Evonik is cutting jobs in Germany

The crisis in the chemical industry is also affecting Evonik. The specialty chemicals company plans to cut around 2,000 jobs, most of them in Germany.

The specialty chemicals group Evonik is responding to the industry crisis by cutting jobs. The company intends to cut 2,000 of the approximately 33,000 jobs, around 1,500 of them in Germany. The Essen-based company announced this. The cuts will primarily affect management. The program is intended to reduce costs by around 400 million euros and the group should become leaner and more efficient, it was said.

Above all, cuts in management are planned, for example the number of hierarchy levels should be reduced. “We shouldn’t fool ourselves even with slight signs of recovery: what we are currently experiencing is not an economic fluctuation, but a massive, consistent change in our economic environment,” said CEO Christian Kullmann. Evonik produces, among other things, amino acid products for animal fattening, but also lipids for vaccines.

Group restructuring continues

The background is the difficult economic situation, which also affects Evonik. After a slump in sales and profits last year, Evonik expects only slight growth in 2024: “Evonik does not yet expect any real economic recovery in 2024,” the group said. Last year, Evonik achieved an adjusted Ebitda of almost 1.7 (previous year: 2.5) billion euros, with sales shrinking by 17 percent to 15 billion euros.

“The many crises worldwide have ruined our results,” said CEO Christian Kullmann. Overall, Evonik “got away with a black eye.” The general conditions are “not getting any easier”: “We will therefore continue our fundamental restructuring of the group,” emphasized Kullmann.

“A deep, long valley”

The entire chemical industry, a key German industry, is still suffering from comparatively high energy prices and the weak economy. In 2023, sales in the chemical and pharmaceutical industries fell by twelve percent to around 230 billion euros. Production fell by eight percent, and in chemicals alone it was eleven percent.

Evonik’s competitor Covestro recorded a 20 percent decline in sales last year. Industry leader BASF reported a decline in profits and sales for 2023. BASF is responding with savings programs and job cuts.

“We are in the middle of a deep, long valley. And it is still unclear how long we have to go through it,” the President of the Chemical Industry Association (VCI), Markus Steilemann, who is also Covestro boss, recently said. Demand for the industry’s products is experiencing a phase of weakness.

According to the ifo employment barometer, German companies are currently increasingly hesitant to hire new employees due to the uncertain future. In some sectors there are even signs of job cuts, commented the head of the ifo surveys, Klaus Wohlrabe.