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Evonik Industries: From Coal Mines to Specialty Chemicals—Germany's Radical Industrial Reinvention
Introduction: The Phoenix of the Ruhr Valley
Picture Essen in the winter of 2007. The skyline of this once-grimy industrial city—heart of Germany's legendary Ruhr Valley—no longer belches the smoke of a thousand coal furnaces. The mines that powered the German economic miracle are shutting down one by one, victims of globalization and cheap imports. But in a glass-and-steel headquarters on Rellinghauser Straße, something remarkable is taking shape: the birth of a new industrial giant from the ashes of an old one.
Evonik Industries AG is a publicly listed German chemicals company headquartered in Essen, North Rhine-Westphalia, Germany. It is the second-largest chemicals company in Germany, and one of the largest specialty chemicals companies in the world. It is predominantly owned by the RAG Foundation and was founded on 12 September 2007 as a result of restructuring of the mining and technology group RAG AG.
This is not merely a corporate restructuring story. It is the tale of how a coal mining conglomerate—subsidized for decades by the German taxpayer, employing generations of miners whose fathers and grandfathers had descended into the earth—reinvented itself as a global specialty chemicals powerhouse. The global chemical company, headquartered in Essen, Germany, is active in more than 100 countries and generated sales of €15.2 billion and earnings (adjusted EBITDA) of €2.1 billion in 2024.
The central question this deep dive will answer: How did a coal mining conglomerate pivot to become a global specialty chemicals leader—and why is a foundation its largest shareholder?
The answer involves a cast of characters worthy of a German opera: stubborn union leaders, politically connected industrialists, European regulators, private equity players, and scientists who trace their intellectual lineage back to the founders of the modern chemical industry. It requires understanding the peculiar German model of industrial consensus, the billion-euro question of "perpetual liabilities" from coal mining, and the strategic brilliance (or luck) of acquiring a specialty chemicals company at precisely the right moment.
Part I: The Deep Roots—170 Years of German Industrial Chemistry
The Predecessor Companies: Building Blocks of an Empire (1847-2001)
The history of Evonik basically goes back to six time-honored chemical companies that were founded in Germany between 1847 and 1938: Goldschmidt, Degussa, Stockhausen, Röhm, SKW Trostberg, and Hüls. These companies were very good at doing what they did: They invented and produced chemical substances, developed new processes, and helped other sectors such as the textiles, automotive, and construction industries to launch successful products on the market.
The oldest of these lineages begins in Berlin in 1847, when a young chemist named Theodor Goldschmidt founded Chemische Fabrik Th. Goldschmidt. Chemische Fabrik Th. Goldschmidt, founded in 1847, made significant contributions. Relocating to Essen in 1890, it became known for its innovative tin recycling process and the thermite process for welding rail tracks. By the 1920s, Goldschmidt ventured into organic specialty chemicals, developing its own surfactants. This was a company that understood the industrial frontier—creating the chemical processes that would literally hold together the railroads of the expanding Reich.
Meanwhile, in Frankfurt am Main, another crucial lineage was forming. The history of former Degussa began in the half of the 19th century, when the head of the Frankfurt Mint, Friedrich Ernst Roessler, established a gold and silver separation factory at the city's request in 1843. Furthermore, Roessler initiated the construction of a chemical-technical laboratory close to the Mint, on the premises of today's Evonik site. This laboratory processed the byproducts of sulfuric acid separation, namely silver nitrate and cyanide salts.
When Frankfurt lost its political independence after the Prussian-Austrian War in 1866, Friedrich Ernst Roessler became a Prussian civil servant and withdrew from the separation business. His eldest sons, Hector and Heinrich, both chemists, took over operations. They transferred the separation factory to the chemical-technical laboratory and continued both activities as the company Friedrich Roessler Söhne.
Several banks established Deutsche Gold- und Silber-Scheideanstalt vormals Roessler (German Gold and Silver Refinery formerly Roessler), in January 1873. Hector and Heinrich Roessler were appointed to the posts of directors. Because of the long and unwieldy company name, it was commonly referred to as the "Scheideanstalt" for decades. The name "Degussa" became more popular in the 1930s on the basis of the company's telegram abbreviation. It took until 1980 to enter Degussa formally into the Commercial Register as a new company name.
Degussa became a pioneer not just in precious metals but in chemical innovation. In 1901 Degussa successfully synthesized indigo. It also developed perborates and later percarbonates which were used as the basis for modern detergents such as Persil from 1907. Consider the significance: Persil, one of the most recognized detergent brands in Europe, owes its existence to Degussa's chemical innovations. This is not a company that made commodities—it created the building blocks of consumer products.
Evonik's chemicals site in Darmstadt can trace the origins of its present chemicals activities back to 1909 when Röhm & Haas oHG, a company established in 1907, moved from Esslingen to Darmstadt. Initially, this company produced auxiliaries for the leather industry and enzyme-based detergents. It achieved its real breakthrough in the 1930s thanks to the development of the transparent, multifunctional plastic PLEXIGLAS®.
PLEXIGLAS—that versatile, transparent plastic that would find its way into aircraft canopies, museum displays, and countless other applications—came from this same family tree. And there was more. Starting in 1938 Chemische Werke Hüls GmbH, subsequently Hüls AG, built up a site in Marl (Germany) to produce synthetic rubber (Buna rubber).
The Dark Chapter: The Nazi Era and Its Aftermath
Any honest account of Degussa's history must confront its role during the Third Reich. During the Nazi era, Deutsche Gold- und Silber-Scheideanstalt expanded its precious metal and chemicals business in line with the regime's autarkical program. As a result, carbon black developments were advanced significantly with government subsidies. The company also developed new production processes on the basis of domestic raw materials and acquired further companies through the "Aryanization" campaign.
