AptarGroup suffers from weak demand in fragrance and cosmetics

14-Oct-2009 - Last updated on 15-Oct-2009 at 16:15 GMT

Packaging supplier AptarGroup expects softness to continue in the cosmetics sector, its biggest business sector, although predicts the end of inventory reduction in others.

The Illinois-based company reported sales of $473.7m from its cosmetics, closures and pharmaceutical packaging businesses in the quarter ending September 30; an 11 percent drop in sales compared to the corresponding quarter last year, 5 percent of which it puts down to currency effects.

This revenue drop dragged net income down by over 16 percent to stand at $33.46m for the quarter.

Despite the results, the company remained positive explaining that the results were an improvement on previous quarter figures and certain sectors were beginning to look up.

Commenting on the results, CEO Peter Pfeiffer said: “Many of our customers remained cautious in the quarter, but we believe inventory reductions were reaching an end in certain markets and our third quarter results improved sequentially over our second quarter results.”

Weak demand means low beauty sales

The home and beauty segment, which accounts for over half of the company’s revenue, saw a 12 percent sales decline, of which 5 percent was attributed to currency effects.

According to CEO Peter Pfeiffer, the decline was mainly due to weak demand in European and North American cosmetics and fragrance markets.

Asia and South America remained growth markets for the company, and it announced the completion of its acquisition of Brazilian aluminium parts provider Covit do Brasil Componentes de Alumínio para Perfumaria.

Although the company is small (AptarGroup paid approximately $7.6m for the company), it hopes the Covit do Brasil acquisition will help enhance competitiveness in the South American region.

Income for the beauty and home segment fell 21 percent or $4.6m, of which $1.2m was put down to the closing of facilities and associated severance packages.

Like many of its competitors which also operate in the pharmaceutical industry, AptarGroup has noted the diversity of the business as one of its strong qualities.

“The diversification of our business has been a stabilizing factor in challenging times and we expect that to continue,” said Pfeiffer.

Although Pfeiffer said in general the company was ‘cautiously optimistic’ that inventories may be bottoming out in certain markets and demand would therefore start going up, he did not include cosmetics and fragrances in this.

“We expect the softness in the fragrance/cosmetic market to continue in the near-term.”