- Email: [email protected]
Stepan doubles 2Q 2009 profit, but sales fall
F O C US
MARKET REVIEWS The top 50: US household & personal products industry The US cosmetics sector, which has been dominated by New York Citybased businesses, is seeing a shifting growth trend towards the West Coast, particularly to California. In fact, 11 of the firms included in HAPPI’s latest annual ranking of the top 50 USbased firms in the household and products sector, are based in California. They include 13th placed Clorox with sales of $2.5 bn, and 18th placer Guthy-Renker with sales of $1.3 bn. The top spot was taken by Ohio-based Procter & Gamble (P&G), which reported estimated sales of $65 bn for household, personal care and oral care products. Corporate sales reached $83.5 bn, and net income totalled $12 bn for FY ending 30 Jun 2008. P&G is in the middle of its biggest capacity expansion project ever in all its years of business, with plans for constructing 19 manufacturing plants through 2013. The firm is planning to increase output at sites in Romania, Poland, Mexico, South Africa, Thailand and the USA. At second place is New York-based Colgate Palmolive with sales of $13.1 bn of household and personal care products. Total corporate sales reached $15.3 bn, and net income totalled $1.9 bn. The 10.5% growth in sales of oral, personal and home care products was driven by a 3.5% volume growth, 4.5% price hikes, and positive foreign exchange impact of 2.5%. Wisconsin-based SC Johnson was ranked no 3. The company reported estimated sales of $8 bn for FY ended 30 Jun 2008, including sales from food management products. Corporate sales increased by over 6%. SC Johnson’s new products include the Glade Sense & Spray automatic spray, Nature’s Source natural cleaners, and Pledge multi-surface cleaner. In May 2009, the company divested its Edge shave cream franchise to Energizer under a $275 M deal. HAPPI, Household & Personal Products Industry, Jul 2009, 46 (7), 66-68,70-72,74-76,78,80,82,84,86,8898,100-102,104-118,120-122,124
6
O N
S U R FAC TA N T S
Green is the new black: innovations abound in natural ingredients for household and personal care products in 2009 Consumers are becoming more conscious of what goes into the manufacturing of personal care products, concerned about the possible impact of the products on the environment and on their health. At least two out of three beauty product consumers say they are willing to buy ‘eco-beauty’ products, according to the marketing firm The NPD Group Inc. In 2008, sales of natural personal care products in the USA grew 19% to $2 bn, estimates market research firm Kline & Co. The use of botanicals in particular is increasing at a rate of 8% in the USA and Europe. Through 2013, Mintel projects the green product market, including green personal care and environmentally friendly household cleaners, to grow 19%. To establish a foothold in the expanding market, manufacturers are launching a slew of new products all claiming natural and organic formulations, but some are worried that a lack of a rigorous definition for ‘natural’ could eventually prove detrimental to the industry’s reputation. As a result, new certifying organizations and labels are being created, including the Natural Products Association (NPA), NSF International and NaTrue. It is suggested that the key to advancing the organic sector is by creating a more consistent certification standard. Europe’s NaTrue label and the USA’s NSF/ANSI 305 standard have agreed on a fast-track certification process to facilitate quicker accreditation. Under the new process, companies with NaTrue accreditation will no longer undergo another certification process to secure NSF certification. NaTrue is also presently negotiating a mutual recognition process with the USA’s NPA. Elsewhere, Organic Monitor reports that 2008 global sales in the natural and organic products market reached almost $8 bn, though this represented only 2% of the overall cosmetics and toiletries (C&T) market. The leading sales regions are North America and Europe, with 90% of overall sales, while the leading sales market is Germany, with 5% of the total organic market. Meanwhile, growing competition in the natural and organic sector is prompting C&T
firms to find ways to enhance their product offerings. One way is to integrate other green initiatives like sustainability as well as the addition of botanical and food ingredients. HAPPI, Household & Personal Products Industry, Jun 2009, 46 (6), 45-46,48-50,52,54 & SPC, Soap, Perfumery and Cosmetics, Jul 2009, 82 (7), 38-40
COMPANY RESULTS Stepan doubles 2Q 2009 profit, but sales fall Surfactants and polymers producer Stepan posted net profit of $19.6 M for 2Q 2009, up two-fold year on year from $9.8 M in 2Q 2008, despite a 24% drop in sales to $321 M (€226 M) from $420.4 M in 2Q 2008. The improved operating result was attributable to lower commodity raw material prices and expense controls, while the sales decline was due to a 9% fall in volumes coupled with lower sales prices (9%) and 6% lower foreign sales due to currency translation effects. The selling price reductions were due to falling raw material prices though some have started to rise again recently, the company says. For 1H 2009, Stepan posted net income of $34.7 M (up 88%) on net sales of $639.3 M. For the surfactants segment, sales in the three months to 30 Jun 2009 were $238.5 M, down 23% from $308 M in 2Q 2008. However, the segment’s gross profit grew by $12.8 M, or 38%, for the quarter, offsetting a 7% decline in sales volume. The company reports that sales volumes in its largest surfactant markets, consumer laundry and personal care, were higher than the previous year. The improved profit was attributable to lower commodity raw material costs, purchasing-led cost reduction initiatives and lower freight costs. The effect of the stronger US dollar on translation of foreign results reduced surfactant gross profit by $2.8 M. For the first six months of 2009, the segment’s gross profit rose 30%, or $19.7 M, while sales fell 17% to $498 M. Press release from: Stepan Co, 22, West Frontage Road, Northfield, IL 60093, USA, tel: +1 847 446 7500, fax: +1 847 501 2100, website: http://www.stepan.com (28 Jul 2009)