The company's complicity went deeper. Gold dental fillings, which had been forcefully removed from the mouths of concentration-camp inmates, were processed by Degussa. The company's partnership Deutsche Gasrusswerke (DGW) employed Jewish slave laborers at the Gleiwitz concentration camp, a subcamp of Auschwitz.
The history of Deutsche Gold- und Silber-Scheideanstalt during the Nazi era and immediately after the Second World War has been investigated in two scientific studies. The renowned U.S. historian Prof. Peter Hayes (Northwestern University) published the book "From Cooperation to Complicity: Degussa in the Third Reich" in September 2004. The German edition was published by C.H. Beck Verlag, Munich, while the English version is available through Cambridge University Press, New York.
This history surfaced dramatically in the early 2000s. While constructing the Holocaust Memorial in Berlin, it became public that the plasticizer and the anti-graffiti coating of the memorial were produced by Degussa, resulting in a pause of the construction works until the matter was clarified. In November 2003, the memorial's trustees decided to finish the building with the involvement of Degussa. The decision to continue with Degussa's products was controversial, but it reflected a broader German approach to confronting history while moving forward.
Consolidation into the "New" Degussa (1990s-2001)
The 1990s brought a wave of consolidation in the German chemical industry. In the 1980s, Hüls AG acquired Röhm GmbH and later Chemische Fabrik Stockhausen GmbH. In 1999, it merged with Degussa AG (as the company was called since 1980) to form Degussa-Hüls AG which subsequently merged with SKW Trostberg AG to form the "new" Düsseldorf-based Degussa AG. The "new" Degussa AG, which brought together the competencies of its predecessor companies, subsequently started to shift its activities to specialty chemicals.
This was strategic reorientation at scale. Between 2001 and 2004 non-core operations with total sales of more than €6.5 billion were divested, including the phenolic chemicals business, dmc2, Degussa Dental, Viatris and PolymerLatex. The new Degussa was deliberately positioning itself as a specialty chemicals company—not a sprawling conglomerate, but a focused player in high-value-added products.
In the late 20th century, these companies pooled their capabilities and, after two big mergers, formed the new Degussa AG in 2001. This company was a producer of specialty chemicals. In 2006 Degussa AG became a part of the RAG Group. Traditionally, RAG was primarily involved in coal mining, but also operated in other industrial sectors. An important step was taken when RAG decided to expand Degussa AG and thus make the specialty chemicals business the core element of its future industrial activities.
But why would a coal mining company want to acquire a specialty chemicals business? To understand that, we must journey into the peculiar world of German coal politics.
Part II: The Coal Problem—Ruhrkohle AG and the German Energy Dilemma
The Birth of a National Champion (1968)
In terms of legal status, the history of Evonik Industries dates back to the year 1968, when Ruhrkohle AG was founded on November 27 in Essen as a joint venture of Ruhr mining companies on the basis of a federal statute. This company initially combined some eighty percent of Western German coal mining capacities.
In 1968 the German government issued legislation aimed at the regulated reorganization of the German coal industry. At its core was the establishment on November 27, 1968 of Ruhrkohle AG—RAG for short—which was owned by 24 companies, including VEBA, Hoesch, Mannesmann, Thyssen, and Klöckner. RAG became the national umbrella organization for 52 coal mines, 29 coke producers, and five briquette manufacturing plants with combined sales of DM 5.8 billion and 182,650 employees.
On November 30, 1969, all these plants and employees were reorganized into seven companies, the Bergbau AG Niederrhein, Oberhausen, Gelsenkirchen, Herne/Recklinghausen, Essen, Dortmund, and Westfalen. RAG was thus unique in Germany, operating as a private enterprise yet dependant on support from the state. This support was given mainly in the form of subsidies but also through laws protecting German coal interests in some sectors.
The Subsidy Machine
Although the company was run according to the principles of private enterprise, it was dependent on support from the state from its beginnings. This support was given mainly in the form of subsidies but also through laws protecting German coal interests in some sectors. The evolution of Ruhrkohle AG should be understood in the context of the development of West Germany's energy policy after the end of World War II. In the years immediately after the war, German coal was a highly sought-after commodity. In the years of hunger before the currency reform in 1948, miners—or Kumpel, as they were known—received special grocery rations to enable them to carry out their heavy work. They were also given special advantages in looking for accommodation in the towns of the Ruhr area, which had suffered great destruction during the war.
The scale of subsidies was enormous. The agreement comprises subsidies of DEM 68 billion up to the year 2005, on condition of a reorganisation of the mining industry. Under various plans, the German government committed to subsidize coal production at levels that reached DM8 billion to DM10 billion per year as a result of low world energy prices making German coal uncompetitive.
Successive governments have paid dearly for either an orderly shrinking of the hard coal industry or social peace, depending on the perspective. Even in the hypothetical case of no reductions of employment in hard coal mining, the compromise means subsidies of—on average—more than DEM 800,000 for each of today's 85,000 miners by 2005.
The Strategic Pivot
By the mid-1990s, something remarkable was happening inside Ruhrkohle AG. By 1996, the company reported that for the first time in its history, its non-coal businesses secured a higher turnover than its coal mining operations. Overall, Ruhrkohle began to morph into a diversified conglomerate. The company marked this transition by changing its name to RAG AG in 1997.
Between 1970 and 1992, the percentage of RAG's total sales generated by activities other than coal jumped from two percent to over 30 percent. This was not accidental. RAG leadership understood that coal's future was limited and had been quietly building profitable non-coal businesses.
