Cognis 2009 results: strong earnings and cash flow
Resilient, innovative product portfolio defies global downturn
In 2009, Cognis proved its resilient operating performance in a challenging environment. Due to the global economic crisis and the consequent weak demand in some end markets in the first half of 2009, sales volumes decreased by 7.8 percent compared to the previous year. Sales decreased by 13.9 percent to 2,584 million euros. In the second half of 2009, Cognis observed a continuing recovery in global demand – and as a result, in its own sales volumes – across most of its markets.
Compared to 2008, Cognis’ operating result (Adjusted EBITDA) increased by 13 million euros to 364 million euros (plus 3.6 percent). Return on sales (Adjusted EBITDA as a percentage of sales) increased by 2.4 percentage points to 14.1 percent. This positive development was mainly attributable to Cognis’ resilient, innovative product portfolio. The company also benefitted from the increasing importance of the global green trend, successful product launches, and effective cost management. These factors compensated for the decline in volume. A fall in selling prices was driven by lower raw material costs.
Earnings before interest and taxes (EBIT) increased by 3 million euros to 195 million euros. Net profit from continuing operations improved significantly to 25 million euros.
Operating cash flow in 2009 increased by 260 million euros to 488 million euros, due to strong operating performance and effective working capital management. Overall, Cognis’ cash position improved substantially to 324 million euros.
Cognis took advantage of favorable conditions in capital markets to buy back PIK loans in open-market transactions since 2008, with a total face value of 284 million euros. As a result, the net debt of the Cognis Group (including Cognis Holding GmbH) decreased to 1,866 million euros, which is 396 million euros less than on December 31, 2008.
Cognis CEO Antonio Trius: “Our strategy and the restructuring of our portfolio have really paid off during this time of crisis: amid the uncertainty of 2009, our business model and our new organizational structure with the three business units Care Chemicals, Nutrition & Health, and Functional Products have proven themselves highly resilient and agile. We reacted swiftly and decisively to the global downturn. Our portfolio of innovative products and concepts aligned with the wellness and sustainability trends, strengthened by the launch of about 50 new products, has enabled us to leverage our strong position in dynamic markets effectively. This, combined with our systematic efforts to improve efficiency and productivity, meant that we were able to improve our operating result despite the decrease in sales volumes seen last year.”
“We expect the markets to remain volatile in 2010, although we have made an excellent start to 2010. Assuming global economic conditions continue to recover, we expect to achieve an increase in sales volumes in 2010, and continue to exploit the growth potential offered by the wellness and sustainability trends, in both mature and emerging markets,” says Trius. “We also expect to further improve our operating result by providing added value to our customers through innovative products, and as a result of continuing efficiency improvements.“
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