Cost savings help Cognis counteract fall in sales

By Simon Pitman

- Last updated on GMT

Related tags: Business, Supply and demand

Cost initiatives help counteract flagging sales over the past six months for the personal care ingredient giant Cognis.

The company yesterday reported a more than 15 per cent decline in sales volumes and net sales for the first half of 2009 as it struggled to cope in an “extremely difficult”​ market environment.

The company’s care chemical ingredients business, which is mainly concerned with personal care, suffered big losses, as did the functional ingredients business, but the drecrease was less pronounced for its nutrition and health division, as sales of plant sterol ingredients helped push up the performance.

Lower costs help counter sales drop

Overall sales volumes were down by 15.8 per cent, while net sales fell by 15.1 per cent to €1.30bn, for the first six months of the year. The company said that lower sales prices were compensated for by lower raw material prices and cost savings.

The company’s care chemical division reported sales down by 15.3 per cent to €729m, reporting lower sales volumes across all segments, while underlining that the personal care market proved to be more resilient, particularly with respect to stronger Asia Pacific and South American markets.

The company did also indicate that the trend within the care chemicals division was up during the course of the first half, with sales volumes increasing by 3 per cent in the second quarter, when compared to the performance in the first quarter.

De-stocking effect

The bulk of the declines were seen in the firm’s chemicals and construction businesses, which experienced “a real downturn in demand”,​ Cognis said. In contrast, the more moderate sales decline in the group’s health and food ingredients division reflected a cautious approach from food and supplements producers, rather than a lower market demand for these products, said the firm.

Sales for Cognis’ Nutrition & Health division, which includes food and supplement ingredients as well as pharmaceutical ingredients, declined 8 per cent to €167m. Overall sales volumes in the first six months of 2009 declined by 15 per cent to €1,302m.

The company’s functional products division registered a fall of 17.1 per cent in sales to €398m, reflecting tougher times in the industries it serves, specifically the construction and automotive sectors.

Market studies tracked by the company have reflected its sales performance in different divisions, revealing “relatively stable”​ demand for consumer goods products. In contrast, demand for all industrial applications has fallen significantly.

Related topics: Business & Financial

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