Evonik Industries AG

XETRA:EVK

Earnings Call Transcript 2023-Q2

[Tim Lange, Head-Investor Relations]

Thank you very much, and good morning from our side here in Essen. With me are Christian and Ute for our – I know at some point, it would happen. On the second corollary with me are my most favorite CFO, Maike; and my most favorite CEO, Christian for the Q2 Earnings Call.

And with that, I hand over directly to Christian and Maike.

[Christian Kullmann, Chief Executive Officer]

Thanks a lot, Tim. And yes, of course, he's our best highly ranked and well gifted Head of Investor Relation ever. So it is forgiven. So thanks – and welcome also from my side, and thanks for being with us today. Exactly, one month ago on the 10th of July, we already published preliminary results. So you are aware of the key financials, and there was only limited news today. Hence, we will keep our introduction rather short and crispy. I will briefly review the current environment and the situation at Evonik, and how we act in response. And Maike will give you further details, mainly on free cash flow, cost management and our outlook for this year. So ladies and gentlemen, let's jump right into it and start with chart number 5.

So to start into the year, we all had hoped for an accelerating recovery in the course of the year. This has stayed nothing more than a hope, and Evonik is no exception here. We all have seen similar crisis before, the financial crisis in 2008, or the corona one in 2020. But this crisis is more severe, and especially longer lasting than any other crisis before. For five quarters now, we have been confronted with persistently weak demand and destocking by our customers. There are no signs of recovery yet.

And what is different this time as well in both previous crisis, there have been several businesses in our portfolio that has proven quite resilient. Many of our Specialty Additives, our businesses like the Catalysts and Care solutions have seen more or less stable EBITDA. In this particular crisis, virtually all of our businesses are equally affected by weak volumes and especially by customer destocking. For Evonik, specifically, what comes on top is an unprecedented earnings decline in our Animal Nutrition business. You could call this an unfortunate coincidence or simply pretty damn bad luck, because Animal Nutrition is typically unaffected by macroeconomic trends and downturns.

Over the last two crises it has even improved earnings. Or from a different point of view, it shows you that and how – that and how much any market is impacted by high inflation and customer destocking these days. The animal feed market, which has been characterized by steady and very healthy volume growth for decades, is now expected to show only modest growth for two years in a row. As far as I can remember, this is for sure, unprecedented. At the same time, methionine prices have been falling until recently, while prices for key raw materials such as propylene and ammonia have increased. As a result, our earnings in Animal Nutrition, which have only shown an average year-on-year swing of below €100 million over the last five years, are now 80% below the long-term average this year, which means close to breakeven in some months. This is, of course, pretty severe, but it might present an upside chance going forward, especially if you take the right steps and measures.

We have to improve our cost position. And that ladies and gentlemen, is exactly what we do by running our essential amino acid business with a leaner organizational structure and by improving our raw material supply in the U.S. We will reduce our cost base by €200 million by 2025 and €100 million of that will be realized in 2024 alone.

Prices are budding out and have even improved by a couple of cents since the end of the last quarter. Following of our two recent price increases in June and in July, raw materials like propylene or ammonia are coming down and volumes have picked up nicely over the recent years – sorry, over the recent months – forgive me, already.

In the fourth quarter of this year and in the first half of 2024, the necessary partial closure of our Singapore plant will effectively take out close to 10% of total market capacity for six months. And competitors have recently taken out capacity as well.

So while also the methionine market will remain challenging, there is a fair chance that our earnings in this business will recover from the current, absolute trough level.

That is all for me now. Now, dear Maike, it is your show, it is your turn to give and to show the right answers to the short-term challenges of this year.

[Maike Schuh, Chief Financial Officer]

Thank you very much, Christian. And yes, our environment is extraordinary. So it is important to focus all our activities over the next month in two things: cash generation and cost discipline. And our progress in both areas is already evident in the first half of the year.

