Wellness delivers above average growth for Cognis

By staff reporter

- Last updated on GMT

Related tags: Goldman sachs

Cognis is taking heart that its strategic focus towards wellness
and sustainability is spot on, as these business areas report above
average growth in the first quarter for 2006.

The German specialty chemicals group reported its first quarter results this week, and although all its strategic business units (SBUs) achieved growth, the largest gains were seen in nutrition and health and care chemicals - with sales up 13.6 per cent to €85m and 12.3 per cent to €354m respectively.

"Our first quarter performance was a good start to the year,"​ said CEO Dr Anthonio Trius.

Overall net external sales were up 12.1 per cent to €875m over the first three months of 2005, and adjusted EBITDA was €113m, up 17.4 per cent.

"Those areas of our business which focus concentrate most strongly on serving the high-potential wellness and sustainability trends have seen above average growth, which shows that our strategic focus is right,"​ stressed Dr Trius.

The company has placed considerable emphasis on its nutritional ingredients the past 12 months, and efforts to continue growing this business included the commissioning of a €20m esterification plant at its Illertissen site in Germany - the greatest single investment the company has made in its seven-year history.

For nutrition and health, the dent in operating profit was attributed to the US market. Although America was a major force behind 21 percent sales growth for the fat-reducing product Tonalin CLA on a global scale, lower vitamin E sales dragged down the performance of the whole SBU in the region by 21 per cent.

The new facility will produce Cognis' body fat-reducing product Tonalin CLA, one of the branded ingredients highlighted as a key growth areas for the SBU and on which it has placed much marketing emphasis.

In Q1, Cognis cleared the way for its Tonalin CLA to be sold in supplements in health food stores in Norway and Sweden, thanks to an exclusive sub-license agreement with Bringwell International.

Since the close of the quarter it has moved to expand the scope of the nutrition and health SBU into another hot area, omega-3, with the acquisition of Norwegian fish oil concentrate supplier Napro Pharma. It is currently developing new solutions to aid the use of the fish oil in foods.

It has also formalized its friendly relations with compatriot WILD to form a powerhouse of food and beverage product innovation using Cognis' store of ingredients and WILD's formulation expertise.

Cognis entered private ownership in 2001 when Henkel agreed to sell its chemical division to a consortium of financial investors comprising of Schroder Ventures, an European private equity specialist based in London, and Goldman Sachs Capital Partners, the private equity branch of Goldman Sachs.

In April the company announced that is now exploring and pursuing various strategic options "in light of an attractive market environment"​. It has mandated Goldman Sachs and JP Morgan to assist with the review.

The private-equity funded company has revealed nothing about what the potential options may entail, but some press reports have speculated that they could include putting itself up for sale.

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