Germany’s €500 billion infrastructure fund receives cautious welcome from Evonik

Evonik Industries, the German specialty chemicals company, has expressed support for the government’s newly proposed €500 billion infrastructure fund and €46 billion tax relief package, highlighting the potential upswing for construction-linked products such as insulation additives, foam systems and tubing materials. The company projected cost savings of roughly €30 million in 2026 due to lower energy taxes. 

However, Evonik stressed that critical details remain unresolved – particularly the timing, allocation mechanism and pace of deployment, all of which could determine how effective the stimulus will be. The fund, announced by Berlin in recent weeks, is intended to bolster investment through to 2029. Although the stimulus could add up to 1 percentage point to Germany’s annual GDP growth, Evonik and the chemical industry are cautious because the country’s consumer and business sentiment remains weak.

Meanwhile, the company reported a weaker-than-expected Q3 performance today. Evonik Industries reported third-quarter 2025 adjusted EBITDA of €448 million, down 22% from €577 million in the same period last year but within the previously announced range of €420-460 million. The company said it had anticipated a late-year recovery that ultimately did not occur.

“The anticipated recovery in September failed to materialize,” said Christian Kullmann, Evonik’s CEO. “In the short term, this is painful. But longer term, it does not throw us off course.”

Revenue declined 12% to €3.39 billion (Q3 2024: €3.83 billion), reflecting lower sales volumes, the sale of the company’s superabsorbents business in August 2024, and adverse currency effects, particularly from the weaker U.S. dollar. Selling prices were largely stable, but reduced volumes accounted for about half the revenue drop. The adjusted EBITDA margin fell to 13.2%, compared with 15.1% a year earlier.

Free cash flow reached €300 million, below last year’s €357 million but continuing an upward trend through 2025. The company said disciplined control of investments and net working capital supported this improvement

“Many trends are going against us at the moment, so we had to adjust our expectations to this new reality in September,” said Claus Rettig, who has led Evonik’s finance operations since September 18. “Our adjusted targets for this year are achievable, and we are focused on the long-term, successful implementation of our programs to grow revenues and cut costs.”

Among those initiatives, the Evonik Tailor Made efficiency programme is advancing as planned. The company said its benefits – fewer management layers and lower personnel costs – are already visible, with 90% of all business lines expected to be restructured by year-end.

Evonik’s differentiated management approach is also showing results. In its Custom Solutions segment, focused on specialty and tailored products, prices rose 2% on average. Meanwhile, the Advanced Technologies segment limited volume losses to just 2%, which the company described as “solid performance in a weak environment.”

In the near future, Evonik expects subdued demand to persist through the end of the year. The company now forecasts full-year adjusted EBITDA of around €1.9 billion (2024: €2.07 billion), with a cash conversion rate of 30–40% (2024: 42%) and capital expenditure of roughly €750 million (2024: €840 million). Free cash flow should remain “at an attractive level,” while return on capital employed (ROCE) is expected to come in slightly below last year’s 7.1%.

Photo: Evonik's strategic innovation unit, Creavis, at the Marl Chemical Park, Germany [Evonik Industries]

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