(Reuters) German chemicals group Evonik Industries said it did not expect an economic recovery in 2024 and announced up to 2,000 job cuts worldwide by 2026.
The job cuts are expected to reduce costs by $434.04 million annually, the company said, adding that the majority - some 1,500 - would be in Germany.
Chemical companies have been under pressure for more than a year, forced to reduce inventories on lower demand from industrial clients as energy prices soared.
"We will have to be prepared for the economic storm to continue in the global economy," said CEO Christian Kullmann on a conference call, adding that the company hopes customers will be in a position to benefit from the more recent fall in energy prices.
Evonik says economic recovery unlikely in 2024, plans 2,000 job cuts
Evonik, whose products are used in items from animal feed and diapers to Pfizer/BioNTech's COVID-19 vaccine, expects 2024 adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) in the range of $1.84 billion-$2.17 billion.
This compares with a 2023 result of $1.82 billion which fell short of the $1.84 billion expected by analysts.
The 2024 guidance is close to consensus and should reassure investors, JP Morgan said in a note.
Evonik, a market leader in the production of amino acids used in poultry feeds, said it would sell its superabsorbents business to the International Chemical Investors Group (ICIG) for a price in the low triple-digit million-euro range.
The Essen-based company also said it would buy back shares worth up to $123.5 million including transaction costs.
The group will propose an annual dividend of $1.27 per share, unchanged from the last year.
Its 2023 sales fell 17% to $16.6 billion.
Sales at its performance materials division, which accounted for around 13% of the total, fell by 22% to $2.76 billion after the company sold a production site in Luelsdorf in June.
Evonik shares rose 3.7% at the market open before paring gains to stand 0.9% higher.
