERYONE BEHIND BARS?’ | INDIA NEWS
April 9, 2022
ARTISTS AND MUSICIANS ARE GETTING A NEW SOURCE FOR AID IN THE NEW YORK STATE
BUDGET.
April 9, 2022
SamarthPophalehttps://finnoexpert.com
Evonik Industries AG (OTCPK:EVKIF) Q4 2021 Earnings Conference Call March 3,
2022 8:00 AM ET
Company Participants
Tim Lange – Head, IR
Christian Kullmann – CEO
Ute Wolf – CFO
Conference Call Participants
Sebastian Bray – Berenberg
Martin Rödiger – Kepler Cheuvreux
Geoff Haire – UBS
Georgina Fraser – Goldman Sachs
Chetan Udeshi – J.P. Morgan
Jaideep Pandya – On Field Research
Thomas Swoboda – Société Générale
Charlie Webb – Morgan Stanley
Operator
Dear ladies and gentlemen, welcome to the conference call of Evonik Industries
AG. At our customers’ request, this conference will be recorded. As a reminder,
all participants will be in a listen-only mode. After the presentation, there
will be a question-and-answer session. [Operator Instructions].
May I now hand you over to Tim Lange, who will start the meeting today. Please
go ahead.
Tim Lange
Thank you very much and good afternoon to our Q4 Earnings Conference Call. With
me as usual are our CEO and CFO, Christian Kullmann and Ute Wolf.
And I will hand over directly to Christian for the introductory remarks.
Christian Kullmann
Thanks a lot, Tim. And also very warm welcome from my side and thanks a lot for
being with us today.
Under this, let’s keep it like the very special and varying circumstances.
There’s one Europe. This was hardly imaginable until a few days ago, but now in
the year-end now, it is our reality. Less than two flight hours away from
Germany, people are dying from tank and missile fire. Immediately after the
attack on Ukraine, we, at Evonik, have set up a task force to assess the
situation on an ongoing basis. Evonik has 59 employees in the region, three in
Ukraine and 56 in Russia. We’re in constant exchange especially with our
colleagues in Ukraine via SMS, or social media. We will do everything we can to
support our employees, and, if necessary and possible bring them to Germany.
Our first priority now is to alleviate human suffering, and provide help where
we can. And that is exactly what we will do. I hope and I will pray for the
people of Ukraine,
Under these circumstances, it is really difficult to switch to daily business
and a conference call on financial figures. We will nevertheless try to do so
for the next hour.
As a disclaimer right at the start, our outlook and forward-looking statements
are based on our currently observable, positive sales and order book
development. As anybody else, we are currently not able to assess the impact on
the war in Ukraine on the overall economic development. For our company, the
different business impact is limited with only 1% sales share in Russia and
Ukraine, of which the biggest part is from signing. With no production in the
region we are not impacted by any direct tensions. We are monitoring the
situation closely on all levels: IT security, international payment flows,
procurement and energy sourcing. So we are prepared and will take the
appropriate measures. So far, our introduction and personal statements on the
latest developments.
Let’s try the hard cut and switch to the latest development of Evonik’s. Ladies
and gentlemen, let me start with a look back in the rearview mirror. Exactly one
year ago in March 2021, here on this call, I shared with you my confidence about
2021 as the year of growth and progress. And despite the headwinds in the second
half of the year, we grew EBITDA double-digit versus the pre-crisis year 2019.
And we were able to convert this at a high cash conversion rate with free cash
flow beating the 2019 level by even 32%. And these results are not, are
definitely not one-hit wonder. They extend and even accelerate our long-term
growth track record since 2017, when we as management team have taken over. Our
ambition level for 2022, we’ll strive to outperform our EBITDA growth rate of
the last two years and deliver the fifth year in row with higher free cash flow.
Chart 5 describes a track record of the last three years in more detail, which
can certainly be characterized as not being the easiest. Let me briefly
summarize it in two sentence. First, by never losing the long-term view by
consistently executing our strategy, and by constantly improving the quality of
our portfolio, we delivered on our promises. Here, we even upgraded our guidance
in two of the last three years, something I could really get used to.
An element which has become a more and more important growth driver for us over
the last years is sustainability. Here are some highlights across our four
defined sustainability-focused areas. They are not only nice shiny examples, but
real growth drivers of our business, which is expressed as a growing share of
next-generation solutions within our group sales from 35% to 37%.
SEPURAN membranes as one example, since the first product launched in 2011, we
have now delivered gas separation membranes to more than 1,000 reference plants
worldwide. The business is growing at 35% per year.
Continuing on Chart 9, the other essential growth driver for us is innovation.
Well, actually sustainability and innovation are two sides of the same coin for
us. Also for innovation, just one, but therefore impressive figure.