The unsubsidized non-mining activities (the so-called "white" activities) of the company were in part highly profitable and included the majority share in the power company Steag AG, the chemical corporation RĂĽtgerswerke AG, or the holding in Ruhrgas AG. A "joint liability" existed between the black and the white area of the Group, which meant that the assets of the white area provided a guarantee for the economic risks of mining. Furthermore, the profits of the non-mining activities were needed to reduce public subsidies for coal mining. Ruhrkohle AG never paid any dividends to its shareholders, most of them mining or energy companies.
The Structural Problem
Here was RAG's fundamental dilemma: it owned highly profitable "white" businesses, but the structure forced those profits to subsidize coal mining. Ruhrkohle AG never paid any dividends to its shareholders, most of them mining or energy companies. This created a trap—RAG couldn't attract external capital because investors couldn't earn returns, but without capital, it couldn't grow its profitable businesses.
Moreover, the coal mines themselves represented an unusual liability. Today, Evonik Industries are majority owned by the RAG-Stiftung (English: RAG-Foundation), which uses corporate profits to finance the costs that arise due to the former mining activities in the Ruhr region. The foundation plans on using about 220 million euro per year from 2019 to maintain abandoned coal mines, which mainly involves pumping out the ground water that destabilises tunnels.
These are the "perpetual liabilities"—the costs of maintaining closed mines forever, preventing groundwater from flooding tunnels and destabilizing the land above. Someone would have to pay for this forever. The question was: who?
Part III: The Big Pivot—Acquiring Degussa and Creating Evonik (2003-2007)
The E.ON Deal: A Strategic Masterstroke
The subsequent restructuring, which among other developments would end in the establishment of Evonik Industries AG, began when E.ON AG, one of the primary shareholders of RAG AG, expressed an interest in the strategically important Ruhrgas share of RAG. After lengthy negotiations and the intervention of a minister, RAG eventually transferred its Ruhrgas holdings to E.ON in early 2003 in exchange for 46.5% of the specialty chemicals company Degussa AG of DĂĽsseldorf, which had previously been primarily owned by E.ON. This was a crucial juncture, and RAG decided in 2003 to make Degussa AG the core of its future industrial activities. It acquired another 46.5% of Degussa from E.ON AG in transactions of June 1, 2004 and March 17, 2006 and ultimately was able to fully take over Degussa after compensating the remaining minority shareholders on September 14, 2006.
This sequence of transactions is worth unpacking. RAG traded its stake in Ruhrgas—a natural gas company—for a controlling stake in Degussa, a specialty chemicals maker. Why? Because E.ON, Germany's energy giant, wanted to consolidate natural gas assets, and specialty chemicals didn't fit its strategy. For RAG, however, Degussa represented a ticket out of the coal business.
To finance this transaction, RAG divested some 280 companies with revenues of €4.5 billion between 2003 and 2005 and also sold off the Degussa construction chemicals segment in 2006. RAG then included the newly acquired Degussa AG into its holding structure, RAG Beteiligungs GmbH (AG from October 2006), which already included the strategically important subsidiaries Steag AG und RAG Immobilien AG.
The RAG-Stiftung Solution: A Foundation as Owner
The final piece of the puzzle was the most innovative—and most German. How do you separate profitable businesses from the coal mining liabilities while ensuring those liabilities are funded forever?
None of this would have been possible without the consent of the remaining shareholders of RAG (the four corporations RWE AG, E.ON AG, Thyssen-Krupp AG, and Société Nouvelle Sidéchar S.A.). Each of them placed their shares into a dedicated foundation, RAG Stiftung, on June 26, 2007 for the symbolic price of one Euro.
Think about what happened here: major German industrial corporations—RWE, E.ON, ThyssenKrupp—transferred their shares in RAG to a foundation for one euro. They were essentially walking away from both the value of the non-coal businesses and the liabilities of coal. But they were also enabling a clean separation that would benefit everyone.
RAG Foundation is a civil-law foundation established in 2007. Its purpose is to build up Foundation assets by 2018 in order to fund long-term liabilities in German coal mining from 2019 onwards. Under the Foundation's Statutes, this objective is to be achieved by means of an initial public offering of Evonik Industries AG.
The Birth of Evonik
Between 2003 and 2006 the Essen-based RAG Group acquired Degussa AG, which became the Chemicals Business Area of Evonik Industries AG (formerly RAG Beteiligungs-AG). In 2007, the RAG Group was split into two: RAG Aktiengesellschaft, Herne (Germany), which was responsible for the hard coal mining and processing operations, and Evonik Industries AG, Essen (Germany) as an industrial corporation focused on specialty chemicals.
Evonik Industries united the business areas of chemicals, energy and real estate of RAG, while mining operations continue to be carried out by RAG.
The name "Evonik" was deliberately chosen to signal a new beginning. Derived from Latin—combining "evo" (stem/germ) with "evolvere" (to develop)—it represented evolution, development, and growth. This was not RAG Chemicals or Degussa Redux; it was something genuinely new.
The structure was elegant: RAG Stiftung owned Evonik. Dividends from Evonik, and eventually proceeds from selling Evonik shares, would fund the perpetual liabilities of coal mining. The profitable "white" businesses were liberated to grow and attract external capital, while the "black" coal operations wound down under government-funded closure agreements.
Part IV: The Road to IPO—Private Equity, False Starts, and Finally Going Public (2008-2013)
CVC Capital Partners Enters the Picture
The original plan called for an IPO of Evonik Industries in the first half of 2008. Market conditions, however, had other ideas. As the global financial crisis unfolded, the IPO window slammed shut.
In June 2008, the private equity firm CVC Capital Partners bought a stake of 25.01% in the company. Funds advised by CVC Capital Partners ("CVC") have agreed to acquire a 25.01 percent stake in Evonik Industries AG from the RAG Foundation for a purchase price of approximately 2.4 billion Euros.
