Press Room.

May 28, 2003

Organic growth of 1.7 per cent in first quarter

For the first quarter of 2003 the globally operative manufacturer of specialty chemicals, Cognis, succeeded in recording an organic growth of sales of 13.9 million Euro (1.7 per cent) as against the corresponding period for 2002. Mainly caused by an exchange rate outlay of 65.4 million Euro, total sales for the first three months of this year amounted to 748.6 million Euro, thereby falling short of last year’s figure by 6.7 per cent. However, when the currency influence (- 8.1 per cent) is considered, Earnings before Interest, Taxes, Depreciation and Amortiza-tion (EBIDTA recurring) - standing at 88.3 million Euro - remained 15 per cent down on last year’s particularly strong first quarter figure.

Regional examination of the first quarter reveals the monetary influence exerted by the weak US dollar and the generally depressed global economy. Sales in North America fell to 193 million Euro (- 13.2 per cent). However, currency-adjusted the Region succeeded in achieving growth of sales of 5.8 per cent. The same applies for the Asia/Pacific region, where sales dropped to 87.4 million Euro (- 10.9 per cent), yet grew by 4.1 per cent when the dollar devaluation is ex-cluded. In Latin America, where customers have partially shut down their production as a result of weak demand and transacted the remaining business from stock on hand, the influence of exchange rate fluctuations was particularly apparent. Here, sales fell by 17.9 per cent to 36 million Euro, yet without the negative effects of the weak dollar sales would have increased by 0.5 per cent. In Europe, sales were essentially maintained and showed a relatively slight fall of 1.4 per cent despite weak domestic demand and falling exports to dollar-dominated world regions of 431 million Euro. Adjusted for monetary influence sales fell by 1.3 per cent.

Practically all business units contributed to the currency-adjusted growth of the Cognis Group, totalling 1.4 per cent for the first quarter of 2003. The leading sales unit, Oleochemicals, achie-ved sales of 248 million Euro in the first three months of the year. Overall, sales fell by 20.9 million Euro. Insofar as the influence of dollar-devaluation is excluded, growth of 0.2 per cent was achieved against the previous year. A drop of sales was particularly apparent as re-gards business relating to chemicals for the extraction and processing of crude oil, resulting from starkly reduced oil exploration activity following the crisis in Iraq.

The Care Chemicals business unit maintained progress and increased its sales by 0.8 million Euro to 142.7 million Euro. In comparison to the first quarter of 2002, this exchange rate ad-justed figure represented 7.2 per cent, the strongest level of growth achieved within the Cognis Group. The business unit Nutrition & Health saw a drop in sales of 2.9 million Euro, achieving total sales of 72.7 million Euro, although this would have represented growth of 2.9 per cent in a stable exchange rate environment.

Within the Functional Products, business in agro-chemicals and lubricants saw positive devel-opment, with the business unit achieving currency-adjusted growth of 5.4 per cent. However, taking into account the monetary influence, sales of 161.4 million Euro generated by the busi-ness unit were down by 10.5 million Euro in comparison to the corresponding period for last year. Even excluding monetary influences, the Process Chemicals division was obliged to re-cord a drop of sales of 5.4 per cent as against the strong figure yielded in the previous year’s quarter. The business unit, which manufactures additives used in textile, plastic and leather pro-cessing, recorded a drop of sales of 16.2 million Euro to 110.2 million Euro. This is a result of the stagnant level of demand currently being experienced in the processing industry.

“The situation in the first quarter of 2003 was additionally compounded by a sharp increase in raw material costs, whereby balancing out the position through price adjustments will only be achieved following a corresponding time-lag. Against the background of our consistent cost-orientation measures and increasing expectations of an upturn in the economy, we are deter-minedly continuing to realize our growth potentials,” declared Joachim Söhngen, Chief Financial Officer at Cognis.

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