Edited from annual report
Cognis states that it has instituted preparations for what it calls a ‘major strategic milestone in its development’: the transfer of its Oleochemicals business to a global joint venture with the company Golden Hope, Malaysia in February 2006. This step is believed will let Cognis concentrate on its innovation-driven growth markets served by its strategic business units Care Chemicals, Functional Products and Nutrition & Health.
The company also repositioned its Process Chemicals business unit, in line with changing prospects for the segment. It has adapted its structure to the ‘fundamental shift’ undergone by the world market for leather and textiles by increasing its presence in Asia, especially China.
The further realignment of Cognis is to be geared towards accelerating its strategy for above-average growth. It will be focussing on innovations tailored to the requirements of the market.
‘All these developments clearly show that Cognis is well equipped to meet the challenges of our markets. We have succeeded in consolidating our position in a difficult business environment and, with targeted cost savings and efforts to increase efficiency in all our operations, held earnings at the level of the previous year while establishing a solid base for the future’, says chief executive officer, Antonio Trius.
Outlook
Cognis expectations are based on its assumptions of moderate economic growth in Europe, stronger economic growth in the Americas and Asia-Pacific, raw material prices moderately higher in 2008 than in 2007 and stable thereafter, and a slight weakening of the US dollar. Overall, Cognis expects sales growth broadly consistent with economic growth, though the regional expectations differ as follows:
In Europe, quantities are expected to increase only slightly while prices are expected to increase moderately.
Robust growth is planned in North America based on programmes, measures and investments it is taking to reposition, restructure and reinvigorate its operations in this region.
Central and South America are expected to deliver significant volume-driven growth.
Strong sales growth in Asia-Pacific is expected to result from strong local economic growth and its investments in this region.
The sales expectations for its strategic business units are:
Care Chemicals plans with the growth of care performance speciality products and a potential softening of fatty alcohol and surfactants markets.
Nutrition and Health plans relatively high growth in the conjugated linoleic acid (CLA) business – made possible by its new facility in Illertissen, Germany, and the Pharma and Health business, which benefits from the market focus brought by the bundling of its service to these industries in one strategic business unit. A short term recovery of the vitamin E business is not expected.
Functional Products aims to recover lost sales volumes in commodity businesses, to benefit from operational improvements in North America and to generate sales out of new local capacity in Asia.
Process Chemicals’ plans for growth are based on the expansion of its textile and leather technologies businesses in Asia, which are supported by new production facilities in China.
Oleochemicals’ growth plans are based on the benefits of initiatives at North American operations, increased sales quantities of fatty acids and an improvement in the oilfield chemicals business.
Its expectations for adjusted EBIDA growth result from the expected benefits of its efforts and investments to improve its North American operations, from increased sales of specialities and from the recovery of lost volumes in Functional Products businesses. These positive effects are expected to overcome the negative effects of potentially softening fatty alcohol and surfactants markets and increasing energy costs.
In 2008, the company will focus on its three core business areas and continue to optimise its operations and processes to what it states as “equipping itself for the market challenges that lie ahead”. One example of this has been establishing a company-wide cost optimisation programme.
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Financial highlights: Cognis, year ended 31 December
|
|
2008 |
2007 |
2006 |
2005 |
2004 |
|
Sales (€ m) |
3,001 |
2,844 |
3,372 |
3,176 |
3,076 |
|
Net Profit (€ m) |
-63 |
-120 |
2 |
-136 |
-27 |
|
Operating Profit (€ m) |
351 |
360 |
206 |
57 |
99 |
|
Total Assets (€ m) |
2,085 |
2,505 |
2,640 |
2,551 |
2,520 |
|
R&D (€ m) |
85 |
81 |
94 |
92 |
-- |
|
Number of Employees |
5,900 |
7,585 |
7,719 |
7,788 |
8,059 |
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Cognis
Company Structure
Cognis is a supplier of specialty chemicals and nutritional ingredients, with a particular focus on the areas of wellness and sustainability to food, nutrition and healthcare markets and the cosmetics, detergents and cleaners industries. The Cognis group was established in August 1999 as a carve-out of the chemical products business of Henkel. On 30 November 2001, Cognis became a wholly independent enterprise. The investor group, Permira Funds, GS Capital Partners and Schroder Ventures Life Sciences took over Cognis from Henkel.
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