Cognis digs its way out of debt as sales growth continues

By Simon Pitman

- Last updated on GMT

Germany-based ingredients supplier Cognis is unburdening its debt load thanks to continued sales growth mainly driven by its personal care division.

Net sales for the third quarter were up 7.9 per cent to €771m, representing organic growth of 12.0 per cent, whereas sales for the first nine months of the year were up 7.3 per cent to €2.30bn, again, up 12.0 per cent in organic terms.

Exceptional items mainly relating to restructuring and refinancing heavily impacted the profit figure for 2007, which meant that net losses were significantly trimmed back.

Trimming back the losses

For the first nine months, net loss including exceptional items came in at €4m, compared to a loss of €82m last year.

Last year’s loss coincided with a plan that meant refinancing €2bn worth of debts, allowing it to make significant savings in interest payments, which it said had more than off-set rises in commodity prices.

Commodity price rises have continued to affect the company during the past nine months, but CEO Antonio Trius explained how it had managed to absorb most of the impact from this.

Optimising costs and increasing prices

“Within the first nine months of this year we managed to face the challenges by increasing selling prices, further optimising our costs and focusing ourselves on our growth strategy with profitable specialties,”​ he said.

“By doing so, we were able to partially counteract the effects of exceptionally high raw material and energy prices.”

Trius went on to explain that the adjusted net profit figure was at almost the same level as last year on an organic basis as a result of the increased prices.

Care Chemicals leads the way

On a divisional basis, the results for the company’s Care Chemicals division again led the way, growing by 9.6 per cent to €1.29bn during the first nine months, representing an organic increase of 13.2 per cent.

The company said that the results were primarily driven by volume growth and selling price increases of specialty and innovative products, together with growth in the primary surfactants business.

Outlook unsure for December

Looking to the future, the company says that the refinancing and restructuring programmes initiated in 2007 are now clearly feeding through to the current results and are expected to have a positive impact on the full year figures for 2008.

Likewise, the company pointed out that, despite the current economic conditions, no negative sales development has been reported to date for the current, fourth quarter.

However, the company did say that macroeconomic conditions are likely to impact orders for December, which will mean that overall results for the full year will come in lower than in 2007.

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