By Karol Badohal and Bartosz Dabrowski
(Reuters) -German chemicals group Evonik Industries on Thursday projected an upbeat view for 2022 after firming up 2021 core profit and sales guidance, citing improved business performance and higher pricing.
Evonik, whose products include chemicals for batteries and coolant lines of electric cars, derives almost one-fifth of its sales from the mechanical engineering and automotive industries, which have struggled to maintain production levels because of chip shortage this year.
Chief Executive Christian Kullmann, while speaking to analysts, named the automotive, animal feed and lipids businesses among potential growth drivers for the company next year.
"The underlying trend in automotive is strong," Kullmann told the conference call, adding that the company sees good potential for a strong rebound in the business in 2022, as he expects the logistical constraints to ease.
Kullmann said the prices of methionine, an animal feed ingredient Evonik produces, which have surged in recent weeks, would start to help the company's margin performance and price increases from the next month and would pay off in 2022.
He also said the company expected "significantly" higher sales of lipids, used in Pfizer/BioNTech's COVID-19 vaccine, next year versus 2021.
Evonik expects 2021 adjusted core profit of about 2.4 billion euros ($2.78 billion) and sales at 14.5 billion euros, both in the upper end of ranges the company had forecast at mid-year.
The Essen-based company also expects free cash flow to rise to about 1 billion euros in 2021, up from 780 million euros in 2020. Previously the company had said it expected an increase in free cash flow in 2021.
The company reported adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of 645 million euros ($747.23 million) in the third quarter, up 24% and slightly above analysts' forecast of 641.1 million euros in a company-provided poll.
"We think Evonik reported good results. The previous weak spot of Evonik – the FCF generation (free cash flow generation) – seems to be managed far better than in the past," said Baader analyst Markus Mayer.
"(Evonik) is seeing impact of the raw material and supply chain related headwinds as EBITDA margin came in 140 basis points weaker than consensus," Citi's Mubasher Chaudhry said.
At 1229 GMT Evonik's shares were down 0.1%, with their year-to-date increase just below 7%.
Germany is Europe's largest producer of chemicals.
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