IWP to concentrate on Jeyes integration as profits climb 14%

IWP International, the household products and distribution group, has said the integration of Jeyes Group would be the main challenge in the year ahead although the company remains on the lookout for a US acquisition.

IWP's £60 million offer for Jeyes has already been declared unconditional as the company has received acceptances in respect of more than 60 per cent of the shares. "The big target is to integrate Jeyes. We have it, so let's put it together and make a proper job of it," said chief executive, Mr Joe Moran.

Jeyes's operating margins were currently around 3.5 per cent, he said, but IWP aimed to raise them to level of between 8 per cent and 9 per cent which it enjoys in its household products business.

Meanwhile, it will continue to look for "a good business with good management" in the US while, down the line, it would also like to enter the French market. The company also plans to consolidate its household products business and its personal care business in larger, more easily managed strategic groups.

"We are quietly confident going ahead that we are in for a good period of growth," Mr Moran said.

He was speaking as IWP announced a 14 per cent increase in annual pre-tax profits to £25.6 million, in line with broker forecasts.

Turnover increased by 26 per cent to £262.4 million, boosted by a nine-month sales contribution of £31 million from Constance Carroll, the British cosmetics firm acquired last year.

IWP's household products and personal care division, which includes Royal Sanders in the Netherlands, reported turnover of £170.1 million, up from £128.2 million a year earlier. Operating profit rose by 23 per cent to £23.3 million but the operating margin fell to 13.7 per cent from 14.7 per cent.

The British firelighter business was hit by the mild winter and the strength of sterling didn't help.

Meanwhile, there was a slight erosion of margins in the Dutch toiletries business as the cool summer affected the sale of suncare products while the company also made a significant investment in terms of personnel.

IWP's labels and distribution business recorded a 16 per cent increase in turnover to £92.3 million while operating profit rose to £6.3 million from £5.8 million. Operating margins fell slightly to 6.8 per cent from 7.3 per cent.

Interest cover fell to 7.5 times from 10.8 and is likely to fall further, to between five and six times, the company said.

IWP announced a 10 per cent increase in the full-year dividend to 5.87p while earnings per share rose by 14 per cent to 25.86p.

The share price was unchanged on the Irish market at 450p but analysts described the results as "a solid set of numbers" and said 500p was a likely target.