Evonik wants to become leaner and thus reduce costs. The job cuts should be carried out in a socially acceptable manner. The IGBCE union is calling for quick clarity for employees.
The chemical company Evonik wants to cut many jobs as part of an administrative restructuring. Up to 2,000 will be eliminated, around 1,500 of them in Germany, as the MDax group announced in Essen.
The reduction should largely take place through natural fluctuation, but also through severance programs. Once the program is completed at the end of 2026, the annual costs are expected to be around 400 million euros lower than before, and the first effects will be felt as early as 2024. Thanks to these and other savings, the Essen-based company wants to at least slightly increase its operating profit in 2024 in what remains a difficult environment.
No redundancies for operational reasons until 2032
At the end of 2023, Evonik had around 33,400 full-time positions worldwide, including around 20,000 in Germany. On Monday, the group announced the sale of its absorbent materials business, such as diapers. Around 1,000 people are employed in this area, 750 of them in Germany. However, these positions will not be counted in the planned job cuts. On Monday, the group reaffirmed its commitment from 2022 not to announce any redundancies for operational reasons until 2032.
The company had already announced in September that it wanted to significantly streamline administration. “The first phase is now completed,” it was said on Monday when the business figures for 2023 were presented. The new organization should be established by the end of 2026. The number of hierarchy levels below the board of directors will be reduced from ten to a maximum of six, and review and approval procedures will be significantly accelerated.
The approach is similar to that of the pharmaceutical and agricultural chemicals group Bayer, which is currently streamlining its administration in order to reduce bureaucracy. As with Bayer, a disproportionate number of management positions at Evonik will be affected by the cuts. “How the planned job cuts will be designed in detail in a socially acceptable manner will be negotiated by the Executive Board and co-determination in the coming weeks,” explained Evonik.
IGBCE: Making job cuts socially acceptable
In the opinion of the chemical union IGBCE, the announced structural changes must sustainably improve the group’s performance. “A pure cost-saving program would not do justice to the challenges the company faces,” explained IGBCE board member Alexander Bercht, who is also deputy chairman of Evonik’s supervisory board.
Clarity must be created quickly for employees as to how the work previously done will continue to be done without the 1,500 jobs that will be eliminated in Germany. “The job cuts must not lead to additional workload.” The planned job cuts in Germany must also be carried out in a socially responsible manner, “primarily through natural fluctuation and offers to employees to retire early,” continued Bercht.
In 2023 as a whole, Evonik had to accept a decline in sales of 17 percent to almost 15.3 billion euros and a fall in operating profit by a third to 1.66 billion euros. According to the information, the company can now look back on seven quarters without a noticeable increase in sales. The bottom line is a loss of 465 million euros – after a surplus of 540 million the year before. The loss also results from impairments on parts of the business.
Looking at day-to-day business, Evonik boss Christian Kullmann is not expecting a quick recovery. Global growth will once again lag behind previous years – high inflation and restrictive monetary policy are a burden, according to the annual report. Therefore, demand will remain weak.
Kullmann: Europe doesn’t need a “brown mob”
With expected sales of 15 to 17 billion euros, Evonik is targeting earnings before interest, taxes, depreciation and amortization (Ebitda) of 1.7 to 2.0 billion euros in 2024, adjusted for special effects. According to CFO Maike Schuh, the group result should be positive.
The dividend for 2023 is expected to remain stable at 1.17 euros per share. The largest individual shareholder with around 53 percent of the shares is the RAG Foundation, which must always pay the follow-up costs from German hard coal mining. The remaining shares are in free float.
With a view to the European elections, Kullmann took a stand against right-wing extremism. “An economically prosperous Europe doesn’t need one thing: a brown mob in the European parliaments and a brown mob that also tries to gain influence here.”
Source: Stern
