Cognis Divestments Help to Lower Loss
Nutrition & Health achieved sales of 346 million euros, a 4.4 percent rise (6.3 percent on an organic basis). Overall, the business unit benefited from higher demand led by the global trend towards products based on natural ingredients.
26/03/09 In 2008, global specialty chemicals supplier Cognis increased its net external sales by 5.5 percent to 3.001 billion euros. On an organic basis (excluding foreign currency effects and the effects of acquisitions and divestments), sales grew by 9.2 percent. All strategic business units – Cognis Care Chemicals, Nutrition & Health, and Functional Products – contributed to this growth.
The operating result (Adjusted EBITDA) slightly fell by 2.6 percent to 351 million euros. This was due to higher raw material and energy costs, as well as unfavorable exchange rates and a decline in volumes which started in the fourth quarter. On an organic basis, the operating result was almost at the same level as 2007 (down by 0.3 percent). Cognis was able to offset its increased raw material costs to a large extent by raising selling prices and by continuing to optimize its cost structures and improve efficiency in all areas.
Return on sales (Adjusted EBITDA as a percentage of sales) was at 11.7 percent. Due to lower restructuring charges, earnings before interest and taxes (EBIT) increased by 5 million euros to 209 million euros. Earnings before tax and special items decreased by 55 million euros to -3 million euros due to non-cash effective revaluation of interest derivatives and US dollar debts. Net loss including special items stood at 63 million euros, representing an improvement of 57 million euros compared to 2007. The net loss of 2007 had been influenced by refinancing costs and the German tax reform. Overall, Cognis’ cash position increased substantially to 226 million euros, mainly due to cash proceeds from the divestments of Cognis’ 50-percent-stake in the Cognis Oleochemicals joint venture, and the sale of its former wholly owned subsidiary Pulcra Chemicals. The company additionally has a revolving credit facility of which 221 million euros were undrawn. Cognis also took advantage of the current conditions in the capital markets. So far, Cognis bought back PIK loans amounting to a face value of 112 million euros in open market transactions, resulting in an improvement of Cognis’ financing costs, net debt and equity.
Comments Cognis CEO Antonio Trius: “Despite an extremely difficult environment in 2008, we successfully managed to strengthen our position in our key markets. Consumers’ growing desire for personal well-being and heightened awareness of environmental sustainability are increasingly converging in the New Green lifestyle, which in turn is reaffirming and validating our strategy. By consistently focusing our core businesses on serving these market demands, Cognis has systematically laid the groundwork for future success.”
“The benefits of our wellness and sustainability-driven growth strategy, our improved efficiency and the focus on our core business areas which target less cyclical growth markets are clearly visible and will support our development in 2009,” says Trius. “It is difficult to predict what will happen for the rest of the year. One thing that is certain, however, is that Cognis is constantly implementing optimization measures to ensure that it is well prepared for the challenges that lie ahead. To counteract the ongoing weak demand in some of our markets, we recently expanded our cost optimization measures targeting total savings of 70 million euros in 2009. Additionally we expect positive effects of lower energy and transportation prices. We will take the chance to strengthen our position in our key markets during these times of economic uncertainties, by leveraging our customer orientation to develop innovative products which help our customers to gain genuine advantages.”
Cognis' Nutrition & Health division achieved sales of 346 million euros, a 4.4 percent rise (6.3 percent on an organic basis). Overall, the business unit benefited from higher demand led by the global trend towards products based on natural ingredients. Natural-based vitamin E showed excellent growth rates, especially in the North America and Asia-Pacific regions. The Food Technology business achieved a sales increase as a result of higher sales volumes in the business segments of baked goods and desserts. The businesses for plant sterols, omega-3 fatty acids and solutions for the pharmaceutical industries also contributed to the growth.
