Cognis struggles to protect profits
The supplier of cosmetic and food ingredients posted an increase of 7 per cent in net sales to €1,533m for the first six months of the year but was unable to translate this growth into higher profits.
High input costs eat into profits
Escalating raw material and energy costs took a heavy toll on operating profit which fell 5.1 per cent despite the encouraging sales figures.
Price increases and cost saving initiatives have been implemented as damage limitation measures but these have so far only provided partial compensation for higher input costs and unfavorable exchange rates.
Cognis is also slimming down and focusing on core businesses in order to maintain high sales growth.
In July the company sold both Pulcra Chemicals and Cognis Oleochemicals with the declared objective of channeling its energies into the wellness and sustainability trends.
“Our successful efforts to optimize our processing and manufacturing costs, and more especially the sale of our Pulcra and Oleochemicals businesses, represent major steps forward for Cognis in terms of its strategic direction and prospects for future profitable growth,” said Cognis CEO Antonio Trius.
Performance of cosmetic and food divisions
In personal care the strategic focus on sustainability and wellness has led Cognis to specialize in natural oil-based ingredients and the sensory features of its products.
The strategy seems to be paying off on the sales front as care chemicals outperformed the other divisions with a 10.2 per cent increase in sales to €860m for the first half of the year.
Looking forward to the rest of the year, Cognis said high raw material costs and the weak US dollar would force the company to introduce further price increases. Otherwise, Cognis will stick to its strategy of adding value to the company by targeting the wellness and sustainability trends.