P&G’s Wella Posts Higher Profits but Flat Sales

German hair care group Wella posted third-quarter pre-tax earnings up almost a quarter on the year-ago period despite flat sales which it blamed on restrained spending by consumers. The company, controlled by U.S. consumer products group Procter & Gamble, posted earnings before interest and tax (EBIT) of 90.3 million euros ($104 million), up 24.2%.

Earnings before interest, tax, depreciation and amortisation ( EBITDA) rose 14.6 percent to 124.3 million euros, it said.

“The financial result was well up on the same quarter of the previous year, underpinned by a turnaround in the impact of exchange rates,” Wella said in a statement.

The group makes a quarter of its sales in Germany. Its other main markets are in the United States and Japan.

Sales edged up 1.7% to 827.4 million euros. Sales of consumer products, which account for more than a quarter of the group’s business, were 4.8% lower.

“Apart from exchange rates, the sluggish global economy and the resulting spending restraint exercised by consumers were the principal factors affecting Wella business,” Wella said.

Wella makes hair care products and sells perfumes such as Gucci and Alfred Dunhill under license. Almost half of its business is in professional products, with cosmetics and fragrances accounting for just under a quarter.

The group said currency-adjusted sales were up 6.3 percent year-on-year and adjusted EBIT 27% higher.

Wella did not give a full-year forecast. “Due to the special challenges Wella AG faces in connection with the corporate takeover by Procter & Gamble, the Management Board refrains from issuing forecasts for 2003,” the statement said.

Procter & Gamble controls around 80% of Wella stock and holds 98 percent of voting rights.