In the first nine months of 2008, global specialty chemicals supplier Cognis increased the net sales of its core businesses by 7.3 percent to 2.304 billion euros, compared with the same period in 2007. On an organic basis, sales grew by 12.0 percent. All three strategic business units that focus on the innovation-driven wellness and sustainability markets – Care Chemicals, Nutrition & Health and Functional Products – contributed to the sales growth.
The operating result of the core businesses (Adjusted EBITDA) was at 264 million euros (down 2.7 percent) due to higher raw material, transportation, and energy costs as well as unfavorable exchange rates. On an organic basis (excluding foreign currency effects and acquisitions and divestments), the operating result was almost on the same level as last year. Cognis was able to partly compensate increased raw material costs by raising selling prices, and continued to optimize cost structures and improve efficiency in all areas.
Return on sales (Adjusted EBITDA as a percentage of sales) meanwhile stood at 11.5 percent. Earnings before interest and taxes (EBIT) increased by 4 million euros to 156 million euros.
In the first nine months ending September 30, 2008, net profit before exceptional items was at 4 million euros, compared to a net profit of 21 million euros in the same period of 2007. Continuing operations reported a loss of 19 million euros (2007: +17 million euros). Discontinued operations showed a net profit of 23 million euros (2007: +4 million euros). Continuing operations were 36 million euros below 2007 mainly influenced by higher tax expenses and by the effects of revaluation of US dollar debts on the basis of present currency development. The higher net profit of discontinued operations benefited from the favorable development of Oleochemicals.
Comments Cognis CEO Antonio Trius: “Within the first nine months of this year we managed to face the challenges by increasing selling prices, further optimizing our costs and focusing ourselves on our growth strategy with profitable specialties. By doing so, we were able to partially counteract the effects of exceptionally high raw material and energy prices. As a result, our Adjusted EBITDA is almost on the same level as last year on an organic basis. All three of our core business areas, which focus on the global wellness and sustainability trends, were able to increase their sales.”
“The benefits of our wellness and sustainability driven growth strategy, the cost optimization programs and the refinancing we carried out in 2007 are clearly visible,“ says Trius. “The fourth quarter started of well with acceptable results in October and no negative sales development could be recorded in November so far. However, the current macroeconomic situation may consequently affect order patterns of our customers’ and therefore our results in December. Therefore, we expect the overall results of 2008 to be lower than in 2007. Due to our well-balanced product portfolio, combined with stringent cost management, we are confident that in 2009 our results will be at least on the same level as this year.”
Sales by core businesses – continuing operations
Care Chemicals reported strong sales growth of 9.6 percent to 1.294 billion euros (organic sales growth of 13.2 percent), primarily driven by volume growth and selling price increases of specialty and innovative products and the good growth in the primary surfactants business reflecting higher selling prices which over compensated lower volumes.
Nutrition & Health achieved sales of 265 million euros, a 5.3 percent rise (organic sales growth of 7.8 percent). The result reflects higher sales volumes of Vitamin E and branded ingredients, especially in the segments of Food Ingredients and Dietary Supplements.
Functional Products saw its sales rise by 5.4 percent to 729 million euros (organic sales growth of 13.0 percent). Higher worldwide sales of its environmentally sound agricultural solutions and synthetic lubricants, especially in Europe and NAFTA, were driven by greater demand from key customers and favorable market conditions. However, the PCI business saw its sales decrease, mainly as a result of the slowdown in the US housing market, while mining sales were impacted by the weakness of the US dollar.
Cognis is a worldwide supplier of innovative specialty chemicals and nutritional ingredients, with a particular focus on the areas of wellness and sustainability. The company employs about 6,000 people, and it operates production sites and service centers in 30 countries. Cognis has dedicated its activities to a high level of sustainability and delivers natural source raw materials and ingredients for food, nutrition and healthcare markets, and the cosmetics, detergents and cleaners industries. Another main focus is on products for a number of other industries, such as coatings and inks, lubricants, as well as agriculture and mining.
Cognis is owned by private equity funds advised by Permira, GS Capital Partners, and SV Life Sciences. In 2007, Cognis recorded sales of about 2.8 billion euros and an Adjusted EBITDA (operating result) of 360 million euros.
The statements we make in this release may include statements about our plans and future prospects for the company and the industry that are forward-looking statements. Our actual performance may differ materially from performance suggested by those statements. We urge you to review the cautionary statements in our financial statements for information on factors that could cause those differences.