Cognis: Organic Sales Growth of 4.6 Percent in First Quarter of 2007

05/06/07
•Organic sales growth of 4.6 percent (41 million euros)
•Net sales up 1.7 percent to 890 million euros
•Operating result (Adjusted EBITDA) at 111 million euros, maintained on the high level of Q1 2006
•Return on sales at 12.4 percent
•Earnings before Interest and Taxes (EBIT) increased by 8 percent to 64 million euros

“We had a satisfactory performance in the first quarter both in sales and profit,” says Cognis CEO Dr. Antonio Trius. “Higher margin products and higher volumes at our strategic business units Care Chemicals and Functional Products, and a successful cost management were important drivers for our solid growth. On the other hand, increased raw material prices and unfavorable hard currency issues had an impact on our earnings.”

In the first three months of 2007, global specialty chemicals company Cognis increased its net sales by 1.7 percent to 890 million euros. On organic terms, excluding foreign currency effects and effects of acquisitions of Cosmetic Rheologies (March 2006) and Napro Pharma (May 2006), sales grew by 4.6 percent or 41 million euros compared to the first three months in 2006. Almost all strategic business units contributed to this growth.

The operating result (Adjusted EBITDA) remained with 111 million euros at the high level of 2006 (minus 1.3 percent), return on sales (Adjusted EBITDA as a percentage of sales) was at 12.4 percent. Earnings before Interest and Taxes (EBIT) grew by 8 percent to 64 million euros.
 
Sales by strategic business unit (SBU)

Care Chemicals, the company’s largest SBU, saw its sales rise by 2.4 percent to 362 million euros. Organic sales growth was 16 million euros, or 4.6 percent. This was primarily due to the strong volume growth achieved with innovative specialties, and increased volumes in the primary surfactant business.

Nutrition & Health recorded sales of 86 million euros, a 1.3 percent rise compared to the very strong first quarter of 2006. On an organic basis, sales decreased slightly by 1 million euros or 0.6 percent. Strong growth was achieved with products for the pharmaceutical and healthcare industries, and moderate growth in the carotenoids (antioxidants) business. In contrast, there were slightly lower sales in the functional foods business compared to the first quarter of 2006, where the food industry was especially active with new product launches in this field.

Functional Products achieved growth of 0.6 percent, with total sales of 222 million euros, although in organic terms, the growth rate was higher, amounting to 5.4 percent (12 million euros). Except Mining Technology, all businesses, including Polymers, Coatings & Inks, AgroSolutions, and the synthetic lubricants business, contributed to the growth.

Process Chemicals’ sales of 64 million euros were on the same level as in the first quarter of 2006. Organic growth was 5.8 percent, or 4 million euros. Overall, sales volumes both in the Textile and the Leather Technology businesses were up slightly, as a result of strong growth in the Asia-Pacific region following the addition of new capacity in China in 2006. Some markets, including Brazil and Turkey, were affected by adverse exchange rates.

Cognis Oleochemicals, the 50:50 joint venture between Cognis and Golden Hope, saw its sales rise to 150 million euros, even up by 8.2 percent. On an organic basis, growth was 15 million euros, or 11.1 percent. All regions contributed to this sales development.
 
Outlook

“For the rest of 2007, we expect further solid and profitable growth in sales and earnings especially in the areas of our core activities Care Chemicals, Nutrition & Health, and Functional Products,” says Antonio Trius. “Cognis will continue to focus on the innovation-driven growth markets for products that serve the wellness and sustainability trends.”