- Email: [email protected]
Own-label success makes McBride a good safe bet
FOCUS profit fell 23% to $285.7 M. With restructuring costs excluded, profit was down 10% at $333.7 M. Full-year net profit, including the restructuring charge, was $1,327.1 M ($1,375.1 M excluding the charge) compared to $1,421.3 M in 2003. However, sales growth was strong, with 4Q 2004 revenues up 10.5% to $2.8 bn, and sales volumes up 9%. 2004 sales were almost $10.6 bn, up from $9.9 bn in 2003. The company increased its market share in toothpastes in more than 100 countries. The company is optimistic that it will fulfil its profit expectations in 2005. The aim is gross margin growth of 0.51%/y. For 4Q 2004, North American sales volume grew 7.0%, with revenues up 6.0%. Operating profit increased 7% in the quarter. European dollar sales and unit volume, taking into account the divestment of detergents in Europe, the GABA acquisition and the 8.5% positive effect of foreign exchange, increased 19.0% and 13.5%, respectively. Dollar operating profit increased 21% to an all-time record level even after strongly increased commercial spending behind Colgate brands during the quarter. Latin American dollar sales and unit volume, reflecting the divestment of detergents in Ecuador and Peru, grew 4.5% and 5.5%, respectively in 4Q 2004, continuing the strong momentum seen in this region throughout the year. Operating profit declined 1% after a double-digit increase in commercial spending and negative foreign exchange. Market shares are very strong throughout the region and new products are performing well. Press release from: Colgate-Palmolive Co, 300 Park Avenue, New York, NY 10022, USA. Tel: +1 212 310 2000. Website: http://www.colgate.com. (27 Jan 2005)
Henkel improves figures in 2004 thanks to US business Despite the difficult economic environment, the Henkel Group significantly exceeded its prior-year figures in fiscal 2004, both in sales, with an increase of 12.3% to €10.592 bn, and in operating profit (EBIT), with an increase of 12.7% to €1.92 bn. Operating profit before goodwill amortization (EBITA) and exceptional 6
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items increased to €1 bn for 2004 (€835 M in 2003 before exceptional items). The growth was driven by US business, which was speeded up by the acquisition of Dial. In the cosmetics/toiletries sector, sales rose by 18.7% to €2.477 bn, while sales of detergents/cleaners rose from €3.073 bn to €3.617 bn for 2004. Sales for 4Q 2004 were €2.721 bn. Henkel expects organic sales growth of 3-4% in 2005. The spree of US acquisitions in 2004 doubled Henkel’s debt to €1.5 bn. Henkel will now target the Asian market, where turnover will be increased from 7% to 10% of the group total with selected acquisitions in the mid-term. In India, Henkel Spic reported net profit for 2004 of Rup 31.2 M on net sales including excise duty of Rup 3103.4 M (net profit was Rup 50.2 M on net sales including excise duty of Rup 3615.2 M in 2003). Revenues from detergents/cleaners were Rup 1969.7 M and from cosmetics Rup 1133.7 M (Rup 2294.5 from detergents/cleansers and Rup 1320.7 M from cosmetics in 2003). Press release from: Henkel Group, Germany. Website: http://www.henkel.com (3 Feb 2005), Neue Zuercher Zeitung, 4 Feb 2005, 226 (29), 15 (in German) & Business Line, 11 Feb 2005, 12 (40), 10
Unilever: slim fast Anglo-Dutch major Unilever is facing the biggest shake-up in the group’s 75-year history, with moves underway to ditch its dual structure. Antony Burgmans, the Dutch co-chair, has become non-executive chairman, while his London-based counterpart Patrick Cescau becomes chief executive. There are no plans at present to merge the UK and Dutch arms of Unilever along the lines of Royal Dutch/Shell, but a working party led by Burgmans will now look at what structure is best suited for meeting future market demands. Instead of two divisions (food and household and personal care) and 11 business units, there will be three regional heads (Europe, Asia/Africa, and America). On 10 Feb 2005, Unilever announced a quarterly loss for the first time since 2000 after issuing the first profits warning in its history. The 4Q loss of €263 M (due to a writedown of €650 M to the SlimFast dietary range) compared to a 4Q