On our way to reach our target of more than €1 billion sales in our six
innovation growth fields by 2025, we already achieved more than €500 million in
the last year. This is growth rate of above 40% in the last year, which is well
above the actually necessary 25% annual growth rate to reach the €1 billion
target.
So it is unnecessary to say that we are very well on track here. The high-growth
clearly show the acceleration in the commercialization of those innovative
products. Healthcare Solutions like our lipid for mRNA or active cosmetic
ingredients like our ceramides are just two examples.
Ladies and gentlemen that was a brief strategic revenue of the last year. Now
Ute will shed some more light on the fourth quarter results.
Ute Wolf
Thank you, Christian, and good afternoon from my side as well.
Let me start with Chart 14 has a good summary of the fourth quarter. We had to
master some challenges during the quarter. There was a power plant outage in
Marl that has cost us €20 million for externally sourced energy. A further sharp
increase in raw materials impacted especially our two divisions, Specialty
Additives and Smart Materials. Additionally, Specialty Additives was hindered in
volume growth due to raw material and supply chain shortages and deliberately
the business decided to be a higher logistic costs to secure reliable customer
servicing. The Smart Materials division continued to cope with higher fixed
costs like linked to the PA12 ramp-up. And Baby Care had another most likely the
last quarter of unfavorable contract prices.
The good news about these negatives is that all of them are fading out, but even
turning positive throughout the current year. And on the other side, the
positive trends observed in Q4 will continue or even accelerate in 2022.
One of the very positive trends are the healthy volumes across virtually all
businesses, as well as the continuous and further accelerating pricing campaigns
in Specialty Additives and Smart Materials.
In Performance Materials, we see a normalization in butadiene. But the other
product of our C4 chain, namely Butene-1, OXO products, and Specialties are
expected at sustained positive spreads into 2022 and they stand for 70% of our
C4 chain. And as you know, Performance Materials and the product spreads benefit
from a higher naphtha price; this is the natural hedge in our portfolio against
higher oil prices.
Nutrition & Care had a strong finish of a very successful year 2021. The three
drivers behind that were the ramp-up of lipid sales, the outstanding sales
growth of more than 50% in active cosmetic ingredients, as well as rising prices
at healthy volumes in amino acids. And again, all of them will even accelerate
in 2022. So fading negative and accelerating positive, this is a nice headline
for the year 2022.
Let me spend some more time on raw materials and pricing initiatives. On Group
level, our own price increases amounted to around €600 million in Q4 after €450
million in Q3. They already overcompensate the cost inflation effects. This was
mostly visible in Performance Materials and Nutrition & Care and explains their
strong performance in Q4.
In Specialty Additives and Smart Materials, both the Specialty character of the
business as well as another sharp increase in raw materials like siloxane or
silicon metal resulted in a gap to yet fully compensate the higher costs.
Nevertheless, we have reached already around 80% in costs on in Q4. The negative
gap in 2021 will turn into a positive gap in 2022 or to put it differently, the
EBITDA burden in 2021 would turn into a positive EBITDA contributor in 2022.
On the cash flow side, we came out at €950 million and received conversion rate
of 40% in line with our long-term target level. Free cash flow in Q4 came out
well below last year’s level. This had two main reasons. First, we observe the
expected higher tax prepayments adapting to the higher earnings levels. Second,
clearly lower net working capital inflows. This on the one hand was caused by
valuation effects in inventories based on the inflated price levels. On the
other hand, inventories and goods in transit were tied up in the system due to
inefficiencies in logistics, and to avoid the risk of shortages. The latter we
were in 2022 and turn into a clear free cash flow support. Taking the full-year
perspective on cash flow again, we were able to grow significantly in absolute
terms for the fourth consecutive year, and by more than €230 million compared to
the pre-crisis year 2019.
With that back to Christian for the outlook.
Christian Kullmann
Thanks a lot, Ute.
Let’s dive into our full-year outlook. Again, let me repeat, the disclaimer from
the start of the call. Our outlook and forward-looking statements are based on
our currently observable positive sales and order book development. As anybody
else, we are currently not able to assess the impact of the war in Ukraine on
the overall economic development. But based on the confidence in our resilient
portfolio, and our proven ability to manage challenging times, the direction is
crystal clear. We are well set for growth in 2022. Resilient businesses like in
Nutrition & Care, the positive price trends in amino acids for Animal Nutrition,
and to natural hedge in Performance Materials against higher oil prices, support
this ambition level despite the uncertain economic environment.
