Cognis profit jumps back into the black on big sales gains

By Simon Pitman

- Last updated on GMT

Related tags Cognis

Ingredients provider Cognis has announced a big rise in sales, driven mainly by its Care Chemicals division, a result that underlines the recovery in the global personal care segment.

The company said that continued sales growth during the second quarter meant that full six months sales rose by 16.3 per cent to €1.51bn, reflecting a jump in sales volumes of 12.6 per cent.

The sales growth also helped push the company’s net profit out of the red, from a loss of €20m in the first six months of last year, to a profit of €129m this year.

Likewise operating profits rose by 67.5 per cent, up from €113m to €281m, a figure that was a particularly good achievement given that raw material prices had risen during the period.

Strengthening margins, despite higher costs

“We strengthened our market position, and maintained our margins despite higher raw material costs,”​ said Antonius Trius, Cognis CEO.

Return on sales, which is calculated according to the EBITDA as a percentage of sales, rose to 18.5 per cent, a figure the company said was attributable to the rise in sales volumes and the focus on high margin products.

Breaking the figures down according to business segments, the Care Chemicals division, which is primarily focused on the personal care segment, together with the home care market, increased sales by 16.0 per cent during the quarter to €845m, which represented a 12. 4 per cent rise in organic sales growth.

Care Chemical growth driven by all regions and products

The company said the increase was driven by all regions and across the entire product portfolio, but was particularly marked by increases for products for the industrial segment, underlining the recovery in manufacturing.

Nutrition and health sales rose by 6. 3 per cent to €178m - the weakest gain, while sales of functional products rose the most, by 21.4 per cent to €483m, a figure that also underlined the recovery in manufacturing given that it is mainly concerned with industrial applications.

“The excellent performance was again largely driven by our improved product mix, along with higher sales volumes, higher capacity utilisation and stable operating costs,”​ Trius added.

Full year results should be a record but second half likely to slow

Looking ahead to the full financial year 2010, Trius stated his belief that the company will achieve a record full year result, although he did also underline there is currently a lack of visibility for the rest of the year due to uncertain trading conditions.

Trius further added his belief that the recovery will continue at a ‘more moderate pace’ for the remainder of the 2010 financial year.

Back in June it was announced that Chemicals giant BASF has would acquire Cognis in a deal that values the company at €3.1bn.

According to BASF the deal will give it a leading position in the higher margins personal care and home care markets, as well as boosting its position in human nutritional care, ultimately generating growth above that of the industry average.

In 2009 Cognis generated sales of nearly €2.6bn derived from the more than 100 markets it is present in and registered an EBITDA that amounted to €322m, accounting for a profit margin of 12 per cent.

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