Cognis Reports 13.9% Sales Decrease in 2009

Nutrition & Health saw its sales decrease by 6.3 percent to 325 million euros in 2009 (down 5.5 percent on an organic basis), mainly due to weak consumer demand. Businesses serving the dietary supplements and food ingredients markets were particularly affected by the global downturn.

24 Mar 2010 --- In 2009, global specialty chemicals supplier Cognis proved its resilient operating performance in a challenging environment. Due to the global economic crisis and the consequent weak demand in some end markets in the first half of 2009, sales volumes decreased by 7.8 percent compared to the previous year. Sales decreased by 13.9 percent to 2,584 million euros. In the second half of 2009, Cognis observed a continuing recovery in global demand – and as a result, in its own sales volumes – across most of its markets.

Compared to 2008, Cognis’ operating result (Adjusted EBITDA) increased by 13 million euros to 364 million euros (plus 3.6 percent). Return on sales (Adjusted EBITDA as a percentage of sales) increased by 2.4 percentage points to 14.1 percent. This positive development was mainly attributable to Cognis’ resilient, innovative product portfolio. The company also benefitted from the increasing importance of the global green trend, successful product launches, and effective cost management. These factors compensated for the decline in volume. A fall in selling prices was driven by lower raw material costs.

Earnings before interest and taxes (EBIT) increased by 3 million euros to 195 million euros. Net profit from continuing operations improved significantly to 25 million euros.

Operating cash flow in 2009 increased by 260 million euros to 488 million euros, due to strong operating performance and effective working capital management. Overall, Cognis’ cash position improved substantially to 324 million euros.

Cognis took advantage of favorable conditions in capital markets to buy back PIK loans in open-market transactions since 2008, with a total face value of 284 million euros. As a result, the net debt of the Cognis Group (including Cognis Holding GmbH) decreased to 1,866 million euros, which is 396 million euros less than on December 31, 2008.

Nutrition & Health saw its sales decrease by 6.3 percent to 325 million euros in 2009 (down 5.5 percent on an organic basis), mainly due to weak consumer demand. Businesses serving the dietary supplements and food ingredients markets were particularly affected by the global downturn. However, the Pharma & Health business performed well and achieved significant sales growth, thanks in part to its successful acquisition of new customers. Nutrition & Health’s Adjusted EBITDA fell by 17.9 percent to 54 million euros in 2009. This was mainly due to the lower sales, higher raw material costs, as well as negative one-time effects.

Cognis CEO Antonio Trius: “Our strategy and the restructuring of our portfolio have really paid off during this time of crisis: amid the uncertainty of 2009, our business model and our new organizational structure with the three business units Care Chemicals, Nutrition & Health, and Functional Products have proven themselves highly resilient and agile. We reacted swiftly and decisively to the global downturn. Our portfolio of innovative products and concepts aligned with the wellness and sustainability trends, strengthened by the launch of about 50 new products, has enabled us to leverage our strong position in dynamic markets effectively. This, combined with our systematic efforts to improve efficiency and productivity, meant that we were able to improve our operating result despite the decrease in sales volumes seen last year.”