We aim to achieve an adjusted EBITDA between €2.5 billion and €2.6 billion. This
range expresses our confidence in our strong structural growth in our
sustainability and innovation achievement as well as the ramp-up of our pricing
initiatives. The narrow range is a sign of trust, of trust in our resilient
portfolio quality, and based on the conviction that virtually no business has
over-earned in 2021. And as of today, I can report that was a pretty good start
into the year. This is reflected in the guidance for the first quarter of at
least 10% EBITDA growth year-on-year, which is even above the upper end of the
full-year guidance range.
On free cash flow; the high cash conversion rate achieved in the last years is
the level we will sustain going forward. Accordingly, we guided cash conversion
on a high prior-year level of around 40%. Based on the guidance higher EBITDA
level, this translates into a higher absolute cash flow number for 2022 for the
fifth year in a row.
Let me close our presentation with the Save the date. We today spoke about the
importance to have a clear strategy and just stick to its consistent execution.
Therefore, we continue to work on our strategic agenda and adapt — sorry and
adapted to the ever-changing environment. So on May the 11th, my board
colleagues and I invite you to our Capital Markets Day. On this occasion we’ll
give a strategic update.
But you will agree that there’s no reason for revolution of a successful
strategy over the last years rather than evolution, it is the next
transformation period. Going along with this, we will focus in more detail on
two main growth drivers of our portfolio: first, sustainability; and second,
innovation.
With that ladies and gentlemen, thank you for your interest and your time so
far. And now we are happy to take your questions.
Question-and-Answer Session
Operator
Ladies and gentlemen, we will now begin our question-and-answer session.
[Operator Instructions].
The first question is from Sebastian Bray, Berenberg. Your line is now open.
Please go ahead.
Sebastian Bray
Hello, good morning and thank you for taking my question. Good afternoon, I
should say. I’ve a, two please. The first one is on the cash flow. I don’t know
if this was mentioned in previous quarters. But could you please just elaborate
on what the €145 million settlement for previous M&A transaction refers to. Is
that all remaining amount that was for the finished plant on PeroxyChem. But I’m
not quite sure if it was that magnitude. So what is this amount please? And my
second question is on the margin development in Nutrition & Care. This is quite
positive if it continues for the next let’s say two, three years the specialties
continue to take share and so on. Is it fair to say at the moment i.e. in q4,
the margin made in Methionine was pretty similar to the margin made in Health &
Care? Thank you.
Ute Wolf
Yes, good afternoon, Sebastian. I’ll start with cash flow. These are purchase
price adjustments from our meticulous sale and another settlement which is a
little bit older. When we sold carbon black there was a dispute of the — in with
regard to the U.S. Clean Air Act, which was also settled this year. These two
should make up the biggest part of this €145 million.
Christian Kullmann
Okay, and then I’ll take the second question. I also from my side good to hear
and I guess your assumption is fair to say that the margin development in
Methionine and in Health & Care are quite similar. So, yes, I would agree about
your assumption.
Operator
Mr. Bray, we couldn’t hear you at the moment. Could you please repeat if you had
anything else to say?
Sebastian Bray
No. Apologies if you couldn’t hear me. I said thank you for taking my questions.
I’m happy to pass on.
Operator
All right. Thank you. [Operator Instructions].
And the next question is from Martin Rödiger, Kepler Cheuvreux. Your line is now
open. Please go ahead.
Martin Rödiger
Yes, thanks, and good afternoon. I have three questions. First is on energy
costs. Can you disclose what has been the active energy costs in the year 2020
and in the year 2021? What is your expectation for 2022? And what would be the
level based on today’s energy prices if your energy hedges are running out? The
second question is on the signing. I was bit surprised to see your announcement
about the investment in the U.S. I understand it’s a quite lucrative investment.
But this is a capital intensive business. So can you please explain how this
investment fits to your strategy of focusing on low capital intensive
activities? And the third question is on free cash flow guidance. I’m still try
to get my head around that you expect significantly lower net working capital
outflows. But it should be clear that selling price are further rising, input
costs are rising, volumes are rising. So what makes you confident that net
working capital will shrink in 2022? Thanks.
Christian Kullmann
Hey Martin, good to hear you, Christian speaking. First of all, it is to
underpin that our Methionine business we would take this business as a cash cow.
And in this respect, nothing has changed. Second, having said so, it means that
we have to constantly and continuously increase the efficiency and to improve
our cost position. It is not about being the market leader it is about being the
cost leader. And following this idea I would invite you attending tiny revenue
into the past that we have closed our Methionine production for example in
ethylene that we’ve started a lot of activities to currently reduce costs coming
out of a double-digit million cost savings per annum. And now, I would just say
okay, from a strategical point of view, that we do have three main hubs all over
the world, one in Asia, Singapore, one in Europe, Antwerp and one in the United
States of America, which is in Mobile, Alabama. And here, it is need to better
our cost positions over the course of the next year. So in other words, this
investment in U.S. cash cow helps us to extend and to expand our leading cost
position for Methionine in North America and we will definitely benefit from
this nicely. So we will see here significant annual savings of about €15 million
more — a little bit more than €15 million. And it is worthwhile to mention that
it will have an increase the supply security, which is needed to make sure that
we could provide our customers with a sufficient amount of Methionine.