On free cash flow, despite declining profits of more than €600 million, we were able to keep free cash flow almost stable. Lower bonus payments for the previous year and a significantly lower cash outflow from net working capital, helped by lower prices and lower sales, even led to an increase in operating cash flow compared to last year.

Less CapEx spend in H2, which is this year more H1 weighted and continued tight net working capital management, similar to last year's H2, will result in strong cash generation over the next six months.

We are also making good progress on our contingencies. By the end of June, we are fully on target for the €250 million of cost savings. We have achieved a run rate of 40% so far. Existing measures will ramp up further in H2. For example, the effect of our hiring freeze will be multiplied with every day in every open position, and we will intensify our efforts and implement further measures for the remainder of the year.

Before I come to our outlook, let me just mention the impairments we have booked on our half year financial statements. €300 million of the €400 million was in Animal Nutrition and is reflecting the current trough earnings in methionine and a rather conservative view ahead. Another €80 million was in silica. In Europe, the substantial increase of energy cost for precipitated silica has put pressure on the competitive environment and on our margins.

In the U.S., the site-specific increase of supply cost for raw materials, combined with a currently sluggish demand and more competitive environment has forced us to impair two assets. With these impairments, we have derisked our balance sheet, just like we did with our EBITDA outlook. For the latter, we now expect continued demand weakness without any recovery throughout H2. Based on this assumption, we expect Q3 to be around the same level as Q2. Similarly, for Q4, we expect the euro year-end seasonality of around minus 20% versus Q3. This will bring us pretty much in the midpoint of our €1.6 billion to €1.8 billion guidance range. Contingencies, lower raw material costs and the full availability of our PA12 capacities will give us support in H2.

The ambition level for our confirmed free cash flow outlook is higher with full intention. We aim to hold the tension level high across the whole organization for the remainder of the year. With the help of increased CapEx discipline and the lower CapEx guidance of €850 million in cash inflows from net working capital, the cash conversion is targeted to develop towards 40%.

With that, I hand over to Christian again.

[Christian Kullmann, Chief Executive Officer]

Thanks a lot, Maike. Ladies and gentlemen, will the environment remain challenging for the rest of the year? Most likely, yes. Have we implemented the right measures to face this environment early and proactively? Yes, of course. And we can do more. Guess what? Yes.

On top of the contingency measures in place and based on our assumption of no recovery in the second half of this year, we are now rolling out to measures to adjust our capacities to the ongoing weak demand situation.

We will reduce over time accounts. We'll utilize our global production network to mothball single sites temporarily. And we are starting with the, Germans call it Kurzarbeit, short-term work at selected sites. And, as always, we are learning from this crisis.

One thing is already clear, even crystal-clear. The strong cost awareness across all divisions and functions is only the starting point to make us better, to make us faster and to make us a more resilient company well beyond the current trough. With that, thanks for your attention and your time so far. And now we feel prepared and are ready to take your questions. Thanks a lot.

[Operator]

Our first question comes from the line of Ranulf Orr with Citi. Please go ahead.

[Ranulf Orr, Citi]

Good morning, everyone. Thanks for taking the questions. My first one is just on the EBITDA guidance for the full year. And I was wondering if you could help with the bridge. I think midpoint of guidance implies around €814 million, kind of similar to 1H. But you do, as you say, have things improving to PA12 plants, cost savings, lower raw materials. So kind of what's the offset on what's getting worse? That's the first one, please.

Secondly, just on the impairments and particularly Animal Nutrition, could you provide some more details around your forward assumptions behind this? And should we take it to mean you no longer see the market recovering to the historic mid-cycle levels.

And thirdly, just net debt, that jumped by €1 billion Q-on-Q. So how do you see this progressing from here? I'm pleased can you remind us what sort of maximum leverage you're comfortable with? Thank you very much.

