Cognis’ first nine months 2009: strong earnings growth in Q3, volumes continue to recover, net debt significantly reduced

11-27-2009: In the first nine months of 2009, Cognis saw its sales volumes fall by 11.8 percent compared with the same period in 2008. Compared to the first nine months of 2008, the total net external sales figure of 1,957 million euros represents a fall of 15.0 percent, with the highest decrease in Europe. However, in comparison with the second quarter 2009, global sales volumes increased by 5.1 percent in the third quarter. This indicates a continuation of the upward trend Cognis has already observed since the second quarter.

Cognis’ operating result (Adjusted EBITDA) increased by 6 million euros to 270 million euros compared to the same period in 2008 (up 2.1 percent). Return on sales (Adjusted EBITDA as a percentage of sales) increased by 2.3 percentage points to 13.8 percent. The 2009 third-quarter operating result of 102 million euros was up by 7 million euros (7.8 percent) on the second-quarter figure of 95 million euros. And compared to the third quarter of last year, the increase was even 14 million euros or 15.7 percent (organic 17.9 percent). This positive development was mainly attributable to Cognis’ innovative product portfolio with a favorable product mix and effective cost management, which compensated for a downward trend of selling prices. Thanks to a comprehensive cost optimization program, the company achieved savings of approximately 79 million euros in the first nine months of 2009.

Earnings before interest and taxes (EBIT) decreased by 18 million euros to 138 million euros, mainly due to higher restructuring costs. The company announced a pre-tax profit of 35 million euros, showing an increase of 21 million euros compared to the same period in 2008, mainly due to lower interest expenses and foreign currency gains primarily on the US dollar borrowings. Consequently net profit of continuing operations reached 1 million euros, representing an increase of 20 million euros on the first nine months of the previous year. In the third quarter the net profit even reached 21 million euros.

Operating cash flow in the first nine months increased by 233 million euros to 387 million euros, primarily due to an improvement in working capital position. Overall, Cognis’ cash position improved substantially to 328 million euros. Taking advantage of the recent conditions in capital markets, Cognis was able to continue buying back PIK loans without compromising its liquidity. As a result, the net debt of the Cognis Group including Cognis Holding GmbH stood at 1,876 million euros, or 386 million euros less than on December 31, 2008.