Sales at condom and footcare manufacturer SSL benefited from a four-month contribution from its newly acquired Russian business, which added £45m to sales and £10.5m to operating profits. Strip that out and underlying sales grew by a modest 1.1 per cent in the period, although underlying operating profit jumped 10.7 per cent to £46.6m.
Sales at the branded products division, which is dominated by Durex, rose 5.3 per cent in the period to £143.5m driven by growth in China, Poland, Hungary and Germany. Specifically, the Durex play range of products - essentially lubricants and vibrators - saw sales increase 10.5 per cent in the period to £25.2m. The footcare division's sales, however, grew by a far more pedestrian 1.9 per cent to £95.6m as de-stocking in Italian pharmacies offset a stronger showing in Germany, France and Scandinavia. Although Scholl footware had more of a spring in its step, with sales there up nearly 5 per cent to £48.7m.
SSL also managed to boost its operating margin from last year's 12.3 per cent to 13.5 per cent. That partly reflected a restructuring of the group's supply chain and an emphasis on investing in the brands part of the business. That emphasis meant that sales of lower-margin third-party products fell 21.3 per cent to £24.8m. What's more, SSL benefited from a fall in the net debt pile - to £60m from £124m a year earlier - which meant that the group's net underlying interest charge for the period fell 34 per cent to £3.3m.
SSL's chief executive Gary Watts is still targeting 50 per cent growth in basic earnings per share (EPS) by March 2012 as the company benefits from the full ownership of its interests in Russia, along with investment in its leading brands. Although Evolution Securities believes that, at current growth rates, SSL should surpass that target a year early - it expects adjusted pre-tax profit of £77m for 2010, giving adjusted EPS of 27.4p, rising to £105m and 32.4p, respectively, in 2011.
SSL INTERNATIONAL (SSL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 700p | MARKET VALUE: | £1.49bn | |
| TOUCH: | 698-700p | 12-MONTH HIGH: | 705p | LOW: 399p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 129p* | NET DEBT: | 17% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 323 | 32.5 | 11.8 | 2.6 |
| 2009 | 391 | 51.9 | 15.5 | 3.1 |
| % change | +21 | +60 | +31 | +19 |
Ex-div: 3 Feb Payment: 4 Mar *Includes intangible assets of £306m, or 144p a share. | ||||