2003 profit of €730 M. Group sales were down 2% in 4Q 2004 at €10.2 bn. For 2004 as a whole, the group achieved a net profit of €1.9 bn, down 32%, on sales of roughly €42 bn, down 6% year-on-year. Operating profit fell 9%. According to market analysts, Unilever’s problems are down to too little (and misdirected) advertising, unrealistic performance targets, some unattractive products, and a lack of innovation and creativity. Unilever spends about 14.5% of its revenues on advertising, which exceeds the 12% spent by Nestle, the world’s largest food company, but much less than the 20% spent by Procter and Gamble (P&G). Unilever needs to make an acquisition of the sort made by P&G in its Jan 2005 takeover of Gillette [Focus on Surfactants, Mar 2005]. Possibilities include US-based Colgate-Palmolive or Reckitt Benckiser. The latter would be expensive. In addition, Unilever’s debts are high: at the close of Dec 2004 net debt stood at €12.5 bn. It could benefit from divesting some operations that contribute little to growth, such as Slim Fast, household care products, frozen foods and prestige fragrances, which together account for about 10% of the group’s sales. Economist, 12 Feb 2005, 374 (8413) & 64 The Independent, 12 Feb 2005 (Website: http://www.independent.co.uk) & Handelsblatt Wirtschafts- und Finanzzeitung, 11 Feb 2005, 6 (30), 13 (in German)
HLL net profit drops 32% for 2004 In India, Hindustan Lever Ltd (HLL) posted a 32% lower net profit at Rup 11.9736 bn on a 2% decline in turnover at Rup 99.2695 bn for 2004 (net profit of Rup 17.7179 bn in 2003). The Home and Personal Care division recorded a volume growth of 5% and value growth of 3.4% for 4Q 2004, with good volume growth for detergents and shampoos. Business Line, 12 Feb 2005, 12 (42), 1
Own-label success makes McBride a good safe bet UK-based household goods group McBride is behind the supermarket APRIL 2005
FOCUS own-label products that are boring a hole in the bottom lines of such companies as Unilever. It posted a 6% increase in half-year profits to £17.5 M on sales also up 6% at £268 M. The group, which makes more than half its sales outside the UK, cautioned that it needed to increase prices to compensate for rising raw material costs while improving efficiency. The Independent, 11 Feb 2005 (Website: http://www.independent.co.uk)
Clorox 2Q 2005 For its 2Q 2005 (ends 31 Dec 2005), The Clorox Co has reported turnover of $1000 M ($920 M for 2Q 2004), R&D costs of $21 M ($20 M), earnings from continuing operations of $136 M ($101 M) and net earnings of $699 M ($109 M). For its 1H 2005 (ends 31 Dec 2005), the company has reported turnover of $2048 M ($1926 M for 1H 2004), R&D costs of $42 M ($39 M), earnings from continuing operations of $245 M ($216 M) and net earnings of $822 M ($238 M). Continuing operations results reflect the impact of the Henkel transaction [Focus on Surfactants, Dec 2004]. In North America, Clorox’ Household Products segment achieved 9% sales growth, 9% volume growth and 11% pre-tax earnings growth in 2Q 2005. Strong shipments of the new Clorox ToiletWand disposable toilet-cleaning system [ibid, Mar 2005] contributed to sales growth. Pre-tax earnings reflected the benefit of cost savings and increased sales, partially offset by unfavourable raw-material expenses. The company’s International business segment saw 16% sales growth, 12% volume growth and 19% pre-tax earnings growth in its 2Q 2005. Strong sales growth in the segment was driven by increased volume behind new products and category and share growth in Latin America, and the continued growth of the newly introduced Clorox home-cleaning products in Australia and New Zealand. Press release from: The Clorox Co, 1221 Broadway, Oakland, CA 94612, USA. Tel: +1 510 271 7000. Website: http://www.clorox.com (7 Feb 2005)
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COMPANY NEWS Akzo Nobel chemicals’ restructuring will retain surfactants, divest oleochemicals Akzo Nobel is to undertake a second round of restructuring that will see the sale of six businesses with total sales of €750 M/y, accounting for 17% of the company’s chemicals sales during 2004, and employing 1900 people. It has already divested businesses with sales of €1 bn (refinery catalysts, phosphorus chemicals and coatings resins). The latest set of businesses to be sold are: inks and adhesive resins; oleochemicals; salt specialities; PVC additives; solar salt Australia; methyl amines/choline chloride and others. The proposed divestments should be completed within 12 months. The company will focus on five core areas within its chemicals segment: pulp and paper chemicals, polymer chemicals, a new focused surfactants business, functional chemicals, and a restructured base chemicals business (chloralkali, electrolysis salt & energy businesses). These five businesses had combined sales of €3 bn in 2004, giving a net profit of €350 M. The chemicals segment posted its best performance for years with operating profits from continuing operations up 21% on sales of €4.3 bn (down 4%). In total, Akzo Nobel recorded a 42% rise in profits in 2004 to €856 M on sales down 3% at €12.7 bn. European Chemical News, 14 Feb 2005, 82 (2134), 6 & Chemical Market Reporter, 14 Feb 2005, (http://www.chemicalmarketreporter.com)
