Operational review

Home, Personal Care & Baby (HPCB)

 

Performance

Revenue declined to

R2,2 billion

 

Operating income declined to

R341 million

 

Operating margin down to

15,3%

(FY17: R2,7 billion)   (FY17: R623 billion)   (FY17: 23,5%)
         
% contribution to HPCB revenue
         
% contribution to HPCB revenue
         

Salient features

Home, Personal Care and Baby

* Includes stationery.

  • Home Care grows market share in volume and value
  • Margin recovery in Personal Care to be supported by normalised stock levels and increased volumes
  • Baby pouches and snacks gain momentum; good volume and market share growth in pouches

 

 

 

The poor performance in HPCB continued through the second half, with revenue down 16% to R2,2 billion. All three categories were affected by price deflation and volume declines. The deleveraging impact of this volume loss was primarily responsible for the significant reduction in operating income to R341 million.

Revenue in Personal Care declined 10% to R616 million. An intensely competitive trading environment resulted in operating income decreasing by 53% to R65 million.

Revenue in Baby declined 10% to R796 million, while operating income fell 36% to R133 million. This performance reflects lower sales volumes, an unfavourable sales mix and the concomitant pressure on factory overhead recoveries. The new baby-food pouch line was successfully commissioned in June 2018, contributing to volume growth of 30%.

Despite market-share gains in key segments of the Home Care category, lower consumer demand resulted in higher-than-expected trade stocks going into the peak pest season. This resulted in revenue and operating income declines of 25% and 48%, respectively. Lower production levels had an adverse effect on factory recoveries, while competitor pricing put pressure on margins.

Home, Personal Care and Baby