Global Specialty Chemicals Group Cognis Continues Growth

In the six months to June 30, 2005, the global specialty chemicals supplier Cognis achieved net external sales of 1,602 million euros. This is an increase by 2.8 percent compared to the same period in 2004. Adjusted EBITDA (earnings before net financial result, income taxes, depreciation, amortization and exceptional items) grew by 1.1 percent to 200 million euros. Comments Dr. Antonio Trius, CEO of Cognis: “High raw material costs and challenging market conditions remain to influence our financial performance. However, for 2005 as a whole, we continue to expect moderate sales and Adjusted EBITDA growth.”

Cognis’ sales excluding foreign currency effects and divestments increased in the first half year of 2005 by 5.2 percent over the first half year of 2004. Four of the company’s five Strategic Business Units (SBUs) – Care Chemicals, Nutrition & Health, Functional Products and Oleochemicals – achieved significant growth, with only the Process Chemicals SBU posting lower organic sales than in 2004.

Sales by Strategic Business Unit (SBU)
With sales up 9.1 percent to 629 million euros, Care Chemicals, Cognis’ largest SBU, achieved strong growth. The main growth drivers were strong sales of fatty alcohols and primary surfactants, and the continuing growth in sales of innovative, new products.

Sales in the Nutrition & Health SBU increased by 5.9 percent to 156 million euros, with sales of plant sterols like Vegapure sterol esters being particularly strong. Sales growth of other branded ingredients, specifically Tonalin conjugated linoleic acid (CLA) and Xangold lutein esters did contribute as well in the first six months of 2005.

Functional Products achieved total sales of 401 million euros, an increase of 2.4 percent. This development was mainly driven by the continued sales growth of Synlubes products for the transportation markets, especially in the US, and by growth in the mining technology business resulting from a strong copper market.

Sales of Process Chemicals in the first two quarters totaled 179 million euros, down 17.6 percent on the same period in 2004. The major factor for this was the divestment of the PVC stabilizers business, which came into effect on July 1, 2004. On an organic basis, sales decreased by 7.0 percent, largely as a result of a drop in revenues from the Textile Technology business.

Oleochemicals sales continued their upward trend, rising 6.0 percent to 224 million euros. This growth was mainly driven by higher sales for fatty acids. Oilfield chemicals reported higher sales specifically in the second quarter.

Sales in millions of Euros

First half-year 2004

First half-year 2005

Change

Cognis Group

1559

1602

+2.8%

Care Chamicals

557

629

+9.1%

Nutrition and Health

148

156

+5.9%

Functional Products

392

401

+2.4%

Process Chemicals

217

179

-17.6%

Oleochemicals

211

224

+6.0%

Earnings in millions of euros Cognis Group

First half-year 2004

First half-year 2005

Change

Adjusted EBITDA

197

200

+1.1%

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