Through the sale of a minority stake in the business, the RAG Foundation has taken the first step in its mandate to establish a capital reserve to finance the perpetual burdens of the German coal-mining industry. Both partners plan to launch an IPO in the medium term; the Foundation has been Evonik's sole shareholder to date. The CEO of the RAG Foundation, Wilhelm Bonse-Geuking, commented: "There were several arguments in favour of CVC as a purchaser: CVC has extensive industry experience in the chemical and energy sectors coupled with a highly experienced team in Germany.
CVC's entry served multiple purposes: it provided immediate capital to the foundation, validated Evonik's value through a sophisticated investor's due diligence, and brought private equity discipline to prepare the company for public markets. The purchase price—€2.4 billion for 25%—implied an enterprise value of roughly €10 billion.
The IPO Saga
The road to public markets proved tortuous. The IPO, by now planned for fall of 2011, was once again postponed in September 2011, this time citing the "current state of financial and capital markets and their prospects."
After three failed attempts at a flotation—the last was cancelled in June 2012—the two major shareholders, German coal mining foundation RAG Stiftung and private equity investor CVC Capital Partners, decided to take an alternate route to the stock market.
Evonik resumed preparations for its planned stock market listing in late February 2013; the uncertain stock market conditions had prevented a listing in 2012.
Finally, on April 25, 2013, Evonik shares began trading. Evonik shares have been traded on the Frankfurt Stock Exchange since 25 April 2013. Prior to the IPO the company had given institutional investors the opportunity to acquire around 14% of the shares for €2 billion.
Following the successful placements by RAG Foundation and funds advised by CVC Capital Partners of a total of c. 67.4 million shares in Evonik Industries AG with institutional investors in Germany and abroad, trading of the company's shares commenced today on the Frankfurt and Luxembourg stock exchanges. A total of 466 million Evonik shares can now be traded on the stock exchanges. The free float currently amounts to c. 14.5 percent of the total shares in the company.
The listing was unconventional—a "controlled" IPO using private placements rather than a traditional public offering. But it achieved the core objective: creating a publicly traded vehicle whose shares could be gradually sold to fund coal mine liabilities.
Part V: Strategic Focus—Becoming a Pure-Play Specialty Chemicals Company (2009-2020)
Divesting Non-Core Assets
In September 2007, Evonik Industries was established, integrating RAG's chemicals, energy, and real estate businesses. By 2009, Evonik had strategically repositioned itself solely as a specialty chemicals company, divesting its other segments to concentrate on its core chemical operations.
That was why it divested itself of its energy and real estate business. Units such as the methacrylate activities, which no longer belonged to the Group's core business operations, were also divested later on.
Energy Divestiture: In December 2010, Evonik Industries signed an agreement to sell 51% of shares in its energy business to a consortium of municipal utilities in Germany's Rhine-Ruhr region. The agreement was finalized on 2 March 2011. The remaining 49% were acquired by the consortium for €570 million in August 2014.
Real Estate Divestiture: On 1 January 2012, Vivawest merged with residential management company THS under the name Vivawest. In 2013, Evonik sold the majority of its shares in Vivawest to the RAG Foundation, the Evonik pension fund, and the coal mining corporation RAG AG. Evonik now holds only 10.9%.
Strategic Acquisitions: Building Scale in Specialty Chemicals
While divesting non-core assets, Evonik aggressively acquired businesses that strengthened its specialty chemicals portfolio.
Singapore Methionine Plant: In November, a plant for the production of DL-methionine was opened in Singapore. At a cost of €500 million, it is the largest investment to date in the chemical sector in the company's history.
PeroxyChem Acquisition: One of the most significant—and contentious—acquisitions came in 2020. Evonik has successfully closed the acquisition of the US company PeroxyChem for US$640 million after the responsible court in Washington D.C. dismissed the lawsuit filed by the Federal Trade Commission (FTC) to block the acquisition.
The Federal Trade Commission authorized an action to block Evonik Industries AG's proposed $625 million acquisition of PeroxyChem Holding Company, alleging the merger of the chemical companies would substantially reduce competition in the Pacific Northwest and the Southern and Central United States for the production and sale of hydrogen peroxide, a commodity chemical used for oxidation, disinfection, and bleaching.
"This is a very good day for Evonik," says Christian Kullmann, chairman of Evonik's executive board. "In its judgment, the court confirmed our view of the H2O2 and PAA market and, above all, the strong specialty focus of PeroxyChem's portfolio. The acquisition unlocks additional growth opportunities for us, especially in the market for environmentally friendly disinfectants."
The Federal Trade Commission's multi-year winning streak ended with Evonik Industries AG's successful $625 million acquisition of PeroxyChem LLC after unsuccessfully employing an atypical legal strategy to block the deal. This was a landmark victory—the FTC rarely loses merger challenges in court.
Part VI: The Animal Nutrition Powerhouse—Methionine and the Global Protein Supply
Building the World's Largest Methionine Operation
Evonik has built one of its most formidable competitive positions in animal nutrition, specifically in the production of amino acids essential for livestock feed.
Evonik is the only company worldwide to produce and market all four essential amino acids for modern animal nutrition: MetAMINO® (DL-methionine), Biolys® (L-lysine), ThreAMINO® (L-threonine), and TrypAMINO® (L-tryptophan). This comprehensive portfolio gives it unmatched ability to serve the global feed industry.
Evonik operates methionine production from three world-scale hubs: Antwerp/Wesseling in Europe, Mobile, Alabama in the United States, and Singapore for Asia-Pacific markets. This geographic distribution provides both supply security and proximity to customers.
The production capacity has been increased by 40,000 metric tons, bringing the total to 340,000 metric tons per year. The expansion was accomplished ahead of schedule.
