Personal care group IWP suffered an 11 per cent drop in sales for the six months to the end of September, on the back of currency pressures and a decision to discontinue production of unprofitable brands.
The company, which was the subject of a failed management buyout (MBO) bid earlier this year, has also revealed that it has been in breach of covenants with its bankers since the end of September.
IWP chief executive Mr Jim Murphy said discussions on revised funding arrangements had begun very recently but were progressing well. The company needs to negotiate with the holders of its loan notes as well as bankers in a number of countries, including AIB in the Republic, and has signalled that these talks are likely to lead to higher interest charges.
Mr Murphy said September's breach related to IWP's EBITDA (earnings before interest, tax, depreciation and amortisation) to debt ratio rather than an inability to meet financial commitments.
IWP's net debt at the end of September stood at €107.2 million, an increase of 15 per cent on the same point a year earlier.
Mr Murphy said the company's Netherlands-based plastics business, Putzfield, was being sold to achieve a "material" reduction in its debt levels.
"I don't believe in owning bits of businesses that don't fit," Mr Murphy said, outlining his intention to focus purely on personal care.
He said Putzfield had attracted "lots of interest", adding that he expected a sale to be agreed in the first half of 2004.
Mr Murphy, who took up his position at the end of September, was cautiously optimistic for the remainder of the year.
Mr Murphy pointed to operating profits, which grew by 26 per cent to €4.3 million before exceptional items, and said he would be "very disappointed" if a similar level of improvement could not be maintained in the second half.
The interim numbers include an exceptional charge of €5.4 million, €4.6 million of which relates to a writedown of goodwill within IWP's Canadian business, which has performed poorly.
The remaining €800,000 charge went on payments to departing executives, including former deputy chief executive Mr Bernard Byrne, who was behind this year's MBO effort.
Shares in IWP came under pressure after the results were released but recovered to close unchanged at 28 cents.
