BASF, Evonik, Lanxess and Co.: Signs of life from the German chemical business | EUROtoday

OkayA spherical of applause, no heckling, no spontaneous audio system from the viewers – the setting that the chemical firm Evonik had chosen for this yr's Annual General Meeting was as sterile as potential. For the second time in a row, Evonik held a purely digital Annual General Meeting, additionally to save lots of prices, as Evonik CEO Christian Kullmann emphasised with a severe look in entrance of a white wall.

The group has had a troublesome yr, and in 2023 Evonik needed to subject a revenue warning for the primary time in its historical past. Nevertheless, the group has nonetheless acquired off evenly and can develop extra strongly than the financial system as an entire once more this yr – thanks partially to constant cost-cutting measures. A glimmer of hope, not less than.

Evonik's Annual General Meeting might mark an early sign of a development reversal within the chemical business. Germany's third-largest export business has reported one piece of unhealthy information after one other in latest months: Lanxess shocked everybody with a major revenue warning within the second quarter of 2023, as did Sartorius and fertilizer producer Okay+S.

Covestro canceled its dividend for 2023, for the second time in a row. And the world's largest chemical firm, BASF, was additionally unable to flee the adverse development and responded with an intensive financial savings program. Across the business, a number of chemical corporations additionally introduced that they wished to speculate extra overseas as an alternative of in Germany as a result of troublesome situations.

But this adverse spiral could now be starting to be damaged. The Chemical Industry Association (VCI) sees the chemical business as being on the up once more. According to the affiliation, the business's overseas gross sales rose by 3.6 % within the first quarter of the yr in comparison with the earlier quarter. Business with prospects exterior Europe specifically has elevated.

“Our industry is finally getting a tailwind again. Foreign business is very important. Over 60 percent of sales are generated with customers abroad,” stated VCI chief economist Henrik Meincke. But regardless of the financial restoration in lots of overseas markets and the rising demand for chemical merchandise “Made in Germany,” the business shouldn’t be out of the woods but.

The VCI states that enterprise is constant to be “sluggish” within the home European market. Foreign gross sales in lots of areas are nonetheless considerably beneath their earlier yr's figures. In addition, gross sales alternatives are being dampened by value issues, notably in Germany. It is subsequently to not be anticipated that the chemical corporations will cut back the cost-cutting packages they’ve launched due to the disaster.

At the Annual General Meeting in Essen, Evonik CEO Kullmann spoke of a “strong start” to the fiscal yr, after the group was in a position to submit an adjusted end result considerably above the earlier yr's determine for the primary time after seven declining quarters. “For the second quarter, we see similar operating trends as in the first quarter, even though there is still no broad-based macroeconomic recovery in sight,” stated Kullmann.

The annual forecast of 1.7 to 2 billion euros for earnings earlier than taxes and depreciation can also be already “well-founded”. Despite the elevated confidence, nevertheless, it’s not but sufficient to regulate the forecast upwards, as Kullmann confused: “We prefer to act cautiously and conservatively and to stay on the better, safer side in program planning.”

Growing gross sales in Asia, the Middle East and Africa

A take a look at gross sales alone reveals how a lot Evonik's development has not too long ago been boosted by the Asia area specifically. According to the corporate, gross sales in China rose by 20 % within the first quarter in comparison with the identical interval final yr – in comparison with a 5 % decline in complete gross sales.

Other chemical corporations are additionally feeling the upswing. The Cologne-based specialty chemical substances firm Lanxess introduced that gross sales for market areas exterior Germany elevated by eight % within the first quarter of 2024 in comparison with the earlier three-month interval. The enhance was notably putting within the financial space of ​​Europe (excluding Germany), the Middle East and Africa, the place gross sales elevated by round 21 %.

In the Asia-Pacific financial area, gross sales elevated by round two % throughout this era. At the identical time, Lanxess confused that these figures solely characterize a “slight upward trend” and that “the figures are still significantly below the average of recent years.”

The chemical firm BASF from Ludwigshafen additionally recorded “an increase in exports from Germany to all regions” within the first quarter of 2024, in comparison with the fourth quarter of the earlier yr. “This increase in sales was mainly due to higher sales volumes,” BASF introduced.

At the identical time, the corporate stays cautious on the subject of making statements a couple of potential restoration within the business. “Whether this increase in volume was a temporary increase due to stockpiling or represents a structural improvement in demand will be shown by the further course of events in 2024,” BASF says. For instance, export gross sales from Germany – adjusted for the agricultural options section – had been “still declining in all regions” within the first quarter of the yr in comparison with the primary quarter of 2023.

The chemical corporations need to keep on with their financial savings packages regardless of the primary indicators of restoration within the business. BASF introduced that the introduced financial savings packages would proceed “unchanged”. The firm had already achieved financial savings of 600 million euros by the top of final yr. The headquarters in Ludwigshafen is especially affected by the financial savings packages. In complete, the corporate needs to save lots of round 2.1 billion euros per yr from the top of 2026.

Lanxess additionally states that the present figures have “no influence whatsoever” on the present financial savings program. For Evonik, a departure from the financial savings program introduced a number of months in the past can also be not an choice. “Our focus remains on liquidity and cost savings. The current savings program is continuing unchanged,” the corporate stated in response to a request from WELT. In March, the corporate introduced that it wished to chop 2,000 jobs worldwide, which might contain the elimination of 4 of the present ten hierarchy ranges.