SEPTEMBER 2009
MARKET REVIEWS The top 50: US household & personal products industry The US cosmetics sector, which has been dominated by New York Citybased businesses, is seeing a shifting growth trend towards the West Coast, particularly to California. In fact, 11 of the firms included in HAPPI’s latest annual ranking of the top 50 USbased firms in the household and products sector, are based in California. They include 13th placed Clorox with sales of $2.5 bn, and 18th placer Guthy-Renker with sales of $1.3 bn. The top spot was taken by Ohio-based Procter & Gamble (P&G), which reported estimated sales of $65 bn for household, personal care and oral care products. Corporate sales reached $83.5 bn, and net income totalled $12 bn for FY ending 30 Jun 2008. P&G is in the middle of its biggest capacity expansion project ever in all its years of business, with plans for constructing 19 manufacturing plants through 2013. The firm is planning to increase output at sites in Romania, Poland, Mexico, South Africa, Thailand and the USA. At second place is New York-based Colgate Palmolive with sales of $13.1 bn of household and personal care products. Total corporate sales reached $15.3 bn, and net income totalled $1.9 bn. The 10.5% growth in sales of oral, personal and home care products was driven by a 3.5% volume growth, 4.5% price hikes, and positive foreign exchange impact of 2.5%. Wisconsin-based SC Johnson was ranked no 3. The company reported estimated sales of $8 bn for FY ended 30 Jun 2008, including sales from food management products. Corporate sales increased by over 6%. SC Johnson’s new products include the Glade Sense & Spray automatic spray, Nature’s Source natural cleaners, and Pledge multi-surface cleaner. In May 2009, the company divested its Edge shave cream franchise to Energizer under a $275 M deal. HAPPI, Household & Personal Products Industry, Jul 2009, 46 (7), 66-68,70-72,74-76,78,80,82,84,86,8898,100-102,104-118,120-122,124
6
O N
S U R FAC TA N T S
Green is the new black: innovations abound in natural ingredients for household and personal care products in 2009 Consumers are becoming more conscious of what goes into the manufacturing of personal care products, concerned about the possible impact of the products on the environment and on their health. At least two out of three beauty product consumers say they are willing to buy ‘eco-beauty’ products, according to the marketing firm The NPD Group Inc. In 2008, sales of natural personal care products in the USA grew 19% to $2 bn, estimates market research firm Kline & Co. The use of botanicals in particular is increasing at a rate of 8% in the USA and Europe. Through 2013, Mintel projects the green product market, including green personal care and environmentally friendly household cleaners, to grow 19%. To establish a foothold in the expanding market, manufacturers are launching a slew of new products all claiming natural and organic formulations, but some are worried that a lack of a rigorous definition for ‘natural’ could eventually prove detrimental to the industry’s reputation. As a result, new certifying organizations and labels are being created, including the Natural Products Association (NPA), NSF International and NaTrue. It is suggested that the key to advancing the organic sector is by creating a more consistent certification standard. Europe’s NaTrue label and the USA’s NSF/ANSI 305 standard have agreed on a fast-track certification process to facilitate quicker accreditation. Under the new process, companies with NaTrue accreditation will no longer undergo another certification process to secure NSF certification. NaTrue is also presently negotiating a mutual recognition process with the USA’s NPA. Elsewhere, Organic Monitor reports that 2008 global sales in the natural and organic products market reached almost $8 bn, though this represented only 2% of the overall cosmetics and toiletries (C&T) market. The leading sales regions are North America and Europe, with 90% of overall sales, while the leading sales market is Germany, with 5% of the total organic market. Meanwhile, growing competition in the natural and organic sector is prompting C&T
firms to find ways to enhance their product offerings. One way is to integrate other green initiatives like sustainability as well as the addition of botanical and food ingredients. HAPPI, Household & Personal Products Industry, Jun 2009, 46 (6), 45-46,48-50,52,54 & SPC, Soap, Perfumery and Cosmetics, Jul 2009, 82 (7), 38-40
COMPANY RESULTS Stepan doubles 2Q 2009 profit, but sales fall Surfactants and polymers producer Stepan posted net profit of $19.6 M for 2Q 2009, up two-fold year on year from $9.8 M in 2Q 2008, despite a 24% drop in sales to $321 M (€226 M) from $420.4 M in 2Q 2008. The improved operating result was attributable to lower commodity raw material prices and expense controls, while the sales decline was due to a 9% fall in volumes coupled with lower sales prices (9%) and 6% lower foreign sales due to currency translation effects. The selling price reductions were due to falling raw material prices though some have started to rise again recently, the company says. For 1H 2009, Stepan posted net income of $34.7 M (up 88%) on net sales of $639.3 M. For the surfactants segment, sales in the three months to 30 Jun 2009 were $238.5 M, down 23% from $308 M in 2Q 2008. However, the segment’s gross profit grew by $12.8 M, or 38%, for the quarter, offsetting a 7% decline in sales volume. The company reports that sales volumes in its largest surfactant markets, consumer laundry and personal care, were higher than the previous year. The improved profit was attributable to lower commodity raw material costs, purchasing-led cost reduction initiatives and lower freight costs. The effect of the stronger US dollar on translation of foreign results reduced surfactant gross profit by $2.8 M. For the first six months of 2009, the segment’s gross profit rose 30%, or $19.7 M, while sales fell 17% to $498 M. Press release from: Stepan Co, 22, West Frontage Road, Northfield, IL 60093, USA, tel: +1 847 446 7500, fax: +1 847 501 2100, website: http://www.stepan.com (28 Jul 2009)
SEPTEMBER 2009