Restructuring helps drive Cognis Care results

Related tags Organic growth

Cognis Care Chemicals has reported a stronger financial performance
in 2004 thanks in part to a restructuring of the division. The
results helped the privately-owned German group to reduce its debts
by more than half compared to the previous year, reports Simon

Accounting for more than a third of total sales, Cognis Care Chemicals is by far the largest of the company's five divisions and is a major supplier to the cosmetics and personal care industry.

This year the division's sales grew from €1.101 billion in 2003, to reach €1.155 billion, an increase of 5 per cent. Cognis​ said that organic growth came in at 8.2 per cent for the division.

"The increase in sales was largely driven by innovative products, including a new range of active powders which enable moisturizing effects from apparently dry powders,"​ the company said in a statement.

During the course of 2004, the division came to include two businesses that were previously a part of the Oleochemicals division - Basic Surfactants and Fatty Alcohols, the move was made because these two areas sit better in the division due to their closer relations to the personal care category.

The company's Oleochemicals division, which also has personal care applications, reported sales grew from €413 million in 2003, to reach €430 million in 2004, an increase of 4.1 per cent.

Overall the group reported that sales increased by 4.2 per cent in 2004, to reach €3.07 billion. This meant that EBITDA increased by 16 per cent to reach 362 million. Overall EBIT losses were cut from €99 million in 2003 to €50 million in 2004 - a figure that was impacted by restructuring expenses of €35 million and exceptional items of €32 million.

Antonio Trius, CEO of Cognis said: "Despite the continuing weakness of the US dollar and increasing raw material, energy and transport prices, we achieved a significant turnaround in our business. This is a result of a volume pick-up in our markets but also confirms the validity of our strategy of focusing on the wellness and sustainability trends. The comprehensive package of restructuring measures initiated through 2003 and 2004 has also contributed substantially to the cost savings."

On a regional basis the group's organic sales were reported to be up by 24 per cent in South America and 16 per cent in Asia Pacific. North American sales were up 10 per cent, whereas the company's mainstay European sales were up 4 per cent.

Looking ahead for 2005 the group says it is expected 'moderate' sales and EBITDA growth in the course of the year. Improvements are expected to be driven by increased market penetration of new and specialty products. However, caution was also sounded over dollar/euro currency fluctuation rates as well as raw material prices, which the company says it has partly safeguarded itself against.

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