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Sun, 24 Jun 2012

Weleda embarks on consolidation process

By Christian von Arnim

ARLESHEIM (NNA). The new management of the Swiss-based medicine and natural cosmetics group Weleda has given a positive assessment of the company’s future. Presenting the 2011 annual accounts at the end of May, administrative board president Paul Mackay and CEO Ralph Heinisch said Weleda was on the way to being “turned around”.

In 2011, Weleda had to absorb a loss of 8.3m euros (£6.7m, US$10.4m) after interest and taxes on a “stagnating income”. In the previous year the deficit was 3.8m euros (£3.1m, US$4.7).

But so far the 2012 financial year had gone to plan, the company said in a statement. Turnover was as budgeted and above the previous year. Turnover of 84.8m euros (£68.4m, US$106.6m) had been achieved in the first quarter with a positive operating result. The launch of the body lotions in the natural cosmetics segment in Germany, France, Austria and Switzerland had been an important lever for growth. Turnover in medicines had benefited from price increases and good growth in the OTC (over-the-counter) range, although there had been a fall in sales of the mistletoe cancer treatment.

These developments together with the savings which had already been introduced meant that a balanced result was to be expected, the new management said. Other measures to safeguard profitability were also being implemented.

These measures include structural changes with the aim of increasing efficiency within the company and reducing the complexity of the management structures. “The purpose of the organisational changes are to achieve a fundamental sliming down of the structures within the company,” Weleda said.

That means, on the one hand, that the management hierarchies will be reduced. That will also affect the worldwide Weleda companies as their top management level is removed with those functions being taken over by the group management in so far as that is permitted by local law.

On the other hand it means that the Weleda sites in Germany (Schwäbisch Gmünd), Switzerland (Arlesheim) and France (Huningue) will be integrated to a much greater extent to create greater “coherence” in the business with central functions being distributed to those three locations. The office in Basel which was only opened in 2010 to take care of those functions will be closed again. This “process optimisation” has also led to redundancies. So far, however, only the top management levels have been affected.

The policy of the previous management of splitting natural cosmetics and medicine into separate business units will also be reversed to enhance productivity and synergy between the two sectors and achieve savings in overhead costs.

However, the previous policy of ending the cross-subsidy of the loss-making medicines by the profitable natural cosmetics and to make the former self-supporting, which caused great concern among sections of the anthroposophical medical establishment, will be continued. But the new management intends to discuss in much closer cooperation with all partners involved how that can be achieved without losing parts of the wide range of anthroposophical medicines.

New CEO Ralph Heinisch also sees other opportunities to make the medicines self-supporting: “The current trend for holistic and natural medicines contains a considerable potential – particularly when combined with the strong Weleda brand profile. So far we have not succeeded in transferring the great appreciation of our natural cosmetics to the medicines as well,” Heinisch said.

The general medium to long-term aim was an improvement in productivity in all areas – “for the efficient use of resources”, Weleda said. Sustainable corporate management also included the generation of appropriate, sustainable profits to be able to finance the necessary investments.

For the first time this year the annual report has taken the form of an integrated business and sustainability report. Joining the Union for Ethical Biotrade (UEBT) in October 2011 had intensified its commitment to sustainable procurement, biodiversity and fair trade, the company said. Binding standards for evaluating suppliers would be gradually introduced from 2012 onwards.

Another new development was the binding biodiversity introduced and implemented in 2011 for all Weleda companies. The Weleda group had set itself the target of being completely climate neutral by 2015. There had been further success in reducing consumption intensity in the fields of energy, water, packaging and waste.

END/nna/cva

Item: 120624-01EN Date: 21 June 2012

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