Struggling Beige warns on prospects

Struggling Beige warns on prospects

JOBS NEWS

Business Day - Jul 11th 2012, 09:01

ALTX-listed consumer goods manufacturer Beige has blamed a R31,6m impairment to its investment in packaging company Crystal Pack for losses posted for the year to March, in its results released yesterday. 

The company also warned its near-term prospects were of concern because of difficult trading conditions globally.

Its diluted headline earnings per share (HEPS) fell from 0,89c to 0,27c per share.

Beige operates as a contract and packaging manufacturer. It manufactures and distributes cosmetics, soaps, laundry soaps, packaging and allied products on behalf of brand owners for both the local and international home and personal care industry.

Its clients include consumer goods giants, Unilever, Johnson & Johnson, Novartis and Reckitts.

"Trading conditions in the local and international retail arena remain challenging as a result of continued economic uncertainty," Beige CEO Mark di Nicola said yesterday.

"This is borne out in the substantial fluctuations in the monthly demand book and provides for an extremely volatile trading environment," he said.

But he said Beige had still managed to increase its revenue from R594,7m to R618,5m.

Revenue from outsourced manufacturing increased 7,7%, but this gain was largely offset by margin pressures resulting from increased raw material costs and higher production costs.

The company said it took strain from above-inflationary energy cost increases and additional labour costs linked to the volatility of its monthly demand book. These costs were not fully recoverable by price increases because of the tough market environments in which the group operates. Revenue from packaging operations was down 13,7% compared with the 12 months to March last year.

Mr di Nicola said the company would mitigate risks associated with uncertain economic conditions by pursuing vertical integration opportunities in the industry, which were meant to secure sources of supply of raw materials and to improve margins.

"In line with this strategy, the company has secured a credit facility for the construction and installation of a new soap noodle manufacturing plant and equipment through the Industrial Development Corporation (IDC)," he said.

The soap noodle plant, was expected to be completed in December. It was intended to help the firm control its input costs.

Looking forward, Beige said it could gain more business following its acquisition by Lion Match Company last year.

Lion Match acquired a controlling interest in Beige for R45m, after it secured 562-million shares held by the empowerment investment company, Thebe Investment Corporation.