Cognis: organic sales growth of about 6 percent in first nine months of 2007

• Net external sales up 3.9 percent to 2.655 billion euros
• Organic sales growth of about 6 percent (2.704 billion euros)
• Higher sales across all strategic business units
• Influence of increased raw material and energy costs successfully alleviated
• Operating result (Adjusted EBITDA) plus 7 million to 311 million euros
• Earnings before interest and taxes (EBIT) up 2.3 percent to 167 million euros
• Net profit reaches 21 million euros before costs associated with refinancing transactions and non-cash tax expenses

In the first nine months of 2007, global specialty chemicals supplier Cognis increased its net external sales by 3.9 percent to 2.655 billion euros. Organic sales growth (growth excluding foreign currency effects and the effects of acquisitions and divestments) reached about 6 percent to 2.704 billion euros. The company’s operating result (Adjusted EBITDA) rose by 2.5 percent or 7 million to 311 million euros, representing a return on sales (Adjusted EBITDA as a percentage of sales) of 11.7 percent. Earnings before Interest and Taxes (EBIT) grew by 2.3 percent to 167 million euros.

Cognis’ earnings were adversely affected by massive rises in the price of natural oils and milk derivatives, petrochemical raw materials, as well as unfavorable currency exchange rates. Despite these factors and excluding exceptional items, Cognis recorded a net profit of 21 million euros. However, this result is lowered by one-time effects as a result of the company’s refinancing transactions in May and June: the early redemption of the existing bonds and loans led to a depreciation of related financing fees. The result was also impacted by a revaluation of deferred tax assets and liabilities due to a tax reform in Germany enacted in July 2007, so that the company recorded a net loss of 82 million euros.

“We are satisfied with the way the business has developed over the first nine months of the year, as Cognis has achieved growth in sales and earnings across all its strategic business units,” says CEO Antonio Trius. “We are currently confronted with a number of challenging factors simultaneously, but we have been able to counteract the effect of these by improving our position in our key markets driven by the wellness and sustainability trends, by successful cost management, and by partially offsetting the increases in raw material costs.”

“We expect sales and earnings to keep increasing, in spite of the tough general market conditions,” says Trius. “Cognis’ prospects for the rest of the year are good, as we are continuing to improve our efficiency and cost structures.”

Sales by strategic business unit (SBU)
Cognis’ largest SBU, Care Chemicals, achieved solid growth of 6.0 percent, with sales rising to 1.086 billion euros (organic sales growth: up 7.1 percent to 1.097 billion euros), primarily driven by strong demand for performance ingredients and primary surfactants. The result reflects both increased sales volumes and the fact that the SBU was able to partially compensate for massive rises in raw material and energy costs.

Sales at Nutrition & Health went up by 4.4 percent to 251 million euros (organic sales growth: up 2.9 percent to 248 million euros). The result was largely attributable to sales of branded ingredients while products for the pharmaceutical, healthcare, and functional foods industries also performed well.

Functional Products recorded sales of 665 million euros, a 3.4 percent rise on the same period in 2006 (organic sales growth: up 7.1 percent to 688 million euros). Agrochemical solutions and synthetic lubricants made a particularly significant contribution to this growth. Sales of the polymers, coatings & inks business unit were affected by the ongoing slowdown in the US housing market.

Cognis’ wholly owned subsidiary Pulcra Chemicals, which was formerly the company’s Process Chemicals SBU, posted sales of 187 million euros; this represents a 3.4 percent fall (organic sales growth: down 1.0 percent to 192 million euros). High growth was achieved in the key markets of the Asia-Pacific region, whereas both the leather and the textiles segments experienced lower sales in North America, and leather chemicals sales were also down in South Europe.

Cognis Oleochemicals, the 50:50 joint venture between Cognis and Golden Hope, reported an increase in sales of 8.0 percent to 450 million euros (organic sales growth: up 10.2 percent to 459 million euros). Sales of fatty acids and glycerin grew particularly strongly, reflecting increased selling prices.

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 7,700 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, textiles, as well as agriculture and mining. The subsidiary Pulcra Chemicals offers specialized chemical products and process expertise to customers in the fiber, textile, and leather industries. Cognis also holds a 50-percent stake in the joint venture Cognis Oleochemicals, one of the world’s leading manufacturers of oleochemicals. Cognis is owned by private equity funds advised by Permira, GS Capital Partners, and SV Life Sciences. In 2006, Cognis recorded sales of 3.37 billion euros and an Adjusted EBITDA (operating result) of 394 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.

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