IWP shares plunge by 10% on weak results

Shares in personal care group IWP plunged by 10 per cent yesterday after chief executive Mr Joe Moran unveiled weak first-half results and warned of harsh trading over the remainder of the year.

The company made a pre-tax profit of almost €5 million over the half, up just marginally on the same period last year.

The profit excludes an exceptional charge of €65.3 million, attributable mainly to a €50 million loss on the July sale of IWP's household products division.

The rationalisation of the company's troubled Dutch business contributed a further €8.5 million to the charge.

IWP closed at 37 cents last night, down four cents on the day. The stock has been falling steadily since the start of this year, when it was worth more than €2.

Mr Moran described the first half as a "disappointing six months", noting particular weakness in both Polish and Dutch divisions.

IWP's colour cosmetics and fragrance units continue to perform well, particularly in the UK.

When asked if he was interested in taking the company private, Mr Moran said IWP currently presented an opportunity for value-seeking shareholders.

"We're not happy with it languishing where it is as a public company," said Mr Moran, who personally owns about 12 per cent of IWP shares.

Mr Moran declined to comment in detail on weekend media reports questioning IWP's purchase of stock from former director, Mr Richard Hayes, the day after Mr Hayes, a business associate of Mr Moran, resigned from the board.

Since Mr Hayes was no longer a director when the sale was concluded, it did not have to be declared to the Stock Exchange.

Mr Moran said it was unfair to say that IWP had conducted a "specific deal" with Mr Hayes.

"We went out to the market to buy shares. If part of those shares were Richard Hayes's, so be it," he said.

IWP has spent the past few months concentrating its interests in the personal care sector, and has instigated a management reorganisation to reflect the new positioning.

In addition to the household products disposal, the company has also sold a small labels business.

Mr Moran said it would take time for IWP to recover from current woes, predicting that full-year pre-tax profits, after tax, exceptional items and amortisation, would come in between €7 and €10 million.

He said the company would in the future be more "aggressive" in managing its portfolio.

In the near term, the company will also focus on reducing debt levels, which currently stand at €92 million, having fallen from €174 million in the wake of the disposals.

Merrion Stockbrokers analyst, Ms Niamh Brodie, maintained an "avoid" recommendation on the stock after the results, citing poor visibility after "successive profit contractions and exceptional charges".