White biotech helps competitiveness Henkel wants in future to be able to wash clothes at below 30°C. To this end, the company is expanding its alliance with ‘white biotech’ firm Brain AG for the development of improved enzymes for laundry applications. The alliance aims to develop new proteases from noncultivated microorganisms which are active at low temperatures. The use of enzymes that work at lower temperatures means fewer chemical additives, a lower washing temperature and lower water consumption. Henkel thus hopes to make its products more
competitive. Worldwide, biotech methods are used to produce almost 5% of all substances in the chemicals field alone, representing sales of €35 bn. This figure is expected to rise sharply. Handelsblatt Wirtschafts- und Finanzzeitung, 18 Feb 2005, 7 (35), 12 (in German)
Branding, five new lessons: P&G’s acquisition of Gillette The P&G acquisition of Gillette on 28 Jan 2005 indicates that innovation is key and marketing is more diffuse and personal. Since the acquisition sales growth at both companies has risen and earnings and margins have both increased. P&G’s sales growth is at 8%/y, excluding acquisitions, double the rate in the late 1990s. The price for Gillette was $57 bn, 19 times earnings before interest, taxes and depreciation. P&G has innovated with existing brands, such as with its market leading Tide detergent and increased sales 2.6% during 2004 in a market segment that is growing at under 1%. Consumers are also demanding that innovative products reach the market more quickly. Companies also need to avoid having the majority of the sales outlet through Wal-Mart. According to studies, the more that is sold through Wal-Mart the less the producer makes. P&G sells 18% of its goods through Wal-Mart and has a wide range of other outlets for its products. Broad-based thinking and the use of new media are also essential strategies in marketing. Business Week (European Edition), 14 Feb 2005, 3904 (1234), 26,28
Henkel to invest in Leningrad region plant Henkel is to invest around Roubles 300 M in the expansion of the HenkelEra plant at Tosno, Russia in 2005. It will expand production of industrial adhesives and construct a new warehouse to store synthetic detergents. Henkel invested €5.7 M in the plant in 2004, mostly in the expansion of synthetic detergent production. Henkel-Era had sales of Roubles 5.14 bn in 2004 (+66.3%). Interfax Chemicals, Jan 2005, 2 (Interfax Information Services BV. Tel: +1 303 368 1421. Fax: +1 303 368 1458. Email: [email protected]. Website: http://www.interfax-news.com)
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Henkel improves figures in 2004 thanks to US business Despite the difficult economic environment, the Henkel Group significantly exceeded its prior-year figures in fiscal 2004, both in sales, with an increase of 12.3% to €10.592 bn, and in operating profit (EBIT), with an increase of 12.7% to €1.92 bn. Operating profit before goodwill amortization (EBITA) and exceptional 6
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items increased to €1 bn for 2004 (€835 M in 2003 before exceptional items). The growth was driven by US business, which was speeded up by the acquisition of Dial. In the cosmetics/toiletries sector, sales rose by 18.7% to €2.477 bn, while sales of detergents/cleaners rose from €3.073 bn to €3.617 bn for 2004. Sales for 4Q 2004 were €2.721 bn. Henkel expects organic sales growth of 3-4% in 2005. The spree of US acquisitions in 2004 doubled Henkel’s debt to €1.5 bn. Henkel will now target the Asian market, where turnover will be increased from 7% to 10% of the group total with selected acquisitions in the mid-term. In India, Henkel Spic reported net profit for 2004 of Rup 31.2 M on net sales including excise duty of Rup 3103.4 M (net profit was Rup 50.2 M on net sales including excise duty of Rup 3615.2 M in 2003). Revenues from detergents/cleaners were Rup 1969.7 M and from cosmetics Rup 1133.7 M (Rup 2294.5 from detergents/cleansers and Rup 1320.7 M from cosmetics in 2003). Press release from: Henkel Group, Germany. Website: http://www.henkel.com (3 Feb 2005), Neue Zuercher Zeitung, 4 Feb 2005, 226 (29), 15 (in German) & Business Line, 11 Feb 2005, 12 (40), 10
