Speciality chemicals group Cognis reported an organic sales growth of €13.9 million for the first quarter, up 1.7 per cent from the corresponding period for 2002.
Total sales however (€748.6 million) were down by 6.7 per cent on last year's quarter, mainly caused by an exchange rate outlay of €65.4 million, said Cognis. Taking the currency influence (- 8.1 per cent) into account, Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA recurring) - standing at €88.3 million - remained 15 per cent down on last year's strong first quarter figure.
The Nutrition & Health unit, currently introducing its new Tonalin CLA to global markets through an agreement with Norway's Natural, saw a drop in sales of €2.9 million, to €72.7 million. However this would have represented growth of 2.9 per cent in a stable exchange rate environment, said Cognis.
Other units saw a similar pattern, with Care Chemicals achieving currency adjusted growth of 7.2 per cent and Functional Products, agro-chemicals and lubricants, gaining currency-adjusted growth of 5.4 per cent.
However even excluding monetary influences, the Process Chemicals division recorded a drop in sales of 5.4 per cent compared to the previous year's quarter, a result of the stagnant level of demand currently being experienced in the processing industry, according to the group. Leading sales unit Oleochemicals, where sales dropped by €20.9 million, was also affected by external factors.
"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 determinedly continuing to realise our growth potentials," claimed Joachim Söhngen, chief financial officer at Cognis.
In regional terms, the effects of the weak US dollar and the current global economy are clear, with sales in North America falling to €193 million (-13.2 per cent). Currency-adjusted the region saw growth of sales of 5.8 per cent. In Asia/Pacific sales also dropped by more than 10 per cent, yet grew by 4.1 per cent excluding the dollar devaluation. 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. Adjusted for monetary influence sales fell by 1.3 per cent, said Cognis.
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, sales fell by 17.9 per cent to €36 million, yet without the negative effects of the weak dollar sales would have increased by 0.5 per cent, according to the Germany-based firm.