IWP says profits for 2003 will fall below expectation

Personal care group IWP has warned that its profits for this year will fall beneath expectations as conditions remain difficult across most divisions.

In a statement to the stock exchange, IWP chief executive, Mr Joe Moran said the company would not achieve its earnings target for 2003 as weak activity in North America combined with underperformances in businesses in Britain, the Netherlands and Poland.

Mr Moran said the group would take an €8 million charge on the rationalisation of its UK cosmetics operation, Constance Carroll.

The charge, which will in part reflect redundancy payments for 200 staff, will however be cancelled out by related asset disposals, according to Mr Moran.

The move will "improve the competitive position of Constance Carroll and facilitate a real improvement in its profitability over the coming years," Mr Moran said. In December, IWP had said Constance Carroll was trading well.

Mr Moran hinted that IWP could be poised to exit its Polish distribution business, an operation that has soaked up about €25 million in investment over the past seven years,

He said the Polish operation would offer "a wonderful opportunity for somebody who wants to develop a business in Poland", adding that IWP was "examining all possible options" for the company. "We want to get some value for the money we've invested," Mr Moran said.

IWP has also pushed forward an expected profit on the disposal of property related to its Dutch business, Royal Sanders, into next year.

When combined with an ongoing restructuring of the operation, this will leave an exceptional charge on the Dutch arm rising by about €1 million in 2003, according to the trading update.

In a positive development, the company has restructured its debt portfolio over the past few months, most recently agreeing the repayment of €30 million in high-coupon long-term debt.

Mr Moran said he was "optimistic" about IWP's future but declined to be drawn on speculation that he could be preparing to build on his 15 per cent holding by launching a management buyout.

IWP shares closed unchanged at 28 cents last night.