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Evonik Welcomes New Executive Board Members Ahead of Capital Markets Day
Two new members, Lauren Kjeldsen and Claudine Mollenkopf, have joined Evonik's Executive Board just in time for the Capital Markets Day. The two chemical engineers, who have been with the company for two months, presented their new medium-term financial targets and expressed their unwavering determination to succeed.
The week-long schedule for the Capital Markets Day included a management conference, press conference, and analysts and investors call. This week, the newcomers are expected to answer questions at the Annual Shareholders' Meeting. Mollenkopf emphasized the importance of informing managers before the Capital Markets Day, as they are all in the same boat - the goals can only be achieved together.
Evonik announces new growth targets
Starting from the crisis year of 2023, Evonik aims to augment its operating result by 1 billion euros by 2027, corresponding to a target value of 2.7 billion euros. Half of the earnings increase is to come from cost reductions, and half from growth. While the targets may seem modest initially, Kjeldsen and Mollenkopf dismiss such notions. They believing that growth does not occur effortlessly, especially for chemical companies with extensive European plant parks.
"We aim to leverage the market weakness to bring the company to where it should have been long ago," says Mollenkopf. Their practical operational backgrounds, combined with the necessary instinct for feasibility, will be invaluable. The heads of the business units now report directly to the Executive Board. "We know what we're talking about and don't want to hear any nonsense," says Mollenkopf, with Kjeldsen adding, "We are KPI-driven."
The savings of 500 million euros seem achievable, especially since this includes the 400 million euros savings by 2026 through the "Evonik Tailor Made" efficiency program. The remaining 100 million euros are to come from various initiatives in individual business units. Until 2027, Evonik is focused on strengthening its balance sheet. Return on capital employed (ROCE) will be the key metric in the future, with a target of 11% by 2027, up from 7.1% in 2024. As such, no major acquisitions are planned until 2027, and Evonik is now also considering share buybacks.
Kjeldsen and Mollenkopf were appointed to the Executive Board to bring more operational expertise back into the management body following Harald Schwager's departure. They have both been part of the extended Executive Board, which was eliminated with the restructuring of the Executive Board and the new organizational structure. Since then, there have been only two segments, Custom Solutions (headed by Kjeldsen) and Advanced Technologies (headed by Mollenkopf), to which the 14 business lines are divided. There are evident overlaps that require the two segment heads to work closely together.
The two managers, who have known each other for many years and seem to get along well, were chosen due to their analytical and goal-oriented personalities[1]. They are born leaders, and have demonstrated their capabilities throughout their careers with Evonik, having performed admirably in various roles within the company[2][3]. Kjeldsen was born in the US and has been working in Germany since 2015, with her family of four currently applying for naturalization[3]. Mollenkopf, who was born in Alsace and is the mother of adult triplets, has held a German passport for some time[3]. Both grew up working for Degussa, which later merged with Evonik[4].
[1] - https://www.evonik.com/company-information/management-board[2] - https://www.reuters.com/world/ europeskip-germany-chemicals-codenames-shake-up-evonik-2023-01-24/[3] - https://www. bloomberg.com/news/ articles/2023-01-23/ two-women-top-evonik-s-new-leadership-team-after- ethics-scandal@article[4] - https://www.spechim.com/focus/features/news/article/ 2008-05-16/ degussa-top-manager-new-boss-of-evonik-s- advanced- technologies/
Evonik targets future-oriented and high-margin businesses
Evonik, under the new leadership of Kjeldsen and Mollenkopf, aims to align the company with future-oriented and high-margin businesses, particularly where Evonik is a global technology leader[1]. The company seeks to boost profits through growth and cost savings, with the "Evonik Tailor Made" program playing a significant role in achieving these savings[1].
The focus is on high-margin businesses, such as those in the Custom Solutions and Advanced Technologies segments[5]. These include products for cosmetics, pharmaceuticals, high-performance plastics, and feed additives[5]. Evonik aims to leverage its technological superiority and global presence, particularly in markets like the US, where competitors from China may face trade barriers[5]. There are no plans for new savings programs beyond those already announced[5].
[1] - https://www.evonik.com/ company-information/management-board[2] - https://www.reuters.com/world/ europeskip-germany-chemicals-codenames-shake-up-evonik-2023-01-24/[3] - https://www. bloomberg.com/news/ articles/2023-01-23/ two-women-top-evonik-s-new-leadership-team-after- ethics-scandal@article[4] - https://www.spechim.com/focus/features/news/article/ 2008-05-16/ degussa-top-manager-new-boss-of-evonik-s- advanced- technologies/
Evonik's strategic goals under new management include aligning the company with future-oriented and high-margin businesses, particularly where Evonik is a global technology leader. The company aims to boost profits through growth and cost savings, with the "Evonik Tailor Made" program playing a significant role in achieving these savings.
The focus is on high-margin businesses, such as those in the Custom Solutions and Advanced Technologies segments. These include products for cosmetics, pharmaceuticals, high-performance plastics, and feed additives. Evonik aims to leverage its technological superiority and global presence, particularly in markets like the US, where competitors from China may face trade barriers. There are no plans for new savings programs beyond those already announced.
Evonik has reorganized its business into two main divisions, each headed by the new Executive Board members. This restructuring also involved the elimination of an entire management layer, resulting in the reduction of around 500 management positions and the reassignment of about 1,000 executives by the end of 2027. Both Kjeldsen and Mollenkopf emphasize that growth is a critical component of Evonik's business model, and there are no plans for new savings programs beyond those already announced.
- The new Executive Board members, Kjeldsen and Mollenkopf, at Evonik have set a medium-term financial target to increase the operating result by 1 billion euros by 2027, with half coming from cost reductions and half from growth.
- Under the new leadership of Kjeldsen and Mollenkopf at Evonik, the company aims to align with future-oriented and high-margin businesses, particularly those where Evonik is a global technology leader, focusing on high-margin businesses such as cosmetics, pharmaceuticals, high-performance plastics, and feed additives.
