Asaleo Care’s half-year results

Results in line with expectations following sale of Australian tissue business.

Asaleo Care has reported a net profit of $7.3 million for the six months to June 30, while underlying revenue rose 2.2 per cent to $202 million.

Asaleo Care CEO and managing director Sid Takla said the company’s financial performance for the first half was in line with expectations, following the sale of its consumer tissue business to Solaris Paper in March.

The sale included Sorbent toilet and facial tissue, Handee Ultra paper towel, and Deeko serviettes and disposable tableware.

The company retained its Australasian personal care and B2B operations, as well as the consumer tissue business in New Zealand, including Purex toilet tissue, Sorbent toilet and facial tissue and Handee towel.

“Sale proceeds were largely used to pay down debt to deliver a strong and healthy balance sheet, which will enable us to invest in our higher margin, higher growth brands,” Takla said.

“Our strategy to drive growth is now clearly focused on becoming the leader in personal care and hygiene in Australasia, by investing in our brands and putting the needs of our customers and consumers first.”

Takla said the company’s major shareholder, Sweden’s Essity, has reaffirmed its long-term commitment to the company, with a new agreement being signed extending the Trade Mark and Technology License Agreement out to 2027.

“This will provide continued access to world-leading innovation, research and technology, marketing materials and a pipeline of new product development for our Tork, TENA and Libra brands.”

Takla said the company’s major capital investment to upgrade the Kawerau, New Zealand manufacturing facility remains on track for completion next month and will deliver substantial operating efficiencies by the start of 2020.

“The outlook for the remainder of FY19 remains unchanged, with continuing operations underlying EBITDA forecast to be in the range of $80 – $85 million. We expect to see some benefits of continued easing in pulp prices, partially offset by the weaker Australian dollar. No interim dividend was declared.”

B2B business sales of its high margin, proprietary ‘Hero Systems’ continue to increase. TENA Healthcare increased by 5.1 per cent, with underlying growth in demand from the residential aged care and in-home care sectors.

Tork Professional Hygiene revenue was marginally down 1 per cent following the exit of two unprofitable contracts. The Tork EasyCube has been implemented in three facilities in NZ, while several trials are in still in progress in Australia.

B2B EBITDA was down 13.4 per cent to $20.8m as a consequence of higher pulp costs in H1 (expected to ease in H2), and production shuts to allow for the installation of new converting equipment.

B2B growth initiatives for the company include “strong Essity NPD pipeline to leverage future growth” as well as a “major Q4 launch of a new, innovative system”.

Retail business revenue growth has been strong in the retail segment, up 4.5 per cent to $95.6 million. Volume and value growth were delivered across all categories except baby.

Retail EBITDA was down 1.4 per cent at $18.6 million due to increased investment in shopper promotional activity, brand advertising and incremental sales and marketing resources. Higher pulp costs also impacted first half margins, but this is expected to ease in H2, delivering a modest margin upside.

Takla also announced the appointment of Essity’s Marie-Laure Mahé (commercial director France and Belgium consumer goods) as a director of the company, following the resignation of Robert due to an internal promotion.

Asaleo Care is a leading personal care and hygiene company that manufactures, markets, distributes and sells personal care and hygiene products throughout Australia, New Zealand and the Pacific Islands.

Its portfolio of market-leading brands includes Libra, TENA, Tork, Treasures, Purex, Sorbent, Handee Ultra, Deeko, Viti and Orchid. The company has 15 manufacturing and distribution facilities and employs about 725 people.

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