In the second quarter of 2010, global speciality chemicals supplier Cognis continued its excellent performance from the first quarter, and achieved the best half-year results in the company's history. Sales rose by 16.3% to €1,514m, due to a steady improvement in demand. Sales volumes increased by 12.6%, reaching the level of the first half of 2008. All regions contributed to this positive development, with Asia-Pacific showing the most dynamic growth rates.
Cognis achieved an operating result (adjusted EBITDA) of €281m in the first half of 2010. This represents an increase of €113m (67.5%) on the previous year. Return on sales (adjusted EBITDA as a percentage of sales) reached 18.5%. These excellent figures were largely due to higher sales volumes, a further shift in the product portfolio towards high-value specialities and better capacity utilisation. The company's ability to keep operating costs stable also played an important role, as the cost management activities initiated in 2008 and 2009 continued to pay off. In addition, recent foreign exchange movements had a positive effect on the operating result.
Earnings before interest and taxes (EBIT) increased by €148m to €226m, resulting in a return on sales of 14.9%. Net profit for the period also improved by €129m due to this strong operating performance and stood at €109m, compared with a net loss of €20m in the first six months of 2009.
The company generated a strong operating cash flow of €119m, although investment in working capital amounted to €129m due to the substantially higher level of commercial activity in the first six months 2010. Overall, Cognis' cash position improved to €34m in the first half of 2010.
The net debt of the Cognis Group (including Cognis Holding) slightly increased to €1,930m at the end of Q2, due to an increase in the euro value of debts denominated in US dollars as a result of exchange rate fluctuations. However, the significantly improved operating result meant that the leverage ratio (ratio of net debt to adjusted EBITDA) for the whole group including Cognis Holding fell from 5.1 in December 2009 to 4.0.
Comments Cognis CEO Antonio Trius: "The development we are experiencing indicates not just a recovery, but real growth in consumer and industrial markets. We were able to take full advantage of this growth due to our strategy of offering innovative products that are aligned with the wellness and sustainability trends. We strengthened our market position, and maintained our margins despite higher raw material costs. The excellent performance was again largely driven by our improved product mix, along with higher sales volumes, higher capacity utilisation and stable operating costs."
Outlook for 2010
"Given the excellent performance in the first half of 2010, followed by a very strong start into the third quarter, we expect to achieve a record full-year result. However, the economic situation remains highly uncertain and trading conditions are difficult to predict. We expect that markets will remain volatile, and that the recovery will continue at a more moderate pace in the second half of 2010."
Sales by strategic business unit
Care Chemicals saw its sales increase by 16.0% to €845m (up 12.4% on an organic basis). This was mainly driven by higher sales in the home and personal care markets, with demand increasing in nearly all regions and across the entire product portfolio. Business segments with industrial applications experienced a strong recovery. Care Chemicals' adjusted EBITDA rose by 74.8% to €163m, due to the combination of increased volumes and improved capacity utilisation.
Nutrition & Health achieved sales of €178m, a 6.3% rise compared with the first half of 2009 (up 3.1% on an organic basis). The business unit benefited from higher demand in all market segments, with sales in Asia-Pacific in particular significantly above last year's levels. Adjusted EBITDA increased by 30.8% to €38m, reflecting both higher sales volumes and improved efficiency.
Functional Products reported strong sales growth of 21.4% to €483m (up 17.9% on an organic basis). This was driven by strong demand in all market segments, including automotive, housing and mechanical engineering. Adjusted EBITDA was up by 83.9% to €82m, driven by increased sales, a good product mix and better capacity utilisation.
Twitter