Cognis Sales Volumes Down 15.8%

Nutrition & Health saw its sales decrease by 8.0 percent (7.7 percent on an organic basis) to 167 million euros. Especially sales of plant sterols and the Pharmaceuticals & Healthcare business as a whole, proved to be robust.

27 Aug 2009 --- In the first six months of 2009, Cognis operated in an extremely difficult market environment and sales volumes declined by 15.8 percent compared with the same period in 2008. Europe and especially Germany and France suffered most from these volume declines. The total net external sales figure of 1,302 million euros represented a fall of 15.1 percent compared to the first half of 2008. On an organic basis (excluding foreign currency effects and the effects of acquisitions and divestments), sales fell by 15.6 percent. However, Cognis experienced a stabilization of its worldwide businesses in the second quarter. Global sales volumes rose by 3.8 percent in the second quarter compared to the first quarter of 2009. This was mainly driven by a pick up in growth in Asia-Pacific as well as Central and South America, whereas the market environment in Europe remained difficult.

Cognis’ operating result (Adjusted EBITDA) fell by 4.7 percent to 168 million euros compared to the same period in 2008. The second-quarter operating result of 95 million euros was up 22.1 million euros compared to the first-quarter of 73 million euros. The negative impact of decreased volumes and continuous price pressure was mainly compensated by lower raw material cost and the results of Cognis’ global cost optimization program, contributing already 47 million euros in the first half of 2009.

Return on sales (Adjusted EBITDA as a percentage of sales) was 12.9 percent for the first half year of 2009. Earnings before interest and taxes (EBIT) decreased by 25 million euros to 78 million euros, mainly impacted by lower operating results and higher exceptional items, mainly restructuring charges, which summed up to 26 million euros. This resulted in a net loss including exceptional items of 20 million euros for the period (net profit without exceptional items was 4 million euros). Operating cash flow in the period improved significantly and was up by 157 million euros to 229 million euros, primarily due to a positive change in working capital. Overall, Cognis’ cash position increased substantially to 256 million euros.

Cognis took advantage of the recent conditions in capital markets to further buy back PIK loans. PIK loans with a face value of 198 million euros have been purchased in a series of open-market transactions until June 30, 2009. As a result the Cognis Group, including Cognis Holding GmbH, was able to improve its net debt, which was cut in total by 296 million euros to 2,026 million euros compared to June 30, 2008.

Cognis CEO Antonio Trius comments: “We are now benefiting from our comprehensive cost reduction program and in the light of the challenging economic environment this year, we are satisfied with what we have achieved so far. Both sales volumes and operating results are moving in an upward direction compared to the first quarter of 2009, and our wellness and sustainability-based strategy remains a strong driver of growth for our business.”

Nutrition & Health saw its sales decrease by 8.0 percent (7.7 percent on an organic basis) to 167 million euros. Especially sales of plant sterols and the Pharmaceuticals & Healthcare business as a whole, proved to be robust. Overall, Nutrition & Health’s sales volumes remained stable in the second quarter of 2009, indicating the continuation of the gradual recovery already observed in the first quarter.

Cognis separately announced that Klaus Edelmann will leave the position of Chief Financial Officer (CFO) in the Management Board of specialty chemicals supplier Cognis on October 1, 2009, and become a member of the supervisory board. His designated successor as CFO is Marco Panichi. This appointment will be officially decided by the supervisory board at its next meeting in September.