Unilever: slim fast Anglo-Dutch major Unilever is facing the biggest shake-up in the group’s 75-year history, with moves underway to ditch its dual structure. Antony Burgmans, the Dutch co-chair, has become non-executive chairman, while his London-based counterpart Patrick Cescau becomes chief executive. There are no plans at present to merge the UK and Dutch arms of Unilever along the lines of Royal Dutch/Shell, but a working party led by Burgmans will now look at what structure is best suited for meeting future market demands. Instead of two divisions (food and household and personal care) and 11 business units, there will be three regional heads (Europe, Asia/Africa, and America). On 10 Feb 2005, Unilever announced a quarterly loss for the first time since 2000 after issuing the first profits warning in its history. The 4Q loss of €263 M (due to a writedown of €650 M to the SlimFast dietary range) compared to a 4Q
2003 profit of €730 M. Group sales were down 2% in 4Q 2004 at €10.2 bn. For 2004 as a whole, the group achieved a net profit of €1.9 bn, down 32%, on sales of roughly €42 bn, down 6% year-on-year. Operating profit fell 9%. According to market analysts, Unilever’s problems are down to too little (and misdirected) advertising, unrealistic performance targets, some unattractive products, and a lack of innovation and creativity. Unilever spends about 14.5% of its revenues on advertising, which exceeds the 12% spent by Nestle, the world’s largest food company, but much less than the 20% spent by Procter and Gamble (P&G). Unilever needs to make an acquisition of the sort made by P&G in its Jan 2005 takeover of Gillette [Focus on Surfactants, Mar 2005]. Possibilities include US-based Colgate-Palmolive or Reckitt Benckiser. The latter would be expensive. In addition, Unilever’s debts are high: at the close of Dec 2004 net debt stood at €12.5 bn. It could benefit from divesting some operations that contribute little to growth, such as Slim Fast, household care products, frozen foods and prestige fragrances, which together account for about 10% of the group’s sales. Economist, 12 Feb 2005, 374 (8413) & 64 The Independent, 12 Feb 2005 (Website: http://www.independent.co.uk) & Handelsblatt Wirtschafts- und Finanzzeitung, 11 Feb 2005, 6 (30), 13 (in German)
HLL net profit drops 32% for 2004 In India, Hindustan Lever Ltd (HLL) posted a 32% lower net profit at Rup 11.9736 bn on a 2% decline in turnover at Rup 99.2695 bn for 2004 (net profit of Rup 17.7179 bn in 2003). The Home and Personal Care division recorded a volume growth of 5% and value growth of 3.4% for 4Q 2004, with good volume growth for detergents and shampoos. Business Line, 12 Feb 2005, 12 (42), 1
Own-label success makes McBride a good safe bet UK-based household goods group McBride is behind the supermarket APRIL 2005
FOCUS own-label products that are boring a hole in the bottom lines of such companies as Unilever. It posted a 6% increase in half-year profits to £17.5 M on sales also up 6% at £268 M. The group, which makes more than half its sales outside the UK, cautioned that it needed to increase prices to compensate for rising raw material costs while improving efficiency. The Independent, 11 Feb 2005 (Website: http://www.independent.co.uk)
Clorox 2Q 2005 For its 2Q 2005 (ends 31 Dec 2005), The Clorox Co has reported turnover of $1000 M ($920 M for 2Q 2004), R&D costs of $21 M ($20 M), earnings from continuing operations of $136 M ($101 M) and net earnings of $699 M ($109 M). For its 1H 2005 (ends 31 Dec 2005), the company has reported turnover of $2048 M ($1926 M for 1H 2004), R&D costs of $42 M ($39 M), earnings from continuing operations of $245 M ($216 M) and net earnings of $822 M ($238 M). Continuing operations results reflect the impact of the Henkel transaction [Focus on Surfactants, Dec 2004]. In North America, Clorox’ Household Products segment achieved 9% sales growth, 9% volume growth and 11% pre-tax earnings growth in 2Q 2005. Strong shipments of the new Clorox ToiletWand disposable toilet-cleaning system [ibid, Mar 2005] contributed to sales growth. Pre-tax earnings reflected the benefit of cost savings and increased sales, partially offset by unfavourable raw-material expenses. The company’s International business segment saw 16% sales growth, 12% volume growth and 19% pre-tax earnings growth in its 2Q 2005. Strong sales growth in the segment was driven by increased volume behind new products and category and share growth in Latin America, and the continued growth of the newly introduced Clorox home-cleaning products in Australia and New Zealand. Press release from: The Clorox Co, 1221 Broadway, Oakland, CA 94612, USA. Tel: +1 510 271 7000. Website: http://www.clorox.com (7 Feb 2005)
