Cognis nine month results:
sales and earnings growth continues upward trend

In the third quarter of 2004, Cognis has continued to show strong sales and earnings growth. In the nine months from January 1 to September 30, 2004, the global specialty chemicals supplier generated total net external sales of 2,321 million euros – an increase of 3.4 percent compared to the same period in 2003. Nine-month Adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization and exceptional items) was 281 million euros, 14.7 percent more than 2003. Antonio Trius, CEO of Cognis, comments: “Despite the weak US dollar and an increase in raw material prices, we see substantial acceleration in earnings growth. We benefited from a greater sales volume in our core markets worldwide. Moreover, the restructuring programs we implemented beginning of 2004 show good results.”

Cognis’ third quarter sales as against the same period in 2003 went up by 4.1 percent to 762 million euros. The major driver of Cognis’ pleasing results is the significant growth in sales achieved by the Functional Products, Nutrition & Health and Care Chemicals strategic business units. Sales in the Oleochemicals business have recovered while Process Chemicals sales were less than last year, due to the effect of a divestment and currency movements. In the first nine months of the year, Cognis achieved an organic sales growth (excluding currency fluctuations, acquisitions and divestments) of 9.7 percent.

Adjusted EBITDA for the first nine months increased to 281 million euros, 14.7 percent higher than in 2003. Thus Cognis’ profit margin (Adjusted EBITDA as percent of sales) rose from 10.9 percent to 12.1 percent. Third quarter EBITDA increased by 17.6 percent to 70 million euros, mostly as a result from the cost-saving measures the company started at the beginning of the year. Cognis’ EBITDA for the first nine months was 237 million euros, 3.3 percent lower than in the previous year. Earnings have been affected by adverse exchange rates as well as increased raw material and energy costs. The lower EBITDA in comparison to last year is due to the gain of 24 million euros realized from the disposal of the fragrance business in 2003, and one-off costs of restructuring initiatives in 2004.

Sales by strategic business unit (SBU):
Care Chemicals is Cognis’ largest SBU, accounting for over 37 percent of total revenues. In the third quarter of 2004, it achieved sales of 290 million euros – up 4.8 percent. The Skin Care and Fatty Alcohol business units remain the main drivers of Care Chemicals’ positive results. The improvement in sales reflects mainly the increase in volume. Factor and energy costs, as well as the prices of both natural and petrochemical-based raw materials, have all increased since the beginning of this year, and are expected to rise further, largely because of a global supply/demand imbalance. Care Chemicals’ nine-month sales stood at 867 million euros in 2004 – 3.6 percent more than in 2003.

With sales up 10.8 percent at 69 million euros in the third quarter, Nutrition & Health achieved the largest growth of the five SBUs within the Cognis group. As in the second quarter, the pleasing performance was primarily due to higher sales of sterols and carotenoids, and CLA (conjugated linoleic acids) to manufacturers of dietary supplements, and in the pharmaceuticals and healthcare market. In the first nine months of 2004, Nutrition & Health sales totaled 217 million euros, a 7.4 percent-increase compared to 2003.

The Functional Products SBU also saw strong growth in the third quarter, with sales up 9.2 percent compared to 2003 at 194 million euros. This was due to an increase in sales across all of the businesses. In particular the polymers, coatings and inks business benefited from the healthy state of the residential construction market in the US. The Synlubes business was stimulated by both improved distribution channels and robust growth in American heavy truck production. Mining chemicals also performed well, as increased copper prices are leading to an increase in mining activity. In the first nine months of 2004, sales in Functional Products rose 11.6 percent to 586 million euros. Over a third of the sales growth achieved is attributable to the acquisition of Laporte Performance Chemicals UK Limited on April 1, 2003.

On July 1, 2004, Cognis sold its PVC stabilizers business which posted total sales of 44 million euros in 2003. As a result, Process Chemicals sales decreased by 11.4 percent to 95 million euros in the third quarter of 2004. Discounting the effects of the divestment and currency exchange rates, all business units of Process Chemicals achieved slight sales growth, which was mostly volume driven. The SBU’s nine-month sales were 312 million euros, a decrease of 4.9 percent.

The Oleochemicals SBU showed an upturn in business: In the third quarter of 2004, Oleochemicals sales were up 9.9 percent to 108 million euros. Sales volumes and the price of fatty acids and glycerin remained stable. The oilfield chemicals business, which produces biodegradable drilling fluids, remains depressed due to subdued levels of offshore drilling activity. In the first nine months of 2004, total sales of Oleochemicals increased slightly (1.3 percent) to 319 million euros.

Outlook:
The weakness of the US dollar, and sustained rises in raw material prices will continue to affect Cognis’ business in the fourth quarter of 2004. However, the company remains optimistic about the prospects for the 2004 financial year, and expects continued growth in both sales and earnings.

Overview of results for the first three quarters 2004

About Cognis:
Cognis is a worldwide supplier of innovative specialty chemicals and nutritional ingredients. As at September 30, 2004, the company employed about 8,100 people, and it operates production sites and service centers in 30 countries. Cognis has dedicated its activities to a high level of sustainability and delivers natural source raw materials and ingredients for food, nutrition and healthcare markets, and the cosmetics, detergents and cleaners industries. Additionally, Cognis provides solutions for a number of other industries, such as coatings and inks, lubricants, textiles and plastics, as well as agriculture and mining.

Cognis is owned by private equity funds advised by Permira, GS Capital Partners, and Schroder Ventures Life Sciences. In 2003, Cognis recorded sales of 2.95 billion euros and an Adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization and exceptional items) of 312 million euros.

Cautionary Statement:
The statements we make in this release may include statements about our plans and future prospects for the company and the industry that are forward-looking statements. Our actual performance may differ materially from performance suggested by those statements. We urge you to review the cautionary statements in our financial statements for information on factors that could cause those differences.

Contact:
Susanne Marell, Vice President Corporate Communications
Cognis Deutschland GmbH & Co. KG
Phone: +49-211-7940-5395
E-mail: susanne.marell@cognis.com
Internet: www.cognis.com

Susanne Sengel, Corporate Communications Manager
Cognis Deutschland GmbH & Co. KG
Phone: +49-211-7940-5431
E-mail: susanne.sengel@cognis.com
Internet: www.cognis.com