Tue, 21 Jun 2011

Weleda Group reports healthy growth despite posting exchange rate loss

BASEL (NNA) – The Weleda Group reported healthy growth last year, despite posting a negative result due to unrealised euro-Swiss franc exchange rate losses stemming from valuation transactions of CHF 8.4 million.

The consolidated accounts of the Swiss-based Group are presented in Swiss francs while three quarters of Weleda’s business comes from the euro zone.

As a result, a loss will be reported after tax for the 2010 financial year of CHF -4.7 million (previous year: CHF +4.6 million), the company said in a media release.

Despite the paper losses, Weleda AG, Switzerland, with its branch office in Schwäbisch Gmünd, Germany, and 17 fully consolidated majority shareholdings in a range of countries across the world, achieved consolidated Group turnover of CHF 385.3 million.

But although this represented a drop of 3.5 percent in reported Group turnover from the previous year, turnover actually rose by 11.1 percent when adjusted for changes in exchange rates, Weleda said.

The operating result (EBIT) of the Weleda Group increased by 10 percent from the previous year to CHF 11.4 million.

Weleda experienced its greatest growth in the Natural and Organic Cosmetics Business Unit. Adjusted for exchange rates, turnover increased by 14.8 percent worldwide, the Group reported, while sales in this area accounted for around 72 percent of the total turnover (previous year 70 percent).

Key pillars of growth were the successful launch of the new Pomegranate Facial Care series and the relaunch of existing Facial Care product lines Iris, Wild Rose and Almond with improved formulations. The Pomegranate body care products introduced in 2009 also continued to experience high demand.

Sales growth was also achieved in the Pharmaceuticals Business Unit with an increase of 2.7 percent when adjusted for changes in exchange rates, Weleda said. This is primarily attributable to market developments in the area of self-medication. Sales in this area accounted for 28 percent of the total turnover compared to 30 percent in the previous year.

However, with 65 percent of investment going into medicines in comparison to 35 percent for cosmetics, Weleda is in the process of seeking to rebalance the business and make its Pharmaceuticals Business Unit more self-sustaining. The company has also sought to rationalise its production.

The failure of medicines to cover their costs has led to a considerable accrual of debt for the company. At the end of 2010, borrowing rose to 115m Swiss francs, a six-fold increase from 2000. This means that approximately 50 percent of profits of 11.4m Swiss francs went on interest payments of 5.5m Swiss francs last year.

The company also reported on its sustainability strategy.

For 90 years, sustainable action and business management has been a firm part of Weleda’s identity, the company says in its annual report.

The environmentally friendly sourcing of raw materials, biodynamic cultivation, climate neutrality, water conservation and employee development are core themes of its sustainability strategy, Weleda says.

The Group’s 2010 Sustainability Report contains consolidated environmental data under the Global Reporting Initiative (GRI) for its locations in Germany, Switzerland, France, Holland and Belgium. Its Group-wide sustainability strategy drawn up in 2010 defines concrete objectives and measures for the next five years.

In 2010, Weleda succeeded in increasing the proportion of plant-based raw materials obtained from organic sources to 74 percent. Further examples of success in Switzerland include the fact that the supply of natural gas and electricity at the Arlesheim site is now fully climate-neutral, the media release says.

According to Weleda, it works with, among others, the climate protection organisation myclimate on appropriate CO2 compensation programmes. And in natural and organic cosmetics manufacturing, systems for optimising cooling processes enabled a further reduction in water consumption.

For the first time, data relating to the company’s social and economic activities are being published in accordance with GRI indicators.

In a further development, Weleda joined the Union for Ethical Biotrade (UEBT) in May this year. The non-profit organisation, founded in Paris in 2007 represents, a globally recognised standard for the sustainable sourcing and consumption of raw materials with a regard for biodiversity and access and benefit sharing.

Weleda has committed itself to implementing the standard within the next five years at all its suppliers and raw materials partners. Due among other things to its 90 years of experience in the area of biodiversity, Weleda has also been elected to the UEBT Board.

END/nna/cva

Item: 110621-01EN Date: 21 June 2011

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