Cognis reports sharp drop in quarterly sales

By Guy Montague-Jones

- Last updated on GMT

Related tags Recession

German specialty chemicals firm Cognis has posted a net loss of €33m for the first quarter following a sharp drop in turnover.

In what the company described as “an extremely difficult market environment”​, sales were down 13.8 per cent to €659m on the first quarter of last year.

Sales in the care chemicals division, which serves the personal and home care markets, fell 13.8 per cent, in line with overall sales, to €370m.

Green products prop up sales

As in other divisions, European sales were weakest while the Americas and Asia-Pacific were more robust. Cognis also said consumer interest in ‘green’ trends, an area into which the company has channeled resources, helped support sales in the quarter.

Nonetheless, the overall weakness of the top-line affected profits and prompted Cognis to take cost-cutting measures. Operating profits declined 19.3 per cent to €73m in the quarter and the company recorded a net loss of €33m compared to a net profit of €10m in the same quarter last year.

Profit protecting measures

To protect future profits, the company has implemented a cost-saving programme that it hopes will bring in savings of €70m this year. The company has also taken action to improve efficiency and improve process speed across all business areas.

In response to the economic downturn and financial crisis, Cognis also took action to improve the health of its balance sheet. The German company reduced its net debt 7.6 per cent to €2.6bn and improved its cash position to €214m.

Cognis is not the only chemicals company to be experiencing reduced demand. The VCI association of German chemical makers this month predicted an annual drop in industry output volume of 10 per cent, which would be the worst drop since 1975.

Nevertheless, Cognis sees some cause for optimism CEO Antonio Trius said: “The trading environment remains highly uncertain and volatile.

“At the same time, we are starting to see a few positive signs, with the rate of volume decline slowing appreciably in March.”

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