INDUSTRY: Industrial holding group IWP is likely to realise more than €110 million from the sale of its entire household products division to its British management, which is backed by a private equity house.
It is understood the sale is likely to be completed within the next three weeks.
While the sale of the household products division has been generally welcomed, IWP also gave the market some unpleasant news with a warning that full-year profits would be below current market forecasts.
Full-year profit forecasts currently range from €17 million to €19 million, with earnings per share forecasts around 16 cents. In its statement, IWP said that adverse trading conditions in the second half of the year, especially in the final quarter, meant that the results would be below the market's expectations.
IWP's household products business, which includes a number of well-known brands such as Jeyes, Bloo and Parozone, is largely based in Britain and it accounts for about half the group's total turnover but only one-third of operating profits. The division manufactures bleaches, toilet cleaners, air fresheners, firelighters, insect control products, cleaners and wipes. More than half the sales are in Britain and one-third in continental Europe.
In the year to March 2001, the division accounted for €251 million of total sales of €565 million and €13.2 million of the group's €41.8 million operating profits. In the half-year to the end of September, turnover in the division was €142.8 million with operating profits of €7.7 million.
Informed sources said that the management group backed by the unnamed private equity house will have to pay in excess of €110 million for the household products division. If this proves to be the case, it will have a dramatic impact on IWP's balance sheet Company broker Goodbody has forecast end-March debt of €153.5 million but almost three-quarters of this would be eliminated leaving IWP with the financial capacity to invest in its cosmetics/toiletries in Britain and the Netherlands and its distribution business in Poland.
IWP shares fell 15 cents to €1.45 after the profit warning and disclosure of the likely sale of the household products division. At this level, IWP is valued at almost €110 million.
Over the past couple of years, there has been periodic speculation that IWP chairman Mr Joe Moran, who owns 11.7 per cent of the company, might take the group private. Sources said with the balance sheet in much improved shape it would be a total surprise if Mr Moran looked once again at a management buyout of IWP.
