Wella 2002 Sales Bolstered by Fragrances

Darmstadt, Germany-based Wella AG posted a better-than-expected rise in 2002 sales, helped by a string of acquisitions in its fragrance division and forecast further growth in 2003.

The maker of cosmetics, hair care and fragrance products saw 2002 sales of $3.6 billion, up 11% according to provisional figures. For 2003, Wella expects sales growth between 10% and 13% adjusted for currency effects, and a double-digit EBIT margin.

At a time when rival Unilever is getting out of fragrances, analysts welcomed Wella’s ability to grow its fragrance business. Sales growth at the division offset sluggish growth in its key German market, which accounts for around 26% of overall sales. Wella said sales in Germany last year saw single-digit growth.

Thanks to acquisitions of brands like Yardley, Escada Beaute, Tony&Tina and Atkinsons, the cosmetics and fragrances division saw currency-adjusted growth of 22% in 2002. Strong demand over Christmas meant that Wella even posted double-digit growth in fragrances in Germany. Fragrances now account for around 27% of overall sales thanks to the 2002 launch of Gucci Eau de Parfums, Montblanc Presence for Women, Rochas Absolu, and men’s fragrances Bogner Wood and Escada Sentiment.

Professional hair care, Wella’s core business, saw a currency adjusted 9.8% sales growth mainly due to the acquisition of the Graham Webb business in the U.S. The sector has further growth potential as Wella begins to launch more products in Asia, Japan in particular, Quiroga-Thiele said.

Sales in North America rose 20%. The rise is sure to catch the eye of Procter & Gamble, which has expressed an interest in expanding its hair care products range and has been often speculated as a potential buyer of Wella. But until the Stroeher family, who controls almost 80% of Wella, agree to sell a takeover isn’t likely, analysts say.