[Maike Schuh, Chief Financial Officer]

All right. So I start with EBITDA full year guidance savings for H2 and maybe also some more detail on where we are, Ranulf. So maybe starting with the business group. As we mentioned before, we have really derisked EBITDA and our outlook for the whole year, assuming clearly no further recovery. And of course, on the one hand side, for now, no recovery is visible. So July and start of August or similarly low level as previous year.

What we – of course, on the one hand – on the other hand, see is that there are, what you mentioned, there are some underlying facts that should help us. Maybe starting with what seems totally negative. We have reached the bottom in terms of destocking in Q2, but the underlying demand will remain weak. The contingencies will continue to ramp up, that's what you mentioned, and we will take out fixed cost and capacities where we can to adjust the no-growth scenario.

Raw material costs are, of course, falling, but PA12 capacity will be available. And methionine prices are likely bottoming out in Q3. So the demand has been good over the recent months. What is – what I can do is by division, I think Specialty Additives, we have mentioned everything smart materials is the actually PA12 capacities that are coming into the market. Nutrition & Care, Q3 you are right, will be clearly better than Q2 and performance materials where there we see a further decline in butadiene prices. So we might face some headwind.

Phasing actually that’s what we mentioned before is that we see 30% or so lower in Q4 versus Q3. So if you just do the math, it’s yes, I don’t know. So it’s around €400 million, €450 million or so to Q3 and €370 million or so around Q4. That’s just high level. With regards to the impairment Animal Nutrition I hand over to Christian.

[Christian Kullmann, Chief Executive Officer]

Thanks a lot, Maike. In respect of the our assumptions for our impairment of Animal Nutrition, it is to say first that we do refer to the draft earnings level as it is as of today and maybe also going forward. And this is, as you know, that’s very conservative assumption. It is our – it is a conservative guess, so that it is reflecting to keep it up. In a nutshell, it is reflecting the current trough earnings in methionine and to address it actively with our new operation model refer to the current situation. I guess that is the answer to your question.

[Ranulf Orr, Citi]

Please help us with the third one. I think you asked for the current net debt level, is that correct or the current balance sheet level?

[Christian Kullmann, Chief Executive Officer]

Yes. No, I was just noted that it’s stepped up significantly quarter-on-quarter. So where does it go from here and what kind of leverage is acceptable for you going forward?

[Maike Schuh, Chief Financial Officer]

Okay. So Ranulf, I’ll take over again. So yes, you are totally right. The net financial debt growth to €4.1 billion at the end of Q2, which is the usual seasonality. So we face bonus payment and dividends in Q2. So if you compare that, for example, for to 2022, we had last year €2.8 billion mid-year, and then we lowered our financial debt again to €3.2 billion at year-end.

Very, very clearly. We are monitoring our balance sheet very closely and it has an extremely high priority today. That’s what I mentioned in our call today. So Evonik is financially solid, liquidity is strong, we have cash and committed credit lines, and we don’t have any bond maturities before Q3 2024.

Our credit ratings outlook were confirmed by Standard & Poor’s and Moody’s. But to be very clear, the total leverage will stay or will improve to from where we are now to where we are going forward and we don’t have so far and no interest in M&A deals. So again, balance sheets and net financial debt is very high on our list.

[Ranulf Orr, Citi]

Right. Thank you very much.

[Operator]

The next question comes from the line of Chetan Udeshi with JPMorgan. Please go ahead.

[Chetan Udeshi, JPMorgan]

Yes. Hi, thanks. Good morning. Just going back to your comment earlier about more capacity available in PA12, but I’m just curious, is there enough demand to fill that capacity? So can you comment on how do you see your – sort of your order books in general for that additional capacity that is now available in PA12? How quickly should we think about from a monetization and earnings uplift perspective?

