Exceptional charges see IWP losses reach €83m

Massive one-off charges left consumer goods group IWP with record pre-tax losses of almost €83 million for the year ended March 31st last.The shares closed unchanged yesterday at 22 cent.

The company yesterday reported that it had operating profits on ordinary activities of €15.8 million but said this was overshadowed by a number of exceptional losses.

Its profit and loss account for the year showed the exceptional losses totalled €86.9 million. Pre-tax profits came to €4.3 million, leaving the group with a total pre-tax loss of €82.6 million.

Diluted losses per share were 105.5 cent and the company was left with net debt at the year end of €97 million.

IWP had turnover of €361 million during the year - €221 million from continuing operations and €140 million from discontinued businesses. These included the British household products division, which it sold during the year, and the closure of its aerosol operation.

The largest exceptional loss was a charge of €56.2 million, mainly attributed to the sale of the household subsidiary. It sold the division, which included brands such as Jeyes and Bloo disinfectants, to its management and a venture capital partner. IWP maintained a 35 per cent stake in the business.

The other charges were €23.5 million associated with the cost of reorganising other elements of the group. Chief executive Mr Joe Moran said that almost €14 million of this was accounted for by the centralisation of its Dutch toiletries company, Royal Sanders.

He said it also included provision for ongoing rationalisation of its British fragrances operation, Constance Carol. IWP is seeking 220 redundancies at the company.

The closure of its aerosol division cost the company €7.2 million.

While analysts yesterday conceded that a large element of the losses were goodwill write-offs and, therefore, non-cash, they remained sceptical about the stock. A note from Merrion Stockbrokers released after the group's announcement maintained its long-standing "avoid" rating.

Mr Moran described the year as one of the most difficult in the group's history. But he said the company was in a position to turn the business around.

It intends to halve losses at its Polish distribution business, which will save €1.5 million. It is also hoping to cut 25 per cent off its €6.4 million interest bill.

He said he was optimistic IWP could grow its personal care business (made up of perfume and toiletries). "We intend to grow our personal care business by 30 per cent," he said.

The division delivers margins of around 10 per cent.

Mr Moran's statement warns, however, that the current year will be a difficult one.