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NZ nappy competition weighs on Asaleo

NZ Newswire logoNZ Newswire 23/02/2017 Sophie Boot

Asaleo Care, the Australian stock exchange-listed maker of household brands such as Libra, Sorbent, Purex and Treasures, posted a 22 per cent drop in annual profit with revenue declining as it faced more competition in the New Zealand nappy market.

Profit fell to A$59 million in 2016, from A$75.6m a year earlier, on a 2.6 per cent drop in revenue to A$605.9m, the nappy, toilet paper and tampon maker said in figures released to the ASX.

Just over half of Asaleo's earnings come from its personal care category which encompasses the Libra, Tena and Treasures brands, while the remainder comes from its tissue segment which includes Sorbent, Purex, Handee and Deeko.

The company has 383 employees in New Zealand with manufacturing facilities in Kawerau and Te Rapa, and distribution centres in Auckland and Christchurch. Revenue from the New Zealand operations shrank 5.7 per cent to A$146.1m in the year.

The company is forecasting low single-digit growth in underlying net profit and underlying earnings before interest, tax, depreciation and amortisation in 2017.

Underlying revenue from personal care dropped 5.3 per cent to A$182.7m in the year, with underlying ebitda down 7.1 per cent to A$66.9m.

In May 2016, Asaleo cut prices for its incontinence and feminine products by about 20 per cent at major customers Coles and Woolworths. The introduction of that pricing model resulted in one-off implementation costs in the first half, but has stabilised its sales and second-half earnings for those products were in line with the first half, it said.

Its underlying revenue for baby care products including nappies declined 11 per cent "due to deeper and more frequent discounting activity required in New Zealand to protect market share".

The company experienced intense competition in New Zealand from its largest competitor which adversely impacted volumes and prices, it said.

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