German specialty chemicals company Evonik has upped its investment in Singapore. It will produce another 40,000 tonnes annually of the chemical methionine, which is used in animal feed. The 13% increase in production at its Jurong Island complex marks a new milestone for the chemicals producer, making it the largest methionine production facility in the world.
Backward Integration: The Verbund Strategy
In the United States, a new plant for methyl mercaptan production is currently being built at the methionine hub in Mobile, further strengthening Evonik's ability to offer reliable and cost-optimized supply and reducing the carbon footprint of DL-methionine from this site by about seven percent. Having a fully integrated 'Verbund' means Evonik will be able to produce all the necessary precursors for DL-methionine on site in 2024, as it already does at its other hubs.
This backward integration—known as "Verbund" in German chemical industry parlance—is crucial. By producing upstream raw materials on-site, Evonik reduces logistics costs, improves supply reliability, and captures margin at multiple stages of the value chain.
Evonik's DL-methionine plants in Singapore have reduced the product carbon footprint of MetAMINO® at this site (Scope 1+2+3) by six percent compared to before the expansion. The expansion of the MetAMINO® production facilities was inaugurated during a festive ceremony attended by Ms. Grace Fu, Singapore's Minister for Sustainability and the Environment and Minister-in-Charge of Trade Relations: "Evonik's latest expansion will help address two urgent problems – climate change and food production – in a sustainable way.
We are particularly proud of the expansion of our production capacities for methionine in Singapore. As a result, we do not simply produce more; above all, we produce better methionine. The carbon footprint of our MetAMINOs at these extended facilities is now 35 percent below the industry average. Our products therefore offer our customers even more sustainability benefits.
Part VII: The "Evonik Tailor Made" Transformation (2023-2026)
Responding to a Changed World
Management started Evonik Tailor Made in response to a persistently challenging demand environment, high energy cost and a continued competitive industry dynamics. The program aims to reduce administration activities and streamline decision-making processes.
Evonik has completed the first phase of the reorganization program "Evonik Tailor Made" and defined the target organization structure for the company which is to be established by the end of 2026. All structures and processes of the company have been analyzed extensively over the past months. Based on this analysis, Evonik will design and establish a new organizational structure by the end of 2026. Evonik aims to significantly reduce all administrative activities that do not directly support its operating businesses. At the same time, key tasks will be consistently bundled in the new structure. The number of hierarchical levels below the Executive Board will be reduced to a maximum of six, while review and approval procedures will be significantly accelerated. Group-wide, managers will then lead a median of seven direct reports, compared to the current span of control of one to four.
"What we are currently experiencing are not cyclical fluctuations, but massive, consequential changes of our economic environment," says Kullmann. "We are addressing this challenge with the 'Evonik Tailor Made' program which will change our organizational structure for good." As a result, Evonik will become leaner, faster, and have a significantly better cost structure.
Up to 2,000 jobs will be cut worldwide, including a disproportionate number of management positions. The majority of these adjustments, around 1,500 jobs, will be made in Germany. Evonik expects cost reductions of around €400 million annually after the program's completion in 2026. Around 80 percent of these savings will be personnel reductions, the rest will come from lower non-personnel costs.
By the time the program is completed, Evonik will have reduced the number of management levels from an average of ten to a maximum of six across the group. At the same time, more than 3,000 organizational units will be eliminated.
The New Segment Structure (April 2025)
Currently, Evonik manages its chemicals businesses in the growth divisions Specialty Additives, Nutrition & Care, and Smart Materials. Under the new structure, which will take effect on April 1, 2025, the Group will organize its business lines in two new segments: Custom Solutions and Advanced Technologies. This will allow for clearer strategic focus and resource allocation. It will also enable more differentiated management of the businesses according to their respective business models. The segments currently have annual sales of around €6 billion each.
"We have significantly improved our portfolio's quality," said Christian Kullmann, chairman of the Executive Board. "In our current structure, focusing solely on specialty chemicals no longer differentiates us sufficiently. We will now manage Evonik more distinctly, leveraging two strengths: solutions and innovation-driven businesses, and technology and efficiency-driven businesses.
This shift is designed to allow for more focused management and resource allocation, catering to the distinct business models of each segment. Custom Solutions will focus on innovation-driven, niche market products with strong customer relationships, while Advanced Technologies will prioritize efficiency, technological expertise, and cost leadership.
The Custom Solutions business lines will be led by Lauren Kjeldsen, an American citizen and currently head of the Smart Materials division. The Advanced Technologies business lines will be managed by Claudine Mollenkopf, a French national and currently head of the Specialty Additives division. Kjeldsen and Mollenkopf will be appointed to the Executive Board on April 1, 2025.
Part VIII: Leadership—The Christian Kullmann Era
Christian Kullmann is the Chairman of the Executive Board of Evonik Industries AG. Born on March 14, 1969 in Gelsenkirchen, he studied economic history at the University of Hanover from 1990 to 1994 and graduated with a master's degree. He began his professional career from 1994 to 1996 at Deutsche Vermögensberatung AG in Frankfurt am Main. He then held various positions in the General Secretariat of Dresdner Bank in Frankfurt am Main from 1996 to 2000.
From 2000 to 2003, he headed the Public Relations/Public Affairs department at Dresdner Bank's Corporate Center. In 2003, Kullmann moved to RAG Aktiengesellschaft in Essen, where he headed the central communications department and the Executive Board office until 2007. He also held this position at Evonik Industries AG in Essen from 2007 to 2013. From 2013 to 2014, he was Chief Representative of Evonik Industries AG and was appointed to the Executive Board in 2014.
Kullmann's path to CEO is unusual—he rose through communications and strategy rather than operations. Christian Kullmann, 47, will replace Klaus Engel, 60, as Evonik Industries' chair and CEO at the big German chemical maker's annual shareholder meeting on May 23. Engel, who is stepping down before his term ends, says Evonik's 10th anniversary is a fitting time for him to depart.
