Wed, 08 Aug 2007

Weleda Group turnover breaks through 200 million euro barrier

ARLESHEIM/SCHWÄBISCH GMÜND (NNA) – With its sales of anthroposophical medicines and natural cosmetics, the turnover of the international Weleda Group broke through the 200 million euro barrier for the first time in the last financial year, the company report shows.

With growth in turnover of 14 percent, the development at Weleda parallels the boom in the alternative and organic sector as a whole as reflected earlier this year already at the international BioFach organic trade show in Nuremberg (see NNA report of 7 March 2007 “Strong growth internationally in organic food sector”).

The fact that Weleda’s operating result of 6.1m euros remained static in comparison with the previous year is explained above all through the extensive investment of the Weleda Group in research and development as well as through the need to comply with the new EU regulations for the approval of medicines.

Further investment activity is planned for 2007 and 2008, including the employment of additional staff.

The Weleda Group will use its strong position to make itself “top fit for the coming years,” the chairman of the Weleda Group management, Mathieu van den Hoogenband, emphasised at the presentation of the company report. A slight growth in profits was expected as early as 2007. An improvement of the product mix and the cost ratio was intended to make the profit on sales start rising again from 2008 onwards.

Investments of 71m euros are planned. This includes a new production plant for body care products. It will be capable of producing three times the amount of the current plant.

The investments will also affect jobs: the Weleda Group intends to create 100 new full-time posts this year, 70 of them in Germany. The new jobs are in production, research and development.

The Weleda Group, based in Arlesheim, Switzerland, is the leading manufacturer of anthroposophical medicines and natural cosmetics in the world. Weleda products are already available in 50 countries worldwide with 17 regional companies.

In its annual report, entitled “Transparency”, the Weleda Group presents itself as a global player of a different kind. The Group showed that “transparency and honest communication form the basis for solid and effective collaboration.”

These factors provided the foundation for its business relations worldwide. The result was a lasting and reliable connection with customers, suppliers and network partners. “In such an open external dialogue we develop together with everyone else involved," the report says.

The development of Weleda showed that economically successful structures did not have to conflict with an idealistic approach.

The business approach of the company was determined by its corporate concept which focused on the human being in his or her personal development and the preservation, promotion and restoration of health, as well as being committed to the principles of sustainability.

The shareholders, too, saw themselves as „guardians of the corporate concept”, the report says.

The whole of the bodycare range and a large part of the medicines are produced in the establishments in Germany, France and Switzerland. These countries also represent the most important markets for the Weleda Group.

The Weleda companies in the other countries cultivate their markets on a largely independent basis. Strategy is coordinated at regular meetings. In this way the smaller companies are able to participate in the development of the range.

Good growth potential was recorded by Weleda in the Eastern European countries which have recently joined the EU. There, too, the awareness was growing of health-supporting ecologically sound products, Weleda says.

The most important instrument for creating customer loyalty was the Weleda magazine which was expanding into a range of new countries. Germany, Switzerland, France, Holland and Italy had now been joined by Spain, Russia, Brazil and the US.

In Japan, Weleda products were very successfully sold through Weleda shops, according to the report.

France has its new “Espace Weleda” in Paris, located off the Champs Elysées. Well-known artists and designers from all over the world worked on the modern design of the exclusive showroom and treatment centre together with the architect, Maryam Ashford-Brown.

The business result in France had continued to benefit from the favourable market conditions for natural cosmetics, the report says. Turnover had almost doubled in comparison to the previous year.

The North American market, too, continued the positive trend of recent years, achieving growth of 13 percent.

Business in Latin America, however, was more unsettled. Both Argentina and Chile achieved double-figure growth rates but worsening exchange rate conditions led to significant losses.

There were serious problems in Brazil. The lapse of individual medicine registrations and difficulties in market cultivation meant that a restructuring programme had become necessary in which about one quarter of jobs were lost. The most socially acceptable solution for the redundancies had been sought, the annual report says. A close eye would have to be kept on further developments here.

Business results in Austria, Britain and Germany had also been negative. This was due to changed sales and margin structures, but also to the additional expenses arising from securing the future of Weleda medicines.

Market conditions in New Zealand and Australia meant that there was no significant growth there either. The earnings situation in this region is to be improved in the coming financial year with new impulses, Weleda says.

NNA/end/ung/cva

Item: 070808-01EN Date: 8 August 2007

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