Playtex restructures

Related tags Company Revenue Playtex products

Playtex Products has announced a restructuring program on the back
of strong financial results for 2004. The program aims to push
profit growth into double figures in the course of the next three
years, reports Simon Pitman.

The Connecticut-based company, which manufacturers a range of personal care items for women and infants, as well as skin care products including wipes, suncare and bubblebath, says it will realign the recruitment of staff, with a greater emphasis on incentives; re-organize its core category focus to focus on categories or brands that have top shares together with continued efforts to reduce costs.

The company also added that, although not a key focus, it would also be looking at international expansion, as well as core business acquisitions providing conditions remain conducive.

"We will review opportunities to expand internationally, as the market for the company's products outside the US is significant,"​ a company statement said. "We will also consider acquisitions in our core categories and when immediately accretive, an only when the company has the ability to absorb them."

The company said that the realignment plan would cost between €12 million to $14 million this year, rising to between $22 million and $24 million by 2006. A restructuring plan implemented in 2003 should savings of between $34 million and $38 million by 2006. As part of that plan the company announced that it was laying off 20 per cent of its 1500 strong workforce at the beginning of last year.

The current drive to cut costs, should see the company better poised for future expansion if the current financial performance remains steady and future cost cutting is equally successful.

Playtex Products​ recently announced that sales in 2004 were up from $643.87 million in 2003, to reach $666.89 million in 2004 - the first rise in sales in four years. The company's skin care division reported growth of nearly 10 per cent, with sales jumping from $200.86 million in 2003, to $219.58 million in 2004.

Neil DeFeo, Playtex CEO said: "Our goal for the next three to four years is to build profits as expressed in terms of adjusted EBITDA to at least $200 million versus our 2004 adjusted EBITDA of $121 million. This is an aggressive goal, but one we are committed to achieving through business growth and cost savings work already begun."

The company said that the planned cost savings should see EBITDA margins reach the mid 20's by 2008, pushing earnings per share into double figures. Equally operating profits should reach $185 million, compared to a figure of $104 million in 2004.

For 2005 the company said it is expecting net sales to up in low single digits, compared to the previous year and that operating income should range between $97 million and $115 million, compared to the $104.49 million in 2004. Equally it said net income would depend on interest expenses, which will be dependant on bond repurchases.

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