So to sum it up, no change of strategy in this respect but because following the
strategy we have given to you that in Methionine is a cash cow. It is time by
time niche to better hear our cost position. And this is a good opportunity
we’re going to tackle. With this, I do hand over to Ute.
Ute Wolf
Yes, thank you, Martin, good afternoon.
First, on the energy cost. We had energy costs in 2021 of around €700 million.
The comparison with 2020 makes only limited sense as 2020 with COVID, of course,
was not a normal year. I think for this year, we will see another €200 million
€250 million increase maybe a little bit more depending on the overall gas price
and market situation. We are hedging three years in advance. Of course, the
first year has a very higher hedge rate. And then the following years has lower
hedge rates. We have increased the hedge rates a little bit already back in last
year. So from that point of view, I think we’re pretty well-positioned here.
Please keep in mind that the discussion on high gas, particularly the European
one, in the U.S. or in America, and in Asia, we have a different picture. So and
of course we will always see, we have to see the full group. I think to
speculate what would it be without hedges is somewhat I think, going very far
because you never know when would you buy. So I think we should leave it with
the numbers. We know and not with the numbers that might come depending on
whatever scenarios. Of course higher energy costs are part of our pricing
initiative and in some of the products we have also energy prices as part of
pricing formulas. So a big part of that will be passed on to our customers.
The question regarding networking capital is a very valid one. You are right; we
had quite a build-up of in last year. And of course now as raw materials are
still rising, that goes into the valuation of our inventories. But of course, we
are also rising prices on the sales side. And this year, that should
overcompensate the rise in raw mat and energy. So from that point of view, from
Q2, and Q3 onwards, we will have also more cash in from our receivables. And
this is how we look at it. So first quarter, I think will still be influenced by
this rising raw material prices. But then I think in the consecutive quarters,
step by step that should in the end level out.
Martin Rödiger
Thank you. Can I have a follow-up question on the free cash flow in general, the
free cash flow guidance? On Page 35, I see that you’re also factoring M&A in the
free cash flow. So are there any disposed proceeds baked in your free cash flow
guidance for 2022?
Ute Wolf
I don’t know which Page 35 you mean?
Martin Rödiger
On the presentation.
Ute Wolf
M&A is not — M&A is not part of our free cash flow. Its CapEx is in that —
Christian Kullmann
I think that’s the — that’s the net debt which we refer to cash flow.
Ute Wolf
Net debt, yes. And net debt of course that’s non-divestiture [ph] but not in the
free cash flow.
Operator
The next question is from Geoff Haire, UBS. Your line is now open. Please go
ahead.
Geoff Haire
Good afternoon. Thank you for taking the questions. Two questions for me. You’re
clearly guiding to 10% EBITDA growth in Q1. But I look at the midpoint of your
2022 guidance for the year at 7%. So it’s a slowdown as we go through the rest
of the year. Just talk a little bit about what that’s relating to, or is it just
cautiousness? And then secondly, I was just wondering if you could give us some
thoughts on how we should think about the LNP sales for 2022 given we are seeing
COVID, obviously easing in the Northern Hemisphere, at least, as we go through
this year.
Ute Wolf
So I’ll start with Q1, Geoff, good afternoon. LNP is Christian’s favorite topic.
Yes, so I think what we see is really customer demand is strong across all
divisions. Now, we really see continued strong and resilient demand. And we see
that our price increases are accepted quite well and go through quite well. Yet
also, strong order book in our industry-related businesses. So the consumer
side, of course, there is still some pent-up demand, but also in
industry-related business.
As we said, of course, we are now having another increase in raw material energy
logistics as I said. But as I said, the price increases accelerate further. And
as described, they will outpace the cost increase on the energy and materials
side.
From that point of view, we have a strong start to the year. That’s why we give
that very positive guidance. Of course, you might argue it is more positive than
a full-year but on the other side, we have more visibility on Q1 than on the
full-year. So maybe I think that explains why your math is not working between
Q1 and the full-year.
Christian Kullmann
Okay. I will take the second question about the lipids. And yes, I’m really
excited about the business because it is one of our growth drivers in future. So
last year, we’ve crossed €100 million revenues for mRNA and the lipid-based
therapies. It was split it up, one half was about pure lipid production and the
other half that is worthwhile to mention was about development and manufacturing
of a very complex parenteral lipid nanoparticle system. Taking this in
consideration, this translates for me and for the company and hopefully for you
into higher sales in 2022.
