Cognis Reports 6.2% Increase in Net Sales

18/04/07 Global specialty chemicals supplier Cognis increased its net sales by 6.2 percent in 2006, to 3,372 million euros. The company’s operating result (Adjusted EBITDA) rose by 10.7 percent to 394 million euros, representing a return on sales (Adjusted EBITDA as a percentage of sales) of 11.7 percent (compared with 11.2 percent in 2005).

“This significant improvement in our operating result was achieved in spite of a sharp fall in the price of fatty-alcohol-based products, as well as increased energy and raw material costs,” commented Dr. Antonio Trius, Cognis CEO. All the company’s strategic business units (SBUs) reported a substantial increase in sales, with Care Chemicals and Functional Products achieving the highest growth rates. The joint venture Cognis Oleochemicals performed almost at the same level as in 2005. Sales generally grew across all regions. The improved results were driven by the growth of sales volume, the associated capacity utilization, and ongoing efficiency improvement measures, particularly in the USA.

The improved operating result meant that the company’s profit before taxes increased by 178 million euros to 42 million euros, while net profit improved by 138 million euros to 2 million euros. As well as the improvement in Adjusted EBITDA, reduced expenditure on non-operational assets, lower extraordinary write-downs and more favorable exchange rates were all factors in this development. One consequence of the improved profit before taxes was that the company’s income taxes rose to approximately 40 million euros. Free cash flow increased by 25 million euros, or 17.5 percent, to 168 million euros. And at 233.4 million euros, cash and cash equivalents were more than double what they were in 2005.

Nutrition & Health recorded a 4.2 percent rise in sales, to 316 million euros. High-margin sterols, CLA (conjugated linoleic acid) and products for the pharmaceutical and healthcare industries all performed well, whereas sales of food technology and vitamin E products fell slightly. The acquisition of Napro Pharma AS, a Norwegian manufacturer of high-quality omega-3 fish oils, enabled Nutrition & Health to expand its range of natural ingredients for dietary supplements and functional foods.

Functional Products achieved growth of 10.4 percent, with total sales of 841 million euros. Business units that performed especially well included Polymers, Coatings & Inks, AgroSolutions, Mining, and the synthetic lubricants business. Growth was strongest overall in Asia. In North America, particularly Polymers, Coatings & Inks substantially increased its market share.

In 2007, Cognis will continue to focus on the growth markets for products that serve the wellness and sustainability trends. “In Cognis’ core markets, sustainability is increasingly a factor in customers’ purchasing decisions,” says Antonio Trius. “Renewable resources already account for the majority of our raw materials, and this will continue to be our key focus in future. Our strategy has proven itself the right one, and this is an excellent prerequisite to continue profitable growth over the years ahead.”