The second question was this may be tied to the previous question just around Q3 versus Q2 across division? So if I heard Maike you correctly, you said Nutrition & Care smart materials and Specialty Additives will be clearly up versus Q2 and Q3, but PM will be down. What about the T&I business? Because you had a positive number there when typically you have quite a sizable negative, so is it going to turn negative again in Q3? And maybe it's worth also just talking about what is going on with that T&I line, because usually it is like high double digit million and now it's sort of positive. So just curious what is driving that? Thank you.

[Christian Kullmann, Chief Executive Officer]

Hi, Chetan. I take the first question about PA12 and to give you a marketing somewhat planned update. So maybe as a starter of the demand, the demand for PA12 is still intact and that is on a pretty attractive level. If you think about e-vehicles in auto – in the auto industry, if you think about PA12 cooling lines in this respect, here we do see a pretty good demand. That is for sure. And you should be aware of the fact that as of today, we have not seen any new competitor capacities in the market.

So I guess, the announcement of production style of new capacities in zinc produce from Arkema, there's an overdue and the – and there's no marketable grades we have seen as of today, no marketable grades from the Chinese. And taking all this in consideration and not to forget about the tightness, about the tightness in the market which is definitely to continue through the remainder of the year, taking all this in consideration, I am quite happy having chance to give you this kind of answer and by having done so, I convey to Maike.

[Maike Schuh, Chief Financial Officer]

Yes, thank you very much Christian and good morning Chetan also from my side. You asked about the extraordinary level of what you see in TI and others. So yes, you are absolutely right. T&I used to report a quarterly adjusted EBITDA between minus €30 million and minus €50 million in the last years. And we have a couple of specific effects showing now in this quarter, there is on the one hand side, the contingencies that are of course, especially in the others and often the T&I part are supporting the EBITDA. So contingencies are roughly in a low double digit million euro on group level, and large part of course of this are in T&I and others. Then we have the release of the bonus provision, again, double-digit million effect and largely or a large part again on T&I and others.

We have some smaller effects such as a higher utilization and higher efficiency of our power plants in Marl with the new setup, we have the release of the holiday provisions, which we show in June. We have the downward correction of leasing fees for our new gas power plants. So this all explain a positive deviation also from our pre-release.

You asked also Chetan about the upcoming quarters and they will continue to be supported actually, because contingencies will stay and also the bonus level, the smaller or the lower provision builder will stay. So we assume that it should stay much less negative than the past in Q3 and Q4, and so overall resulting in a much better outcome for the full year as well.

[Chetan Udeshi, JPMorgan]

Thank you.

[Operator]

The next question comes from the line of Gunther Zechmann with Bernstein. Please go ahead.

[Gunther Zechmann, Bernstein]

Good morning Christian, Maike and Tim. Two questions from my side, please. Firstly, we're now in August, you said Maike that there's no recovery currently visible. Could you talk us through the moving parts since the profit warning a month ago, please? You mentioned the business lines a bit already, maybe geographically anything to highlight as well and what order books look like for September, please. And secondly, your superabsorbent business is now classified as an asset held for sale, which under IFRS I think means that our divestment in the next 12 months is very likely. Could you please provide us with an update there? Thank you.

[Maike Schuh, Chief Financial Officer]

Okay. I can, yes. Gunther, good morning. I can start with the outlook by division and also asked, I think about the regions. Thank you. The regions and then with regards to the accounting issue assets held for sale, I can answer it, but Christian takes over. Good. So maybe starting again division, Specialty Additives. So what we see overall, Q3 is very similar to Q2. The destocking is easing, especially in coatings. However, we don’t see any demand recovery there, rather some downside risk from automotive and U.S. The raw material costs are falling as we mentioned. So we aim to maintain pricing as long as possible.

Going to Smart Materials. Q3 should be better than Q2 somewhere we assume between Q1 and Q2 because as mentioned before, the full PA12 capacities are coming now into the still tight market for more material available. And we see a higher utilization rate of the plants. All other businesses actually, we assume that there are no signs of improvements and we don’t see any improvements as we mentioned in July and beginning of August yet.