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COMPANY NEWS Akzo Nobel chemicals’ restructuring will retain surfactants, divest oleochemicals Akzo Nobel is to undertake a second round of restructuring that will see the sale of six businesses with total sales of €750 M/y, accounting for 17% of the company’s chemicals sales during 2004, and employing 1900 people. It has already divested businesses with sales of €1 bn (refinery catalysts, phosphorus chemicals and coatings resins). The latest set of businesses to be sold are: inks and adhesive resins; oleochemicals; salt specialities; PVC additives; solar salt Australia; methyl amines/choline chloride and others. The proposed divestments should be completed within 12 months. The company will focus on five core areas within its chemicals segment: pulp and paper chemicals, polymer chemicals, a new focused surfactants business, functional chemicals, and a restructured base chemicals business (chloralkali, electrolysis salt & energy businesses). These five businesses had combined sales of €3 bn in 2004, giving a net profit of €350 M. The chemicals segment posted its best performance for years with operating profits from continuing operations up 21% on sales of €4.3 bn (down 4%). In total, Akzo Nobel recorded a 42% rise in profits in 2004 to €856 M on sales down 3% at €12.7 bn. European Chemical News, 14 Feb 2005, 82 (2134), 6 & Chemical Market Reporter, 14 Feb 2005, (http://www.chemicalmarketreporter.com)
White biotech helps competitiveness Henkel wants in future to be able to wash clothes at below 30°C. To this end, the company is expanding its alliance with ‘white biotech’ firm Brain AG for the development of improved enzymes for laundry applications. The alliance aims to develop new proteases from noncultivated microorganisms which are active at low temperatures. The use of enzymes that work at lower temperatures means fewer chemical additives, a lower washing temperature and lower water consumption. Henkel thus hopes to make its products more
competitive. Worldwide, biotech methods are used to produce almost 5% of all substances in the chemicals field alone, representing sales of €35 bn. This figure is expected to rise sharply. Handelsblatt Wirtschafts- und Finanzzeitung, 18 Feb 2005, 7 (35), 12 (in German)
Branding, five new lessons: P&G’s acquisition of Gillette The P&G acquisition of Gillette on 28 Jan 2005 indicates that innovation is key and marketing is more diffuse and personal. Since the acquisition sales growth at both companies has risen and earnings and margins have both increased. P&G’s sales growth is at 8%/y, excluding acquisitions, double the rate in the late 1990s. The price for Gillette was $57 bn, 19 times earnings before interest, taxes and depreciation. P&G has innovated with existing brands, such as with its market leading Tide detergent and increased sales 2.6% during 2004 in a market segment that is growing at under 1%. Consumers are also demanding that innovative products reach the market more quickly. Companies also need to avoid having the majority of the sales outlet through Wal-Mart. According to studies, the more that is sold through Wal-Mart the less the producer makes. P&G sells 18% of its goods through Wal-Mart and has a wide range of other outlets for its products. Broad-based thinking and the use of new media are also essential strategies in marketing. Business Week (European Edition), 14 Feb 2005, 3904 (1234), 26,28
Henkel to invest in Leningrad region plant Henkel is to invest around Roubles 300 M in the expansion of the HenkelEra plant at Tosno, Russia in 2005. It will expand production of industrial adhesives and construct a new warehouse to store synthetic detergents. Henkel invested €5.7 M in the plant in 2004, mostly in the expansion of synthetic detergent production. Henkel-Era had sales of Roubles 5.14 bn in 2004 (+66.3%). Interfax Chemicals, Jan 2005, 2 (Interfax Information Services BV. Tel: +1 303 368 1421. Fax: +1 303 368 1458. Email: [email protected]. Website: http://www.interfax-news.com)
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