Christian Kullmann will head Evonik for another five years. Christian Kullmann, chairman of Evonik's executive board, will head the specialty chemicals company for another five years. The supervisory board extended his contract until May 2027.
"Christian Kullmann has shown excellent leadership during his present term of office as chairman of the executive board. He has played a key role in driving forward the company, and successfully kept it on track in challenging times. The supervisory board has therefore decided that it is important and right to enable Christian Kullmann to continue what he has started.
In addition to his work at Evonik, Kullmann is a member of the Supervisory Board of Borussia Dortmund GmbH & Co. KGaA.—a fitting connection for a company headquartered in football-mad Ruhr Valley. Evonik has been the main shirt sponsor of Borussia Dortmund (BVB) since the 2007/2008 season.
Part IX: Financial Performance and 2024-2025 Results
2024: A Year of Recovery
Evonik posted a strong increase in operating profit in 2024. Adjusted EBITDA rose 25 percent to €2.065 billion, within the guided range of €1.9 billion to 2.2 billion. The company had raised its guidance in the summer amid good performance over the course of the year. At €15.2 billion, sales were roughly on par with the previous year. Accordingly, profitability improved significantly, with the adjusted EBITDA margin rising from 10.8 percent to 13.6 percent year-over-year.
"We advanced during the economic and political headwinds of last year! We have become more robust," says Chief Executive Officer Christian Kullmann. "That will continue to pay off this year, even though the environment remains difficult. We will keep pushing."
At the bottom line, Evonik reported a positive net income of €222 million in 2024. The return on capital employed (ROCE) improved to 7.1 percent (2023: 3.4 percent). Sales volumes rose 4 percent in 2024, outpacing global economic growth.
Our adjusted EBITDA rose by 25 percent to €2.1 billion, and our free cash flow was 9 percent higher at €873 million.
2025 Outlook and Recent Performance
In the first three months of 2025, Evonik increased earnings versus the prior year despite a difficult economic environment. At €560 million, adjusted EBITDA was 7 percent above the good prior-year figure. The improvement was driven by higher sales volumes and better than expected prices in Animal Nutrition, as well as continued cost discipline.
"We had a good start to the year," says Chief Executive Officer Christian Kullmann. "However, the combination of a looming global trade war and armed conflicts makes planning for the future more uncertain than ever. There is a risk of a further economic slowdown, particularly in the second half of the year."
"Our efficiency efforts are taking hold. And that is urgently needed in view of resurgent economic concerns," says Chief Financial Officer Maike Schuh. "The less predictable the environment, the clearer our path must be: Deliver on the improvements we promise." Nevertheless, following its good start to the year, Evonik is confirming its earnings forecast and continues to expect adjusted EBITDA of between €2.0 billion and €2.3 billion for the year 2025.
Part X: The RAG-Stiftung Dynamic—A Unique Ownership Structure
The Foundation Model
The RAG-Stiftung currently holds approximately 46 percent of the shares in Evonik Industries AG.
RAG-Stiftung manages a portfolio of around €20 bn assets under management (AUM) to finance/cover the perpetual liabilities arising from hard-coal mining in Germany. In terms of AUM, "RAG-Stiftung" is amongst the biggest foundations in Europe. The portfolio consists of publicly traded securities, private equity, direct holdings, infrastructure investments, real estate and bonds of various types. RAG-Stiftung focuses on investments with high total shareholder return and strong cash/distribution profiles. More than 65% of the total portfolio are invested in assets other than Evonik. RAG-Stiftung has a strong interest in Evonik's profitable growth, resulting in significant shareholder returns and a clear intention to remain a significant shareholder of Evonik as an integral part of its portfolio.
"The foundation will remain the largest shareholder and a strong anchor shareholder of Evonik. Anticipating your question about when we will part with further shares: The long-term goal was and is to sell the stake in Evonik in a share price-sensitive manner; in the long-term perspective to 25.1%, which we hold in fixed assets. How close we are already to this goal becomes clear when you consider that we currently still have exchangeable bonds with a volume of €2 billion outstanding. This corresponds to a further almost 20% of Evonik shares that we hold for a possible exchange at maturity. If you have now done the math, you will find that there is not much missing from the aforementioned 25.1% and thus the much-cited 'overhang' no longer exists."
In May 2024, The RAG Foundation has reduced its stake in the specialty chemicals group Evonik to below 50 percent. A total of 23.4 million shares were placed at a price of €19.99 per share, Evonik's largest shareholder announced in Essen. The gross issue proceeds amounted to around 468 million euros. The foundation now holds a stake of around 47 percent in the specialty chemicals group.
Governance Implications
The foundation model creates unique dynamics. On one hand, RAG-Stiftung provides patient capital and long-term orientation—it's not a hedge fund demanding quarterly performance. On the other hand, the foundation's mandate to fund perpetual liabilities means it must eventually monetize its Evonik stake.
Dividend payments from Evonik make a reliable contribution to RAG-Stiftung's financing for the perpetual obligations.
The positive cash flow trend allows for another year of stable dividends. The Executive and Supervisory Boards will propose an unchanged annual dividend of €1.17 per share to the Annual Shareholders' Meeting on May 28. This currently corresponds to a dividend yield of around 6 percent.
Part XI: Innovation Strategy—€1.5 Billion in New Growth Areas
Bio-based solutions, the energy transition, and the circular economy as new core areas of the innovation portfolio. Target: Additional sales of €1.5 billion by 2032. Innovation growth areas address the most relevant sustainability trends for the businesses. Specialty chemicals company Evonik is driving forward the green transformation of industry. With its new innovation strategy, it is stepping up its focus on sustainability. To this end, it is bundling a large proportion of its R&D activities in three new innovation growth areas.