And why am I excited about the future of this business? Yes, as of today, it is
focused on fighting the Corona pandemic. But in future, there is much more
growth we do expect from different opportunities and options like for example,
fighting cancer and a lot of other ideas we do have. And here in this respect,
we have already started deep discussions and negotiations with a lot of
potential customers. And they’re really keen on making use of our capabilities
to foster their own ideas about this brilliant new technology.
So sum it up, good startup, good amount of revenues we have reached last year.
And this year, we will definitely see higher sales in this area of mRNA and
lipid-based therapies, if I compare it to the last year. So you talk to a CEO
which is filled up with hope and confidence about the future of this business.
Please forgive me that I’m talked about a little bit more excited about it, than
you might have expected it. But I’m really here convinced about and therefore,
forgive me on my bold statement about the future of our business in this
respect.
Geoff Haire
And can I just follow-up on that is the growth in 2022 expected to come from
more from lipids or the delivery systems that you’re developing or both?
Christian Kullmann
From both. Take it as a mixed, a pretty nice mixed picture. So from both sides,
we do expect a similar growth. And if I look to our order books, they are
already filled up so yes, from both sides.
Operator
The next question is from Georgina Fraser, Goldman Sachs. Your line is now open.
Please go ahead.
Georgina Fraser
Hi, thank you. Good afternoon, Christian and Ute. And firstly, I just want to
thank you for your sincere words related to the difficult context in which
you’re running your business and we’re all working in. And I know there are
various scenarios that are impossible to predict. But I was wondering if you
could describe the key end market assumptions that you made in the guidance
range that you gave today. And maybe if you could break out, how much of your
growth is driven by capacity expansion versus margin recovery? And my second
question is that we have seen limited wage inflation in recent years. But we are
undeniably in a strong inflation environment. And so I was just wondering if you
factored in higher labor costs in your outlook and if so, at what rate? And then
I have one final question. And on the lipid business, would Evonik prefer to
grow in capabilities organically or are acquisitions in this field also
possible? Thank you.
Christian Kullmann
Good to hear you. Thinking about our strategy in respect of enhancing, of
expanding and extending our lipid capacities, we do not have in mind here to
tackle M&A opportunities. Here it is to grow organically because we do have the
capacities. We do have the staff to do it on our own. And by the way, it is not
so costly, if we would do each year in this respect with M&A. So we will focus
on our own investments in organic growth so far.
The second about higher labor costs and the inflation. I do not worry about it
because I’m convinced that the Head of the Trade Union, Michael Vassiliades,
will have good and fruitful and open-minded negotiations and the outcome of this
will be that we stay reasonable. So I do not hesitate about the results of those
kinds of discussions. There have been some more questions maybe, Ute you could
assist.
Ute Wolf
Yes, I’ll take the first one the key end market assumptions and key growth
drivers. I think we should go through this division by division. If we look at
Specialty Additives, here of course we have cross linkers with high volume
demand in their applications. We have comfort installation where there is also
some pent-up demand. We have oil additives that were constrained last year as
raw material shortages and logistic constraints were limiting their growth. So I
think there it is really a mix of yes, demand growth, better usage of
capacities.
If we go to Smart Materials, of course, here is a big driver, our new PA12
capacity. So here is clearly one driver, the new capacity. But also, if we look
at the other businesses like Active Oxygen they have seen good growth in 2021,
both in the traditional and also in the specialty applications. And we have
enough capacity to grow the business also this year.
If we look at coating additives, I think also here, good growth, I think that is
what really drives the growth in the more material-oriented division.
If we look at Nutrition & Care, we discussed it here and there already. We have
good demand in our overall Animal Nutrition, good price levels, for all the
amino acids and we’ve seen many, many years and very, very solid and healthy
demand and volume growth.
If we look at Care Solutions, again, they increase the sales with our active
ingredients dramatically. They are working on that. They have two smaller M&A
acquisitions that they integrate, of course, that will fuel growth. And so I
think that is for that Care Solutions.
Healthcare we discussed with our lipid nanoparticle business, but also with
other applications where we have a good pipeline with Pharma Polymers growing at
very, very good margins over the last year. I think that more or less describes
the picture that we have in our outlook.
Operator
The next question is from Chetan Udeshi, J.P. Morgan. Your line is now open.
Please go ahead.
