UPDATE 2-Germany's Evonik may curb investment, eyes acquisitions

Tue May 6, 2014 8:48am EDT

* Confirms 2014 EBITDA target of 1.8-2.1 bln euros

* Q1 EBITDA 463 mln euros vs average forecast 478 mln

* Might curb investment programme by up to 15 pct

* Eyes acquisitions above 1 bln euros

* Points to uncertainty in Ukraine (Adds comments by CEO, analysts and share price)

By Kirsti Knolle

FRANKFURT, May 6 (Reuters) - Chemicals maker Evonik posted first quarter earnings down nearly a quarter, hurt by falling prices in Asia, and said it may cut its 6 billion euro ($8.3 billion) investment programme by up to 15 percent.

Evonik, which has also been hit by weak currencies in some emerging markets, said it expected prices to stay at least stable in large areas of its portfolio - which includes superabsorbents for baby care, amino acids for animal nutrition and butadiene for tyre production - but added that in some businesses they would probably fall further.

Germany's second-largest chemicals maker behind BASF did confirm its full-year forecast, but suggested it was likely to cut its 6 billion euro investment programme, launched in 2012.

Chief Executive Klaus Engel said that spending could be delayed and the programme might be reduced by 10-15 percent.

"We are waiting in some major projects here for better market conditions to go ahead with further spending," Engel said in a call.

The programme has been seen as key to Evonik's 2018 EBITDA target of 3 billion euros. Some analysts expected around 700 million euros to be contributed by these investments.

Engel said Evonik would now look for acquisitions worth more than 1 billion euros, to strengthen its portfolio. He did not rule out larger takeovers, nor using equity financing. Minor acquisitions might come in the course of the year, he said.

Evonik's shares dropped 4.1 percent by 1115 GMT to make them the biggest decliners in the German midcap index MDAX which was up 0.4 percent.

Kepler Chevreux analyst Martin Roediger said Evonik's major shareholders - public sector trust RAG with a 68 percent stake and private equity firm CVC with an 18 percent share - would take a close look on any potential acquisition.

Evonik said it still expected adjusted full-year earnings before interest, tax, amortisation and depreciation (EBITDA) of between 1.8 and 2.1 billion euros on slightly rising sales. It reported EBITDA of 2 billion euros last year.

Costs of bringing new plants on-stream and negative currency effects could drag on full-year results, the company said, also pointing to uncertainties in emerging markets and the increasing political tension in Ukraine.

Together with its Russian joint venture partner Varshavsky Group, Evonik is building a new production plant for amino acids in the Rostow-on-Don region of Russia, close to the eastern Ukrainian border. The plant is due to come into service in 2014/15. Evonik is the minority partner in this joint venture.

For the three months to March Evonik posted a drop in adjusted EBITDA to 463 million euros from 606 million euros a year ago on 1 percent higher organic sales of 3.2 billion euros.

The average forecast from analysts polled by Reuters was for adjusted EBITDA of 478 million euros on sales of 3.23 billion euros. ($1 = 0.7205 Euros) (Reporting by Kirsti Knolle; Editing by Sophie Walker)