UPDATE 2-Evonik ups dividend although profit not certain to rise

Fri Mar 7, 2014 7:09am EST

* Proposes raising div to 1 eur, vs 0.93 eur poll avg

* Sees 2014 adj EBITDA at 1.8-2.1 bln eur vs 2.18 bln poll

* Q4 adj EBITDA 386 mln eur vs 380 mln poll avg

* Shares up 0.4 pct after initial losses

By Ludwig Burger

ESSEN, Germany, March 7 (Reuters) - German diversified chemicals maker Evonik plans to top up its annual dividend by almost 9 percent even after sounding a cautious note about this year's earnings outlook.

The maker of feed additives, clear acrylic sheet and high-tech plastics, which is controlled by a state-owned trust, proposed a dividend of 1.00 euro ($1.40) per share on Friday, up from 0.92 euros a year earlier - exceeding the 0.93 euro average estimate in a Reuters poll of banks and brokerages.

The company said 2014 adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) would be 1.8-2.1 billion euros - a possible decline from the 2 billion posted last year and just shy of the 2.18 billion euros expected on average by analysts.

"There is still considerable uncertainty as to whether central banks will tighten monetary policy, which could impede development, especially in emerging markets," Evonik said in a statement.

It is expecting higher sales volumes, driven by demand in industrialised countries, but cautioned that product prices may decline in some markets and the costs of bringing new plants on-stream may also weigh on earnings.

Analysts described the outlook as "very cautious" and "not impressive" but after initial losses the stock gained 0.4 percent at 1102 GMT, compared with a 0.6 percent decline in the STOXX Europe 600 Chemicals.

Evonik will pay out 56 percent of its adjusted net income as dividend, breaking out of its 40 percent long-term policy, bolstered by divestment gains of 1.5 billion euros from selling its real estate business last year.

Majority owner RAG, which has said it would reduce its holding in the long term, has been pushing for a higher or at least stable dividend payout, with RAG head Werner Mueller saying he preferred a "round number".

RAG is a public sector trust that will finance the cost of maintaining Germany's abandoned coal mines. Buyout firm CVC also holds a stake in Evonik.

Evonik said it still had firepower to back its ambitious investment scheme, worth an aggregate 6 billion euros between 2012-2016, to boost output of cosmetic ingredients and super absorbers for diapers among other products.

The programme will see the company spend about 9 percent of its current annual sales on investments over the period, above sector leader BASF with 5-6 percent.

Fourth-quarter adjusted EBITDA fell 15 percent to 386 million, broadly in line with the market view, while sales slipped 1 percent to 3.14 billion euros.