Silica and Silane business lines continue to be burdened by high material costs. Nutrition & Care, I think Christian mentioned everything about animal nutrition already and health and care will as usual have a stronger second half of the year. There is the usual seasonality which goes towards Q4.

Performance Materials. We on the one hand side see decline in butadiene prices and this reflects still a continued bearish downward demand and prevailing oversupply, actually, unfortunately in all regions. The inner demand remains poor and there might be some inventory devaluations possible. MTBE prices remain still positive and are quite high. And also superabsorbents business continues with a very nice demand and improving prices.

So that’s this. And then regarding the region starting with China and Asia, we see a very slow recovery and actually no material improvement in demand, especially also for the expenses and durable costs. Goods and especially construction is still in crisis. You have heard that probably before quite often, and that is waiting on the rest of the economy. Unemployment, especially for younger people seems to become a real issue and only the automotive part in there, especially the electric vehicles are doing well across Asia. So we expect there a cautious consumption pattern to remain for months ahead.

Regarding the U.S., the economy was better or longer, so now it’s the last to also come down. We see a softer environment or we saw already a softer environment in Q1 and now this has further weakened in Q2. We don’t really see a positive dynamic in any key end markets. So neither coatings nor construction, durable goods, all very, very low and the monetary tightening is starting to impact the credit growth.

Last but not least, Europe is bumping along the bottom and especially Germany here, it’s still dampened by rising inflation, reduced consumer spends in many countries and of cautious consumer behavior we see that persists. So this is basically our update region by region. Then maybe assets held for sale versus continued -- discontinued operations. The accounting part here, yes, you’re right. Usually, you change your balance sheet -- the position in your balance sheet either on a discontinued operations or assets held for sale. So these are -- you can choose in between these two, that is now accounting specifics, and I’m sure you don’t want to go too much into detail there. If you want to, happy to discuss, it’s actually simply not big enough to reclassify it on to discontinued operations.

And having said that, where are we with regards to the divestment, maybe Christian wants to say your word.

[Christian Kullmann, Chief Executive Officer]

Hi, Gunther, I could keep it short, and I could keep it crispy. First of all, the divestment process, we have started to sell Baby Care is really progressing well. That is for sure. We have good negotiations with several parties, and they are pretty well ongoing. So having said this double point, we do expect to signing for our Baby Care business in the course of this year.

[Gunther Zechmann, Bernstein]

Thank you.

[Operator]

Next question comes from the line of Matthew Yates with Bank of America. Please go ahead.

[Matthew Yates, Bank of America]

Hi good morning everyone. Thanks for taking the questions. A couple, if I can. The first one, just a follow-up on the Baby Care comment and perhaps more broadly in terms of the Performance Materials portfolio. You mentioned potentially a Baby Care agreement before year-end. What about the residual assets in that division? What is the time line for tackling that? And then how are you thinking about use of proceeds? I heard earlier say that the balance sheet is a fairly high priority. Should we assume that any proceeds you’re going to get from disposals go into debt repayment and dividends rather than necessarily using that capital for acquisitions and CapEx.

And the second question on the additives division and in particular about pricing. So we’ve seen that multiple parts of Evonik’s portfolio have come under pressure from global competition and Europe’s relative position on the cost curve. With raw material costs now falling like you’ve alluded to, part of pockets of the additives portfolio where you would expect to have to give back pricing either because of competition or contractual structures? Thank you.

[Christian Kullmann, Chief Executive Officer]

Okay. Hi and good morning. I take the question about our Performance Materials division. As you know, Functional Solutions, we have got the closing end of June. So here, this is fully done, first. Second, we do expect signing of Baby Care in the course of this year. And third, and that is precisely your question, it was about the C4. So the performance intermediates as you know, the carve-out here has been completed as planned. The business is now operating under a new name. It is now called Oxeno.