Chetan Udeshi
Yes, hi. Thank you for taking my question. Yes, I had one question. Maybe this
is for Christian, given that you also Head of the German Chemical Industry
Association. I mean, it’s a broader question, how do you see this huge spike in
energy prices impacting the German chemical industry and the competitiveness of
the industry? I’m not asking this from a Q1 or Q2 perspective, it is more a
philosophical question from a — same the structural perspective. And second, I
mean, the Q1 guidance, can you — is it driven, is that growth driven primarily
by Methionine prices? Or do you see other segments also contributing to that
more than 10% growth for the Group earnings?
Christian Kullmann
Chetan, good to hear you. And by thinking about how to answer your first
question I try to answer your second one. And to be very clear about this, it is
not, not exclusively driven by Methionine. It is broad and therefore, bright
growth in all areas of our businesses. So it is, let me say, very well
underpinned in Smart Materials and Specialty Additives and in Nutrition & Care
too. And sometimes to give a little bit more color about this. Sometimes Caspar
Gammelin, the Head of the Nutrition & Care Division with a twinkled eye looked
at me, and said Christian do you know what, I’m little bit not really satisfied,
because it is so attractive growth rates. We do have in Care Solutions. And in
our healthcare business, they are not really treasured for example by the
Capital Markets, because everybody is talking about Methionine and Methionine.
So having said this, now coming to your first question, that is, I should try to
differentiate the answer a little bit splitting it up. And saying first of all,
those German companies who are global players, they could definitely better in a
better way balance the energy prices out, because they do business all over the
world. And here, the energy prices the uplift of energy prices is really let me
say present some kind of pressure on the Mid Cap companies here in Germany,
because they do not have the chance of diluting the increase of those energy
prices.
But second it is — there is definitely worthwhile to mention being in touch with
the Minister of Economy Mr. Habeck in Berlin. We are in good speaking terms
about the question how he could have to ease the energy prices here in Germany
impacting German industry overall. And in this respect, I’m confident that we
will create over the course of the year might be not some kind of that we will
not be able to resolve it. But I’m confident in that we will find a way to
relieve those energy prices here for German industry. So my first answer was
very concrete. And my second answer was, as you have expected it more on the
level of a philosopher, but I’m not.
Operator
The next question is from Jaideep Pandya, On Field Research. Your line is now
open. Please go ahead.
Jaideep Pandya
My first question really is around your competitive landscape, especially
focusing on Wanhua, who is potentially a very small competitor today, but going
to enter PA12 soon I mean in the next year or so, and then, the move from them
to also signal entry into Methionine. So just when you look at your competitive
landscape today, given you guys are so downstream, and you’ve had technology,
advantage, and innovation advantage over the years? I mean, what is your intel
on new competition especially on products, where it’s been sort of, if I may use
the word in few hands, a few company hands technologies over the years? That’s
my first question. The second question, to you Christian, is really around the
share price and I apologies for asking this question. But, you’ve done a
fantastic job over the last four years in EBITDA growth and in cash flow as
well. But share price remains between €25 and €30. From your point of view, I
mean, what is it that you guys want to do to unlock value here? Is it a share
buyback? Is it a special dividend? Or is it — how is your conversations with
your anchor shareholder for that matter? Because, frankly, for me, this is the
biggest puzzle is to what you could do to sort of breach €30? Thanks, a lot.
Christian Kullmann
Pleasure. Maybe, let me start with the first question the competitive landscape.
And here in respect talking about Wanhua, you would make a brilliant mistake to
underestimate the potentials and the perspectives of Wanhua and that is a
mistake we do not want to do. Second, the more specialty technologies,
businesses, markets are the more it is about customer intimacy, the better the
position of Evonik in the respect for example of PA12 is. And as you could see,
as you could observe, there is a remarkable delay of Wanhua to ramp-up their
PA12 capacities in here in comparison to us, we are frontrunner. So to sum it
up, I do like competition, because that is the best chance for us to make the
difference. And each and everybody is re-invited to tackle our markets and to
see what will come out of it. Competition helps us to become better.
Second, “Oh hey” that’s a very German phrase. It’s close to goodness gracious if
I look and Ute the same to our share price, we are really let’s keep it like
this. I’m disappointed and as you know, as the members of the extended Board of
Directors, our shareholders so if anything else, than sufficient if I look to
the development of our share price. What could we do? It is not about thinking
about super dividends or super somewhat ever something else. It is about to
remain and to stay put to our strategy, which translates into good EBITDA
growth, which translate into good free cash flow growth over the course of the
last five years in a row. And I’m confident and I brought my sleeves up for it.
And I’m going to work my knuckles bloody for it to make Evonik together with Ute
and the members of the extended Board of Directors, a better company. And
therefore, I’m convinced that there will be a point of time when this blossoming
up of the company will be recognized by the present investors and that will have
to lift the share price up. So stay put, move ahead, roll our sleeves up, work
our knuckles bloody and create more and better growth and more and better growth
perspectives. That is what I do have in mind about the business — that is what
we have in mind about thinking about the future.
