Sales fall helps keep IWP in red

LIKE-for-like sales at IWP tumbled 12% to €170 million last year as weaker sterling and the closure of a loss-making subsidiary hurt the household products group.

Pre-tax profits fell from €4.8 million to €1.1 million, but exceptional items of €11.4 million brought the bottom line firmly into the red.

Operating profits increased from €2.5 million to €4 million.

Chief executive Jim Murphy said the year had been “a very difficult and challenging” one, but added that management had concentrated on getting the foundations right for a successful future.

Mr Murphy said IWP had sold non-core businesses and renegotiated its borrowing arrangements with banks. “The improvement in operating profit and reduction in debt is encouraging and the various actions taken over recent months should enable us to significantly grow operating profit in the coming year,” he said.

The company’s net debt burden fell €20 million to €77.1 million as the company paid down some of its loans. But the benefits of lower debt will be offset by the provisions of the new revised funding package, which involves a 0.5% higher interest rate and a restriction on paying dividends to shareholders.

Total interest costs for the year were €8.9 million. Currency effects wiped €14 million off revenues as the group’s British sales were worth less in euro terms.

Davy analyst John O’Reilly warned debt remained too high and that the results made “grim reading”. Mr O’Reilly said the company needed to consider selling its 35% stake in cleaning fluid manufacturer Jeyes to bring debt to a “tolerable” level.

Mr O’Reilly also warned risk-averse investors to steer clear of the stock, saying IWP was a “purely speculative” play.

Goodbody analyst Robert Eason said earnings were lower than expected but was upbeat about the performance of Jeyes, which delivered a 29% increase in profits. The reduction in net debt was ahead of forecasts, said Mr Eason, which reflected better working capital management.

IWP shares fell 4% to 24c yesterday and remain considerably below the 44c value put on the company by the backer of an unsuccessful management buyout attempt last year.

IWP rejected the offer on the basis that it failed to put a “fair value” on the company.

Then deputy chief executive Bernard Byrne, who headed the failed approach, left shortly afterwards to join the ESB.

Mr Murphy said he was focused on IWP’s future and added that the market was in “wait and see” mode while the company’s restructuring process took place.