Cognis Positive on Half-Year Results

22/08/07 In the first six months of 2007, global specialty chemicals company Cognis increased its net external sales by 6.2 percent to 1,821 million euros on a comparable currency basis. Currency effects reduced the sales growth to 3.5 percent, reaching 1,775 million euros. The operating result (Adjusted EBITDA) of 214 million euros could match the high level of the first half year in 2006 in spite of a massive rise in raw material costs, especially for natural oils and fats. Together with a successful cost management, the necessary selling price increases could be achieved in many areas, but will show effect with the usual time delay.

Return on sales (Adjusted EBITDA as a percentage of sales) stood at 12 percent. Earnings before interest and taxes (EBIT) fell slightly down 1.4 percent to 119 million euros. Excluding exceptional items, Cognis recorded a net profit of 39 million euros. It was distorted 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 lead to a depreciation of connected financing fees, resulting in a net loss of 17 million euros.

“We are pleased with the first half-year. Our Care Chemicals, Nutrition & Health and Functional Products strategic business units, with their focus on innovation-driven growth markets, have made particularly important contributions to our encouraging figures,” says Cognis CEO Antonio Trius. “Furthermore, we were able to conduct a successful refinancing. In doing so, we achieved a considerable reduction in financing costs of about 74 million euros on average per year, and improved our liquidity position going forward.”

“We expect to achieve further growth in sales and earnings in the second half of the year,” says Antonio Trius. “The good results achieved in July show that we could partly make up for the higher raw material costs and give us particular reason to look ahead to the rest of 2007 with confidence.”

Nutrition & Health recorded sales of 174 million euros, a 6.2 percent rise on the first half year of 2006 on a comparable currency basis (up 4.1 percent to 171 million euros). The growth was largely attributable to products for the pharmaceutical and healthcare industries, and the carotenoids (antioxidants) and vitamin E businesses. Sales of branded ingredients like sterol esters and CLA have slightly slowed down, the company reported.