UpdateCognis cuts jobs and working hours to save €70m in 2009

25 March 2009 12:24  [Source: ICIS news]

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LONDON (ICIS news)--Cognis is planning a number of cost cutting measures in 2009, targeting savings of €70m ($95m) to counteract weak demand from end-user markets, the German specialty chemicals company said on Wednesday.

The cost cutting programme would include 200 job cuts in Europe, short-time working in Germany and elsewhere, a hiring freeze and halting salary reviews for group management.

However the job cuts, which were included in the annual savings target, were already planned before the downturn.

“The headcount reduction is not only a response to the economic crisis,” said a spokeswoman from Cognis. “This has been planned, and started a year ago as a measure to raise our efficiency and improve competitiveness.”

Cognis also plans to cut working hours, starting in April, for employees at several sites in Germany and other countries “depending on local law”, she added.

The Monheim-based firm almost halved its net loss in 2008 to €63m, from €120m in the previous year, as divestments reduced its refinancing costs.

Cognis’ adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell 2.6% to €351m due to higher raw materials and energy costs, unfavourable exchange rates and a decline in volumes starting in the fourth quarter.

Sales increased by 5.5% to €3bn driven by organic growth in all three business units and in all regions.

The company did not give a specific earnings outlook for the financial year.

Cognis added that the divestment of its Pulcra Chemicals and Cognis Oleochemicals businesses in 2008 had given it a stronger focus on less cyclical markets, which would aid development in the current uncertain economic climate.

The company’s Care Chemicals segment increased sales by 7.1% in 2008 to €1.68bn. The business unit benefited from higher demand led by the global trend towards products based on natural ingredients, Cognis said.

Nutrition and Health’s sales were up 4.4% to €346m, while the Functional Products segment’s sales also increased 4.4% to €948m.

($1 = €0.74)

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By: Mark Watts
+44 20 8652 3214

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