Evonik stays optimistic amid global crude price plunge

Sitting in a bright meeting room in Financial Street in western Beijing, Klaus Engel, chairman of the board of German industrial group Evonik Industries AG, looks cheerful and confident.

Engel was interviewed by China Daily after attending Premier Li Keqiang's meeting with foreign company leaders during the annual China Development Forum on March 23.

"China is working on rebalancing development and is focusing more on the quality of economic growth rather than quantity," he said.

"I have strong confidence to the country's economic growth in the following years and that it will bring growing demand as well as market opportunities to the company."

Engel said he was satisfied with Evonik's performance last year.

He has reason to be, given that last year was challenging for all petroleum and chemical industrial chain businesses due to the global crude price plunge.

Evonik, which is headquartered in Essen, performed well in tough conditions with a 2 percent increase in sales to 12.9 billion euros ($14 billion) for 2014.

The company had profits of 1.9 billion euros in the past year, a decline of 6 percent from the previous year but within the forecasted range.

In the past year, the petrochemical industry saw average price drops of 25 percent to 30 percent but Evonik achieved a solid financial profile by innovations, which are the driving force of the company's growth strategy.

Although the company didn't provide a breakdown of its profits and sales by country, Engel said, "We can be satisfied with the growth in China and the demand is picking up."

In 2014, Evonik invested 1.1 billion euros in new production facilities.

The biggest single investment in the company's history was the methionine complex in Singapore, which came on stream last year.

Engel said the company would continue to invest in production facilities as well as research and development globally and in China.

Looking to the future, he said China would remain a leading market due to its strength in demand compared to other countries and regions.

"For 2015, we have a reasonably optimistic expectation for the first quarter and the first half," Engel said.

Consumption will rise in emerging markets, which will improve the potential of sectors such as personal and household care, he said.

As the incomes of the Chinese middle class rise, more people can aford these products and services, Engel added.

He said the company would focus more on value-pricing products over cost-pricing products in order to benefit from the higher margins.

That is the reason the company plans to invest in businesses areas like nutrition and healthcare, according to Engel.

"We have to do our business in a smarter way," he said.

Seeing that the potential market for specialty silicones has continued to grow in recent years, which was mainly driven by the construction, textile, coating, furniture and appliance industries, the company expanded its site in Shanghai with a new production complex for specialty silicones.

"Optimization and expansion of the global silicone platform will effectively strengthen the position of Evonik as the world leader in specialty silicones," said Claas-J��rgen Klasen, president of Evonik Greater China region.

He said the demand for specialty silicones in Asia was particularly strong.

Thus, the company made the decision to serve the market better and position itself as a long-term reliable supplier.

"Innovations are a key element of our growth strategy," said Engel.

Aiming to become one of the world's most innovative companies, Evonik announced in April that it will invest more than 4 billion euros in R&D during the next decade.

Engel referred to such innovations as the "elixir of life" for the specialty chemicals industry.

Evonik's innovation strategy is guided by the needs of a growing population-nutrition, health, access to new technologies and conservative use of existing resources.

Resource efficiency and climate protection are the basis for numerous energy-efficient and environmentally sound products made by Evonik.

The company has a research and development center for coating additives with locations in Singapore and Shanghai to develop products for coatings and paint manufacturers in Asia.

Evonik also has a technology center in Taiwan to advise customers from the Asian display industry and its Medical Devices Project House in the United States works on innovations in medical technology. As modern companies are increasingly talking about sustainability, the concept has been rooted in Evonik for years with both the operation and products contributing to sustainable development.

During his trip to Beijing, Engel also attended the Evonik Meets Science symposium themed on industrial biotechnology.

"Based on the motto 'open innovation', Evonik works with academics in China to ensure the top research findings on sustainable aspects are transferred to the industry," said Engel.

"Today China owns numerous groups of world-class institutes and experts in chemistry.

"Evonik therefore attaches great importance to keep dialogues and cooperation with Chinese scientists."

Evonik established the Creavis Bio Lab in Shanghai in 2013 to develop biotechnological processes with yeasts that contribute to the future chemical business.

According to the company, products manufactured with biotech processes already generate several hundred million euros of sales for Evonik around the globe.

Evonik's biotechnology platform covers the entire bandwidth - from researching new stems and enzymes to a worldwide production network.

The company has multiple solutions on hand for environmentally friendly and resource-efficient mobility.

The silica system for "green tires" helps to reduce fuel consumption by up to 8 percent compared to conventional products, while innovative additives for high-performance lubricants help to lower it by up to 4 percent.

Furthermore, Evonik products for lightweight design such as composite materials hold the promise of further fuel savings.

dujuan@chinadaily.com.cn

(China Daily 04/29/2015 page18)