And so we have now started to tackle a very precise and concrete analyzing and monitoring of the M&A markets very closely, very precise to create a value enhancement that is the most relevant. It is not about a certain point of time. It is a value enhancing, a value-enhancing start of this divestment process. So in a nutshell, value-enhancing start, that is what we are tackling. That is why we do monitor and analyze situation very precise and then let’s see when to start the divestment process. With this, I hand over to Maike.

[Maike Schuh, Chief Financial Officer]

Matthew also from my side, you asked what will we do with the proceeds of DI divestment, actually as I mentioned before, we will be extremely disciplined. So there will be a debt reduction. I think this is – for now, these are not the times to go in big M&A deals, but really clearly focus on the balance sheet, debt reduction will stay extremely disciplined on our CapEx numbers. And again, I think that’s not the time now to dream about big M&A deals. Then Matthew, you asked about the pricing.

Okay, I have do pricing as well. Sorry. We do – we both do wanted to do the answer. So I talk about specialty additives and smart materials and both actually stayed pricing positive, on group level prices turned negative actually on Q2, which is driven by animal nutrition in C4, but specialty additives and smart materials stay positive against increasingly tough comparables in Q2 2022 with that we had [indiscernible] plus 21% actually. And also despite the weak demand trends, so accepting volume – we accepted volume losses to keep the pricing high.

Going into H2, of course, whether that’s what you saw as well, the raw material prices will decline. And this is also where we should see prices to start falling. But we assume that should not have any negative effect on margins in specialty additives and smart materials.

[Matthew Yates, Bank of America]

Okay. Thank you both.

[Operator]

The next question comes from the line of Andreas Heine with Stifel. Please go ahead.

[Andreas Heine, Stifel]

Yes, thanks for squeezing me in. Actually it is on the costs and the CapEx side. So the contingently measures for this year. They are supposed to be temporary, but introducing them in the second half is higher speed. I would assume that quite a bit of that should stay in 2024. So could you outline how you see the cost position going forward and cost measures except the methionine, which you already mentioned into next year. And the same basically for CapEx. You mentioned that you have to temporary shutdown multiple capacity. So it’s probably also not the time to think about capacity expansions. You reduced your CapEx budget during this year twice and are now at 850. Is that a kind of number we should then also think of for the next, let’s say one to two years? And if I may squeeze in the third question at the bottom of this methionine – were you still positive on EBITDA level? Thanks.

[Christian Kullmann, Chief Executive Officer]

Hi Andreas. Let’s start with the contingencies. First of all, our aim is – our goal is getting savings in this year of €250 million. These are short-term measures, short-term initiatives to support the current earning situation. Depending on how the next year is going to go, of course. And that goes without saying. We do talk about additional measures that we, and now here is worthwhile to mention. Those additional measures we can and will establish and they will be in other words, extended in comparison to those we have already in place, for example, not refilling vacant positions. That is what will lead to a reorganization, the canceling of processes and tasks. So positions might be redundant permanently. Here, you have to expect somewhat more from us in such that we will focus on re-structural initiatives to become slimmer, to become faster and to become more efficient in our administration areas.

So here, that means we are constantly monitoring and forecasting our utilization rates to see how we can manage – how we can manage our sites globally for the next, give or take six or eight months. That is what we will have in mind and having said this, that is what we'll definitely help us, for example, to manage our global capacities and our maintenance in a better way that will also be, let me say supportive. We will reduce overtime accounts, that is what Maike has already talked about over the next months.

We will start to utilize our global site network and take out some capacities for several weeks. And about Kurzarbeit, that is how the Germans do call it about short-term work. We will have only – we will have also here some initiatives that is what we have started. As of today, we hear that is only tackled for tinier sites, but that is an option two to see how we can manage the situation in respect of our cost positions in the future in a better way.

So with this, I guess, I hand over to Maike.