The new innovation growth areas focus on bio-based solutions, the energy transition, and the circular economy. "With our technologies, we are shaping a future worth living. The three new innovation growth areas address the most relevant sustainability trends for our businesses," says Evonik's chief innovation officer, Ralph Marquardt. In the Advance Precision Biosolutions innovation growth area, Evonik scientists are using biotechnology to develop solutions that improve people's health and quality of life, save energy and resources, or protect ecosystems. They include modern biosurfactants such as rhamnolipids. Evonik inaugurated the world's first industrial-scale plant for the production of this new class of biosurfactants in Slovakia in May.
The Accelerate Energy Transition innovation growth area brings together contributions to the energy transition. These include, for instance, solutions to capture carbon dioxide from the exhaust gases from processes or directly from the air. Moreover, in Schörfling (Austria), Evonik produces membranes that can be used to purify biomethane and other gases. This facility was initially extended in 2023 and a further extension is already under construction. The company is also researching other membrane solutions, for example, for the production of hydrogen.
"Research and development already make an overriding contribution to our growth," says Marquardt. "This trend will continue with these new growth areas." The new innovation growth areas are therefore building on the success of Evonik's previous innovation growth fields, which were selected in 2015. The aim was to achieve additional sales of €1 billion within ten years with, for example, sustainable solutions for health, cosmetics, and additive manufacturing. In 2023, that figure was already above €650 million. "Given the turbulence of recent years, that is a good performance, which we can build on in the future," says Schwager. "A global pandemic, an invasion within Europe—those were events no-one foresaw nine years ago. That we came so close to our goal despite such unprecedented challenges shows that we focused on the right topics."
Capital Markets Day 2025 Targets
Evonik today presented the next stage of its strategic development at its Capital Markets Day in Essen. The chemical company focuses on four strategic pillars: the differentiated setup of its portfolio in two new segments, sustainable innovations, a balanced regional footprint, and a culture of mutual respect and performance orientation. With this strategic focus, the company aims to significantly increase its operational and financial performance by 2027. Return on capital employed, the company's key financial indicator going forward, is expected to reach around 11 percent. To this end, adjusted EBITDA is to increase by €1 billion compared to the base year 2023. This increase is expected to result equally from "Growth" and from "Optimization" of costs. The cash conversion rate, which Evonik has significantly improved in recent years, is to be maintained at the good level of over 40 percent.
"We are working consistently on two sides of the same coin—on our growth opportunities and on our costs," says Chief Executive Officer Christian Kullmann. "We used the economic crisis of 2023 as an opportunity to refine our strategy for the coming years and to set clear goals. These goals are ambitious—but we know the quality of our business and see additional opportunities, for example from economic stimulus programs in Germany and Europe." Evonik expects the approximately €500 million earnings increase from "Growth" to result from higher capacity utilization of new plants and from new products in the three Innovation Growth Areas. Evonik occupies attractive and resilient market niches such as fully biodegradable biosurfactants, catalysts for biodiesel, or innovative membranes. Various cost-cutting programs will contribute a further €500 million on the "Optimization" side.
Part XII: Strategic Analysis—Porter's 5 Forces & Hamilton's 7 Powers
Porter's 5 Forces Analysis
Threat of New Entrants: LOW-MEDIUM
The specialty chemicals industry presents substantial barriers to entry. World-scale plants like Evonik's €500 million Singapore methionine facility require massive capital commitments. The technical expertise accumulated over 170+ years cannot be easily replicated. Regulatory approvals, customer qualification processes, and long sales cycles (particularly in pharmaceutical and food applications) further protect incumbents.
However, Chinese competitors have demonstrated ability to enter commodity-adjacent segments of specialty chemicals, though typically at lower margins and quality levels.
Supplier Power: MEDIUM
Evonik's backward integration strategy—particularly the Verbund approach in methionine—significantly reduces supplier dependency. By producing precursors on-site, the company captures margin and controls supply reliability. European energy costs remain a challenge, though the company has been diversifying energy sources with renewable contracts.
Buyer Power: MEDIUM
Specialty focus means serving diverse industries—automotive, pharma, agriculture, cosmetics. Customer-specific solutions create meaningful switching costs; reformulating a cosmetics product or animal feed to use a different supplier's ingredients involves substantial testing and regulatory work. However, large industrial customers (major feed companies, automotive OEMs) have negotiating leverage.
Threat of Substitutes: LOW-MEDIUM
Specialty chemicals are often deeply embedded in customer formulations. Methionine, as an essential amino acid, has limited biological substitutes in animal nutrition—animals simply require it. Innovation pipelines help Evonik stay ahead of potential disruption, and sustainability-driven substitution (e.g., biosurfactants replacing petrochemical surfactants) often benefits Evonik given its R&D investments.
Competitive Rivalry: HIGH
Evonik faces competition from BASF, DSM-Firmenich, Lanxess, and increasingly aggressive Chinese players in methionine. Price pressure exists in commodity-adjacent products. This high rivalry drives the continuous need for innovation and cost optimization—and explains the urgency behind Evonik Tailor Made.
Hamilton's 7 Powers Analysis
Scale Economies: Evonik benefits from scale in methionine production, where its three world-scale hubs provide cost advantages. However, this power is weaker in more fragmented specialty segments.
Network Effects: Limited direct network effects, though Evonik's technical service relationships with customers create some ecosystem stickiness.
Counter-Positioning: Evonik's specialty focus represents a strategic choice that commodity chemical players (and diversified conglomerates) find difficult to replicate without sacrificing their own strategies.
Switching Costs: Significant in pharmaceutical applications (regulatory requirements), moderate in industrial applications (customer qualification), lower in commodity-adjacent segments.
