Morningstar | Evonik Continues to Actively Reshape Its Portfolio
Evonik was publicly listed in 2013 by its majority owner, RAG-Stiftung, which still holds 67.9% of the shares. The company debuted as a conglomerate with energy and real estate divisions in addition to chemicals; however, those noncore businesses were quickly divested. Evonik's long-term goals include volume growth above GDP and an 18%-20% EBITDA margin through focusing on four growth engines: health and care, smart materials, specialty additives, and animal nutrition. In the company's current form, we think the EBITDA margin target will be tough to achieve. Consequently, Evonik continues to be active in reshaping its portfolio of businesses through acquisitions and divestitures.Evonik has a broad portfolio with 22 chemical divisions across three segments, plus the services segment, which primarily manages the company’s production sites. We think the resource efficiency segment (48% of EBIT) houses the most speciality products, while the performance materials segment (27% of EBIT) has the most commoditised products. Both of these segments can be characterised as industrial-focused, with the major end markets being automotive/transportation, most importantly, and construction. However, we think the resource efficiency segment benefits from switching costs, which have enabled stable margins despite the cyclical end markets.The nutrition and care segment (25% of EBIT) offers a blend of lower-value specialities and standardised products. However, its standardised offerings benefit from strong market structures and/or defensive, consumer-oriented end markets. The critical driver of this segment is methionine, an amino acid produced for animal feed.Steag, through its subsidiaries, is engaged mainly in power generation and related industries. Co.'s business is divided into five units: Power generation, Decentralized Energy Supply, Foreign Power Plants, Gas Distribution, and Coal Trading.
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