[Maike Schuh, Chief Financial Officer]

Yes. Good morning, Andreas also from my side. And the CapEx increase [ph] is now a sustainable level. What you asked is well, that, of course, depends now on what we will see in 2024. You know that Evonik is very conservative and depending on what we will see in 2024, going forward, we will, let's put it like this, adjust the CapEx level, definitely, accordingly to a very conservative level.

Methionine EBITDA is still positive, so we will see that on the one hand side, and that's a positive part, we see that we have really – we seem to reach the bottom level of the trough and the Q3 volumes are starting now to paid up. So we see the increasing market demand in Asia. We see increasing order activity since the announcement of the Evonik's timing shutdowns in Singapore. And so 10% to 12% of the global production capacities are missing or will be missing in Q4. Adisseo in France is going out of the market, CJ in Malaysia with 60 KT and also NHU seems to be again delayed. So prices should bottom out and this is, of course, why EBITDA should still stay positive. I hope that answers your questions.

[Andreas Heine, Stifel]

Thanks a lot.

[Maike Schuh, Chief Financial Officer]

I hope that answered your questions.

[Andreas Heine, Stifel]

It did. Thanks.

[Operator]

The next question comes from the line of Jaideep Pandya with On Field Research. Please go ahead.

[Jaideep Pandya, On Field Research]

Thanks. I just had one question regarding methionine actually. Your competitors are increasing capacity in Asia quite meaningfully over the next three, four years. I assume you are now in a sort of cash cow mode and you want to shed market share. So I mean, what is the long-term strategy here from you guys? I mean do you want to sort of run this business for cash or optimize it? And eventually, would you want to partner with somebody who has deep pockets and wants to invest in the long run?

And then the second sort of follow-up to that is, I apologies for asking this from a 2024 point of view, but if you consider price increases you've put through the raw material cost deflation as well as the cost savings – should we think that methionine earnings should grow in the region of sort of €150 million to €200 million next year and come towards that mid-term average of €300 million? Or do you think that it's going to take at least more than 12 months to achieve that given the demand cycle? Thanks a lot.

[Christian Kullmann, Chief Executive Officer]

Thanks a lot for your question. First of all, methionine is the commodity-oriented business. And we, at Evonik to steer this business in as such. That means it is all about becoming defending your position as a cost leader, which is translating into different measures we have in place. We have initiated, we have started, for example, taking €200 million out of it to better our cost positions by this €200 million up to – from – until 2025 and €100 million were already strike in this year, first.

Second, by disciplined debottlenecking in our plant sites in Singapore and by the building up of the methyl mercaptan capacity in the United States of America, we better our cost position additionally. Why do we do this, in a nutshell? Because for Evonik methionine is an attractive cash contributor in this respect. And focusing on cost management by taking costs out, focusing on bettering our cost positions by decent, disciplined, debottlenecking and by bettering the cost positions of our production facility in the United States, taking both in consideration, it will remain and stay as attractive cash contributor for Evonik Industries. I guess, that was a strategical part of your question. With this, I dare to hand over to Maike.

[Maike Schuh, Chief Financial Officer]

Okay. Yes, you asked about how well methionine develop. Maybe giving you an idea on what we see and actually also what do not see yet is, on the one hand side, we mentioned the cost savings – the €250 million cost savings going forward, €100 million – we should see €100 million already in 2024. We also see that the prices should bottom out and the volumes are slowly improving. Raw materials coming down.

And so if you put all these topics into the mixer and blended, put it like this, let's see. So it's, of course, early for 2024 to really give you a complete idea on the amount, the actual amount, but we will hope for some tailwind.

[Jaideep Pandya, On Field Research]

Right. Thank you.

[Operator]

This was the last question for today. I would now like to turn the conference back over to Tim Lange for closing remarks. Tim?

[Tim Lange, Head-Investor Relations]

Thank you very much out there at the line. Thank you very much, Maike, and Christian for today's call, and I'm sure we'll again speak soon.