Branding: The Evonik brand carries weight in technical B2B markets, particularly given the company's 170-year heritage of chemical innovation.
Cornered Resource: Evonik's most valuable cornered resource is its accumulated technical expertise and patent portfolio in specialty applications—particularly in amino acids, specialty additives, and healthcare materials.
Process Power: The Verbund integration model represents genuine process power—producing precursors on-site creates cost and reliability advantages that competitors cannot easily match.
Part XIII: Key Performance Indicators for Ongoing Monitoring
For investors tracking Evonik's ongoing performance, three KPIs deserve particular attention:
1. Adjusted EBITDA Margin This is the primary measure of Evonik's execution on its specialty strategy. The company targets 18-20% EBITDA margins over the medium term, up from 13.6% in 2024. Progress toward this target signals success in both portfolio optimization and cost reduction.
2. Cash Conversion Rate Evonik targets >40% cash conversion (Free Cash Flow / Adjusted EBITDA). This metric matters because it demonstrates the company's ability to translate operating profits into actual cash—critical for debt reduction, dividends, and funding the innovation pipeline. The 42% achieved in 2024 demonstrates strong working capital discipline.
3. Return on Capital Employed (ROCE) The company has identified ROCE as its key financial indicator going forward, targeting ~11% by 2027 versus 7.1% achieved in 2024. This metric captures both margin improvement and capital efficiency—particularly important as Evonik completes major capital investments and seeks returns.
Part XIV: Investment Considerations
Bull Case Considerations
Leading Positions in Attractive Niches: Its specialty chemicals business generates around 80% of sales in areas where it holds leading market positions. These positions in methionine, specialty additives, and healthcare materials provide pricing power and customer stickiness.
Restructuring Momentum: Evonik Tailor Made targets €400 million in annual cost savings by 2026. First benefits are already materializing, and the new segment structure should enable more focused management.
Innovation Pipeline: The three Innovation Growth Areas target €1.5 billion in additional sales by 2032, addressing secular trends in sustainability, biosolutions, and the energy transition.
Stable Dividend and Anchor Shareholder: The 6% dividend yield (at recent prices) is attractive, and RAG-Stiftung's long-term orientation provides stability.
Bear Case Considerations
European Cost Disadvantage: Energy costs in Europe remain elevated compared to North America and Asia. While Evonik has global production, significant operations remain in Germany.
Methionine Price Volatility: Animal nutrition business faces commodity-like price dynamics. Chinese competitors continue expanding capacity, pressuring pricing.
Restructuring Execution Risk: Large-scale organizational changes can be disruptive. Cutting 2,000 jobs and eliminating 3,000 organizational units involves significant execution complexity.
Pension Liabilities: Evonik's pension adjustment in relation to debt accounts for around 19% of total adjusted debt as of 31 December 2024, which remains high compared to European chemicals peers for whom this ratio is typically less than 10%.
Myth vs. Reality
| Myth | Reality |
|---|---|
| "Evonik is just a German coal company's spinoff" | Coal mining never existed within Evonik—the corporate separation was clean. Evonik's chemical heritage traces to 1847, predating the coal industry consolidation by over a century. |
| "The foundation overhang will depress the stock" | RAG-Stiftung has largely addressed this through share sales and exchangeable bonds. Its remaining stake (targeting 25.1% long-term) positions it as a supportive anchor, not a forced seller. |
| "Specialty chemicals is just marketing—it's still commodities" | While some segments face commodity dynamics, Evonik's specialty focus is real: 80% of sales come from market-leading positions, and customer qualification processes create meaningful switching costs. |
Conclusion: The Long Game
The story of Evonik is ultimately about reinvention—industrial, corporate, and even philosophical. A company that began as a government-engineered consolidation of coal mines has become one of the world's premier specialty chemicals companies. The transformation required decades of strategic patience, billions in capital reallocation, and the willingness to accept short-term pain (job cuts, divestitures, restructuring charges) for long-term positioning.
The German model—with its foundation ownership, stakeholder capitalism, and industrial consensus—enabled this transformation in ways that might not have been possible elsewhere. The creation of RAG-Stiftung as a vehicle to fund perpetual liabilities, the patient approach to IPO timing, the social consensus around job reductions—all reflect a distinctly German approach to managing industrial transition.
So, the government stepped in to consolidate the mining industry into one company, Ruhrkohle AG (RAG), whose purpose would be to downsize, carefully. Since then, RAG has closed more than 100 mines, in what both sides call a "socially conscious" way. RAG spokesperson Christof Beike says the process over the last 50 years "was not always perfect. But it was much better than in other regions—in England, in France or in Pittsburgh, Pennsylvania."
German hard coal production ended in 2018, following the termination of subsidies. This paper looks at 60 years of continuous decline of an industry that employed more than 600,000 people.
For investors, Evonik presents a company in mid-transformation. The strategic direction is clear: become a focused specialty chemicals leader with leading positions in innovation-driven niches. The execution challenges are equally clear: deliver on cost savings, navigate volatile methionine markets, and demonstrate that the new organizational structure actually improves performance.
The next two years will be decisive. By the end of 2027, we will know whether Evonik Tailor Made delivered its promised savings, whether the new segment structure improved decision-making, and whether the innovation growth areas are generating meaningful revenue. The targets are ambitious—€1 billion in EBITDA improvement versus 2023, ROCE of ~11%, sustained cash conversion above 40%.
What seems certain is that the company Christian Kullmann hands to his successors will look nothing like the coal-adjacent conglomerate that existed at Evonik's founding in 2007. Whether it will have fulfilled the promise of becoming a "best-in-class specialty chemicals company"—a phrase management has used for years—remains to be determined.
The phoenix of the Ruhr Valley continues its transformation.
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