In the first nine months of 2009, global specialty chemicals supplier Cognis saw its sales volumes fall by 11.8 percent compared with the same period in 2008. Compared to the first nine months of 2008, the total net external sales figure of 1,957 million euros represents a fall of 15.0 percent, with the highest decrease in Europe. However, in comparison with the second quarter 2009, global sales volumes increased by 5.1 percent in the third quarter. This indicates a continuation of the upward trend Cognis has already observed since the second quarter.
Cognis’ operating result (Adjusted EBITDA) increased by 6 million euros to 270 million euros compared to the same period in 2008 (up 2.1 percent). Return on sales (Adjusted EBITDA as a percentage of sales) increased by 2.3 percentage points to 13.8 percent. The 2009 third-quarter operating result of 102 million euros was up by 7 million euros (7.8 percent) on the second-quarter figure of 95 million euros. And compared to the third quarter of last year, the increase was even 14 million euros or 15.7 percent (organic 17.9 percent). This positive development was mainly attributable to Cognis’ innovative product portfolio with a favorable product mix and effective cost management, which compensated for a downward trend of selling prices. Thanks to a comprehensive cost optimization program, the company achieved savings of approximately 79 million euros in the first nine months of 2009.
Earnings before interest and taxes (EBIT) decreased by 18 million euros to 138 million euros, mainly due to higher restructuring costs. The company announced a pre-tax profit of 35 million euros, showing an increase of 21 million euros compared to the same period in 2008, mainly due to lower interest expenses and foreign currency gains primarily on the US dollar borrowings. Consequently net profit of continuing operations reached 1 million euros, representing an increase of 20 million euros on the first nine months of the previous year. In the third quarter the net profit even reached 21 million euros.
Operating cash flow in the first nine months increased by 233 million euros to 387 million euros, primarily due to an improvement in working capital position. Overall, Cognis’ cash position improved substantially to 328 million euros. Taking advantage of the recent conditions in capital markets, Cognis was able to continue buying back PIK loans without compromising its liquidity. As a result, the net debt of the Cognis Group including Cognis Holding GmbH stood at 1,876 million euros, or 386 million euros less than on December 31, 2008.
Comments Cognis CEO Antonio Trius: “Our innovative product portfolio has shown itself to be highly resilient to the effects of the crisis. In the face of this year’s challenging economic environment, our wellness and sustainability-based strategy has proven itself as one of the strongest drivers of success for all our businesses. In addition the significant savings achieved through our global cost optimization program enabled us to improve our operating result. Sales volumes are still relatively low, but they continue to move in an upward direction.”
“The economic situation has further stabilized and slightly improved over the last months, as global demand and businesses start to recover, although the situation remains volatile,” says Trius.
Sales by strategic business unit
Care Chemicals recorded sales of 1,108 million euros, a decrease of 14.3 percent (down 14.0 percent on an organic basis). This was due to lower sales volumes in Europe, in particular in those business segments offering industrial applications. However, the personal and home care market segments proved to be more resilient, with growth reported in Asia-Pacific and Central and South America. Compared to the second quarter of 2009, sales volumes increased by 7.3 percent in the third quarter.
Nutrition & Health saw its sales decrease by 6.8 percent to 247 million euros (down 5.9 percent on an organic basis) due to the economic downturn especially in Europe and in particular in the dietary supplements market.
Functional Products achieved sales of 591 million euros, representing a fall of 18.9 percent (down 19.5 percent on an organic basis). The business unit saw its sales decrease due to lower demand. However, compared to the second quarter of 2009, sales volumes stabilized in the third quarter.
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 5,600 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 2008, Cognis recorded sales of about 3 billion euros and an Adjusted EBITDA (operating result) of 351 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.