The German specialty chemicals group Evonik is currently executing a dual-track strategy that sees it contracting in one region while expanding in another. Simultaneously pursuing workforce reductions across Europe and a significant investment in Asian innovation, the company’s success will ultimately be measured by its ability to improve profitability margins.
Financial Performance Highlights the Challenge
The company’s recent financial results underscore the scale of the task ahead. For the full year 2025, Evonik reported a 7% decline in sales, which fell to €14.1 billion. While its adjusted EBITDA of €1.87 billion met market expectations, a key profitability metric deteriorated. The return on capital employed (ROCE) dropped from 7.1% to 6.1%, leaving it far short of the firm’s medium-term target of 11%.
In response to margin pressures, management has enacted several defensive measures. A 10% price increase for its animal feed product MetAMINO® was announced in early March, effective immediately for all global markets. Furthermore, the company has frozen all acquisition activities until 2027, shifting its focus squarely to organic growth and cost reduction.
The Growth Engine: Targeting China’s Beauty Sector
The centerpiece of Evonik’s organic growth plan is a major push into the Asian cosmetics market. China, the world’s second-largest beauty market, is the primary target. To capture this opportunity, Evonik is establishing an Asia Beauty Science & Innovation Center in Shanghai, scheduled to open in 2026. This facility is designed to accelerate the creation of tailored solutions for regional customers.
Should investors sell immediately? Or is it worth buying Evonik?
The company’s strategic direction will be on display at the PCHi 2026 industry trade fair in Hangzhou from March 18-20. Its product lineup for the event focuses on biotechnological ingredients for skin and hair care, including ceramides, anti-aging actives, and biosurfactants. A standout product is the emulsifier symbio®muls Aquasoft MB. Derived from rice bran and specifically formulated for the characteristics of Chinese skin, it has been nominated for the PCHi Fountain Award 2026.
The Efficiency Drive: “Evonik Tailor Made”
Running parallel to its Asian expansion is a substantial efficiency program internally named “Evonik Tailor Made.” This initiative is expected to result in the elimination of up to 2,000 positions, primarily within Europe, as the company seeks to streamline its operations and reduce its cost base.
Investor Outlook and Market Sentiment
Guidance for the current year reflects a cautious stance amid ongoing macroeconomic uncertainty. Evonik forecasts its 2026 adjusted EBITDA to land between €1.7 billion and €2.0 billion. This wide €300 million range itself indicates a highly unpredictable business environment.
Market sentiment appears bearish in the near term. Evonik’s share price currently trades approximately 35% below its 52-week high from March 2025. A Relative Strength Index (RSI) reading of 20 signals that the stock is deeply oversold. For investors, the critical question remains whether the Asian growth strategy can generate sufficient momentum to close the persistent ROCE gap and validate the company’s concurrent, and seemingly contradictory, strategic paths.
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