Cognis’ Half-Year Results 2008

In the first six months of 2008, global specialty chemicals supplier Cognis increased the net sales of its core businesses by 7.0 percent to 1.533 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 company also benefited from various initiatives to optimize its cost structures and further improve its efficiency, and was able to partially compensate its increased raw material costs by increasing its prices.

The operating result of the core businesses (Adjusted EBITDA) was at 176 million euros (down 5.1 percent) due to a massive rise in raw material, transportation, and energy costs as well as unfavorable exchange rates. On an organic basis, the operating result was down 2.4 percent (excluding foreign currency effects and the sale of Functional Products’ G-Cure business).

Return on sales (Adjusted EBITDA as a percentage of sales) meanwhile stood at 11.5 percent. Earnings before interest and taxes (EBIT) of core businesses were down 5 million euros to 103 million euros due to the increase in operating costs mentioned above. Net profit before exceptional items (including discontinued operations) decreased by 20 million euros to 19 million due to tax effects. However, net profit including exceptional items was 28 million euros above last year which was affected by one-time effects as a result of the company’s refinancing transactions.

Comments Cognis CEO Antonio Trius: “In spite of the tough general market conditions, all our core business areas strengthened their position and recorded increased sales. Our successful efforts to optimize our processing and manufacturing costs, and more especially the sale of our Pulcra and Oleochemicals businesses, represent major steps forward for Cognis in terms of its strategic direction and prospects for further profitable growth.”

“Cognis continues to improve its efficiency, and sees the necessity to further increase its prices in the light of high raw material costs and the weak US dollar,” says Antonio Trius. “Concentrating on highly innovative, natural-based solutions for markets driven by the global wellness and sustainability trends will help us to add further value to our company in 2008.”

Sales by core business – continuing operations
Care Chemicals recorded strong sales growth of 10.2 percent to 860 million euros (organic sales growth of 14.0 percent), primarily driven by higher sales of the specialty and innovative products in the Performance Ingredients business as well as the good performance of the Care Surfactants and Alcohols business segment, reflecting mainly higher selling prices due to increased costs of raw materials.

Nutrition & Health achieved total sales of 182 million euros, a 6.0 percent rise (organic sales growth of 8.6 percent). This was largely attributable to the growth of major product lines for the food ingredients business segment and the Vitamin E business.

Functional Products saw it sales rise by 3.3 percent to 480 million euros (organic sales growth of 11.2 percent). The result reflects good market conditions and strong demand for environmental sound agricultural products as well as for synthetic lubricants. However, sales growth in North America was mitigated by weaker housing and automotive markets as well as negative influences of the US dollar.

About Cognis
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 7,600 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 2007, Cognis recorded sales of about 3.52 billion euros and an Adjusted EBITDA (operating result) of 410 million euros.

Cautionary Statement
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.

Susanne Marell, Vice President Corporate Communications
Cognis GmbH
Phone: +49-2173-4995-222
E-mail: [email protected]

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