Operator
And the next question is from Thomas Swoboda, Société Générale. Your line is now
open. Please go ahead.
Thomas Swoboda
Yes, sir. Good afternoon, everybody. I have two questions, two related on your
portfolio clean-up opportunities. Firstly, on Baby Care, I heard you saying that
the contracts are set to roll-forward and that the margins are said to improve.
I think there is also an anti-dumping probe in the U.S. which should have
earnings. So I figure this business could become very quickly triple-digit
EBITDA again. So my question here is, is it fair to assume that Baby Care is
finally to go out this year? Or do you still have hopes that you could get more
forward if you wait for another year? And secondly, on Performance Materials,
and Performance Intermediates, I think, if I remember correctly, your cash flow
issues in the past were partly keeping you from up — from thinking in a
divestment. I mean that that looks fixed now, congrats by the way. Is it time to
revisit, is it time to think of Evonik excluding Performance Materials? Thank
you.
Ute Wolf
Yes, Thomas. Good afternoon. Baby Care, yes, as we described last year, they
still had unfavourable price cancellations. But that really turned with the new
contracts that started this year. So the earnings are improving here. And as you
rightly said, the anti-dumping cases will help, will support that. I think the
final decision in Europe will come somewhat in April or May, in April. And I
think the U.S. then, later in the year. So what we have done, we have prepared
Baby Care technically, the carve-out is completed. And now we will then see the
operating performance and then decide when is the right time to start the
process. I think normally it makes more sense to have somewhat positive track
record. So I think that might take just be one or the other quarter before we
start the official process here.
Yes, before I think that question also is some kind of evergreen for us.
Performance Intermediate is a cash generator for the group. This is how we run
it. And I think at this point in time, we do not invest into growth here from
that point of view, that’s how we do. If we look at the portfolio, we really
take a step by step approach. We divested M&A, we carved our Baby Care. We are
now preparing the sale of some smaller parts of the portfolio for Functional
Solutions. And this is how we look at it.
And generally speaking, of course if you want to sell something, you have to
prepare the business for divestment. And then of course, you have to see that
you have a good ideally the best timing in the cycle. So this is how we look at
this.
Operator
And the next question is from Charlie Webb, Morgan Stanley. Your line is now
open. Please go ahead.
Charlie Webb
Good afternoon, everyone. Thanks for taking the questions. Maybe just
following-up on Thomas’s question there, Ute, around divestitures. So just, also
you mentioned, what’s kind of currently underway that when you look at the
portfolio, I guess other parts like I’ve seen have kind of come up with
essentially non-core and other bits and pieces. So just wondering, where are we
and in terms of the divestitures opportunities or restructuring opportunities,
as you look at the portfolio today, I mean, perhaps last year, just a bit more
detail on other parts that may be in scope looking ahead? And then just second
question on PA12 and thinking about the ramp up there. Can you help us
understand what the ramp costs were in the second half of 2021? And just how we
should think about its contribution this year as it gets fully ramped
[indiscernible]?
Christian Kullmann
Charlie, good to hear you. I’ll take the first question and Ute will take the
second one. About divestment candidates, it is an easy one. Because the
businesses we do have in our non-core Performance Materials division, they are
flagged as non-core review, it means that it is next step is to know [ph],
taking this in consideration. It’s all about timing, to sell the Baby Care
business. And we’ve started a process to find a solution for our sites in
Germany close to Cologne in Lülsdorf, that is, if I look to it, good amount of
the Financial Solutions business line. And these are the next two steps. And
once again, Ute has already mentioned and it is worthwhile to repeat. All the
businesses we are — which are located in the division, Performance Materials are
non-core businesses. And here it is to work on them step-by-step.
And then you have asked if there is anything else — if so — as I said, anything
— some new ideas about what could be non-core or not. Here’s the answer. It’s an
easy one is two letters and one message. The two letters are an N and an O and
the message is no. And with this to Ute.
Ute Wolf
Yes, Charlie, good afternoon. On the PA12 ramp-up, it’s actually much more than
two letters here. The fixed costs last year were around €20 million roughly, as
soon as the facility is starting production. We expect significant positive
contribution because the market of PA12 is very, very split. So we knew the
market is really waiting for the materials that we’ll see a big ramp-up. And the
quick contribution here to EBITDA and maybe even somewhat more than we thought
originally, or the ramp-up takes a couple of years, but given the market
environment, and really the supply shortage in that market we think that we will
have a decent contributions in this year already.
