IWP International, the personal care and household products group, has announced an 11 per cent increase in first-half profits despite difficult market conditions in Russia and eastern Europe.
Profits before tax, goodwill and exceptional items rose to £11.9 million as the acquisition of Jeyes and Constance Carroll helped offset a disappointing performance from the personal care division which suffered as cosmetic sales to Russia were halted from August.
Despite the difficulties, the company said it was confident that it would deliver improved sales and profit growth in the current year. Prompted by the poor conditions in eastern Europe, the company has decided to restructure its personal care division at a cost of £4.5 million which will be charged in the full year accounts. It plans to close all four of its personal care factories in Britain, concentrating production at a new facility being built in Chester. This should cut costs across a wide range of areas and result in savings of not less than £1 million in the first full year, IWP said.
It will also close its factory in Belgium, transferring production to the Netherlands, while the integration of Jeyes has resulted in the closure of two factories and 49 redundancies in Britain at a cost of £2.4 million in the first half and a full-year cost of £5 million.
As well as streamlining its business, the company is planning to centralise its sales and marketing effort. Overall group turnover rose by 43 per cent to £163 million in the six months ending September 30th while operating profits increased by 27 per cent to £15.5 million.
However, if the impact of the two acquisitions is stripped out, turnover rose by just 7.5 per cent while operating profits increased by 10.2 per cent.
The company said its label and distribution business continued to be a solid earner, increasing operating profits by 15 per cent to £3.0 million. Its Polish distribution business, Polbita, performed particularly well and the group expects further strong growth there.
The household products division, with a contribution from Jeyes, delivered a 69 per cent increase in operating profits to £4.9 million. The personal care division turned in a disappointing performance.
Operating profit, when acquisitions are stripped out, declined slightly due to economic problems in eastern Europe and Russia.
Adjusted earnings per share rose by 5.6 per cent to 11.28p while the company is proposing to increase its interim dividend by 10 per cent to 2.66p.