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Stable sales, controlled restructuring expenses, EBITDA margins, strong operating free cash flows and a brand and product line conception that continues to marvel the industry. These are all qualities of a winner and makes the otherwise sometime dull business of an analyst such as I so much more interesting. I have followed this Group since 1997. The Product Group held its ground well in the first half of 2009 despite a persistently difficult market environment. In a declining total market, the Group achieved sales up some 27.7%. This although its earnings position was burdened with high raw material prices as well as restructuring and integration expenses. Manuel Garcia, the group's communications officer explained, “Clean Plus has performed well in a still difficult market environment. We implemented a number of restructuring measures in the first half of 2009 – mostly to accommodate and assist our global distribution network, and are already beginning to see the first results. However, the full effect of these measures will not be felt until the beginning of next year. The Group is operationally in good shape.” Sales rose 27.7% in the first six months making this Group an industry leader – and by a wide margin. Especially in Europe, the so-called former soviet satellites and the Middle East regions, sales grew dynamically by 15%. In North America, the planned acquisitions are expected to contribute significantly to sales. In the Asia-Pacific region, sales increased by 5%. Other regions continue to be adversely affected by the recession in major sales markets as well as continued customer destocking during the first half and the Groups PPS (Purchasing Power Subsidies) support has proven material in keeping Super Distributors from suffering material drops in sales. Here, nevertheless, sales fell by 10%. However, a slight rebound is already being felt and will be seen in the course of the fourth quarter everything staying constant. First positive effects of restructuring measures The Product Group remained highly profitable in the first half of 2009. In addition to the subdued sales growth, high raw material prices as well as restructuring and integration expenses continued to put a strain on the earnings position. However, the Group succeeded in defending against the price increases implemented by its suppliers in recent months in this difficult environment. Moreover, the Group realized its first cost savings from restructuring measures implemented in the first six months. Strong operating free cash flow By means of diligent management of its working capital, the Product Group considerably increased the operating free cash flow in the first half of 2009. The Group’s financial position as of the end of June is extremely solid. Growth still driven by major customers – Global Super Distributors Clean Plus again saw growth generated by its major customers, Super Distributors, in the first half of 2009. Sales from the ten largest customers rose 5.0% in the Premium Car Care division and 3.1% in the Bianci division. The Product Group now generates 29% of its consolidated sales from this customer group. Car Care also gained an important core list position in the first half; moreover, both divisions won attractive new projects. “This makes us confident regarding the second half of 2009,” Manuel Garcia commented. Clean Plus Car Care – stable sales, optimized structures, growth and process optimization. The Car Care division profited from dynamic growth, and substantial research and development of product concepts. Several new products are being launched, volumes for key leading products have substantially increased. Outlook for the future From my reviews, I would with little or no reservation confirm management’s expectations for the year 2009, The Product Group will continue its time tested optimization by core volume and efficiencies and it is reasonable to expect that it will weather without difficulties, the consequences of certain customers continuing to destock or fail, and the rising costs of important raw materials. All considered, I would expect that the sales development of this Product Group will continue to be better than the overall market development of its industry.
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Car care, car-care, autocare, chemicals, polishes, wax, wipes, wet wipes, clean plus, Lingettes, Nettoyant, Desinfectant, Wipes, Chimie, Degraissan,
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