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Weak demand in European beauty packaging impacts Aptar results

By Simon Pitman , 05-Nov-2012

Negative currency translations and reduced demand for beauty and personal care, particularly in the European market, forces global packaging player Aptar to restructure its operations.

The company says that of its three business divisions, the beauty + Home division reported a significant drop in sales, which meant that the group results for the third quarter were down overall.

Sales were down 2 per cent to $589.6m (Euros459.5m), which the company said was primarily down to softness in the European market, which was counterbalanced by a more dynamic performance in the Latin America and Asian markets.

Net income for the quarter was $42.1m, down from $49.2m in the corresponding period last year.

Sales for the first nine months of the year were down 2 per cent to $1.76bn, while net profits for the period were down 10.5 per cent to $191.84m.

Beauty and home care takes a dive

In the company's mainstay beauty and home care division, sales were down by per 6 cent to $358.47m, which represented an increase of 1 per cent in local currencies after the negative impact of foreign currencies.

"Certain customers in the European beauty market remained cautious but this weakness was offset by increased demand from the personal care market," said Stephen Hagge, Aptar CEO.

“The US Dollar continued to be strong relative to  numerous other currencies and this had a significant negative impact on  our results," Hagge added.

"We estimate that the negative impact of changes in currency exchange rates accounted for approximately 8 per cent of the decline in sales and approximately 7 per cent of the decline in earnings in the quarter."

Weakness in Europe leads to restructuring

The company says that in light of continued weakening in the European market it has decided to close two of its 12 manufacturing operations in the region in an attempt to optimize its capacity there and better position itself for future growth.

The facilities server the personal care and beauty segments, together with the food and health care markets and are expected to cost the company approximately Euros 14 million, but will lead to annual savings of approximately Euros 9 million, beginning in late 2013.

Looking ahead, Hagge said that the he anticipated continued challenges into the fourth quarter, specifically with reference to currency translation, combined with ongoing softness in markets were there is economic uncertainty.

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