Aptar sales drop due to low demand in fragrance and cosmetics

By Katie Bird

- Last updated on GMT

A drop in demand from fragrance and cosmetics companies has led to falls in first quarter sales and income for Aptar Group.

Sales in the beauty and homecare segment of the US-based company dropped 25 percent on last year to $211.7m, although 17 percent of this is attributed to currency effects.

The low demand from the fragrance and cosmetics sector also affected the company’s closures business where sales saw a 13 percent decline.

Aptar Group’s third business segment, pharmaceuticals, performed slightly better reporting a 10 percent drop in sales value of which 9 percent was attributed to currency effects.

Operating income suffers

Operating income for the beauty and home sector was the worst hit, dropping 64 percent to $10.3m, which the company said is due to low sales made worse by underused capacity in the sector.

Aptar spokesperson Matt Dellamaria said: “Our business is more equipment intensive than it is labor intensive. When volumes are negatively impacted as they are now, we are not able to eliminate these more fixed costs as quickly as we need to.

“We have idle capacity in machinery for example that we can’t, nor want to, pull out of the chain.”

Forecasts from the company for the second quarter are not positive; however, CEO Peter Pfeiffer expects a turnaround in the beauty and homecare and closure segments in the second half of 2009.

At the moment clients and their customers are running down inventories, but a rebound in orders is expected when stock is run through, explained Dellamaria.

“In addition, the daily nature of our consumable products such as personal care and cosmetics means that consumers will continue buying. Although things are slow now, inventory changes will be corrected in a few months time,”​ he said.

French sites merge

Along with the first quarter results the company also announced the merger of two manufacturing facilities in France and the consolidation of a number of sales offices in Europe and North America.

Although cutting down the workforce was not the reason for the changes, Dellamaria could not rule out job losses.

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