Christian Kullmann
So, ladies and gentlemen this ends our call for today. Under these very special
circumstances and our thoughts and prayers are with the people of Ukraine. Thank
you for your attention and take care. This closes today’s call. Bye.
Operator
Ladies and gentlemen, thank you for your attendance. This call has been
concluded. You may disconnect.
Source link
RELATED
B.O.S. BETTER ONLINE SOLUTIONS LTD (BOSC) CEO EYAL COHEN ON Q4 2021 RESULTS –
EARNINGS CALL TRANSCRIPT
B.O.S. Better Online Solutions Ltd. (NASDAQ:BOSC) Q4 2021 Earnings Conference
Call March 30, 2022 9:00 AM ET Company Participants Eyal Cohen - CEO Moshe
Zeltzer - CFO Conference Call Participants Unidentified Analyst - Operator
Ladies and gentlemen, thank you for standing by. Welcome to the BOS Year 2021
Results Conference…
March 31, 2022
In "Finance"
WORKDAY INC’S (WDAY) MANAGEMENT ON Q4 2021 RESULTS – EARNINGS CALL TRANSCRIPT
Workday, Inc. (NASDAQ:WDAY) Q4 2021 Earnings Conference Call February 28, 2022
4:30 PM ET Company Participants Justin Furby – Vice President of Investor
Relations Aneel Bhusri – Co-Chief Executive Officer Chano Fernandez – Co-Chief
Executive Officer Barbara Larson – Chief Financial Officer Conference Call
Participants Kash Rangan – Goldman Sachs…
March 1, 2022
In "Finance"
ALLBIRDS’ (BIRD) CEO JOEY ZWILLINGER ON Q4 2021 EARNINGS CALL TRANSCRIPT
Allbirds, Inc. (NASDAQ:BIRD) Q4 2021 Earnings Conference Call February 23, 2022
5:00 PM ET Company Participants Kyle Khasigian - VP, Finance Joey Zwillinger -
Co-CEO and Co-Founder Tim Brown - Co-CEO and Co-Founder Mike Bufano - CFO
Conference Call Participants Jim Duffy - Stifel Lorraine Hutchinson - Bank of
America…
February 24, 2022
In "Finance"
Share
Facebook
Twitter
Pinterest
WhatsApp
Previous articleCleveland Fed President Mester says Ukraine war accelerates the
need for interest rate hikes
Next articleWhite House to share COVID-19 technology innovated by US government
with the WHO
- Advertisement -
MORE ARTICLES
CATERPILLAR STOCK: A SELL AS SIGNS OF A SLOWDOWN MOUNT (NYSE:CAT)
April 9, 2022
A BUY, SELL AND HOLD IN THE DEFENSE SECTOR
April 9, 2022
BIOXCEL: AT A TURNING POINT AFTER THE APPROVAL OF BXCL501 (NASDAQ:BTAI)
April 9, 2022
LEAVE A REPLY CANCEL REPLY
Comment:
Please enter your comment!
Name:*
Please enter your name here
Email:*
You have entered an incorrect email address!
Please enter your email address here
Website:
Save my name, email, and website in this browser for the next time I comment.
- Advertisement -
LATEST ARTICLE
YANKEES BEAT RED SOX AFTER FAILING TO EXTEND AARON JUDGE
April 9, 2022
DISCOVERY COMPLETES ITS MERGER WITH WARNERMEDIA AMID FEAR OF ‘BLOODBATH’ OF
LAYOFFS
April 9, 2022
SC PULLS UP PROBE AGENCIES: ‘DO YOU WANT EVERYONE BEHIND BARS?’ | INDIA NEWS
April 9, 2022
ARTISTS AND MUSICIANS ARE GETTING A NEW SOURCE FOR AID IN THE NEW YORK STATE
BUDGET.
April 9, 2022
CATERPILLAR STOCK: A SELL AS SIGNS OF A SLOWDOWN MOUNT (NYSE:CAT)
April 9, 2022
FINNOEXPERT
© FINNOEXPERT, LLC. All rights reserved. Finnoexpert® is a registered U.S.
trademark of tagDiv, LLC.
Facebook
Instagram
Twitter
VKontakte
Youtube
ABOUT US
* Entertainment
* Business
* market
* Politics
* World
* Tech
* Asia
* news
* Health
POPULAR CATEGORY
* market4930
* World4862
* Politics4747
* Asia4578
* Business4487
* Entertainment4412
EDITOR PICKS
YANKEES BEAT RED SOX AFTER FAILING TO EXTEND AARON JUDGE
April 9, 2022
DISCOVERY COMPLETES ITS MERGER WITH WARNERMEDIA AMID FEAR OF ‘BLOODBATH’ OF
LAYOFFS
April 9, 2022