Challenging year for Sunbeam and Victa despite GUD profit

By Craig Zammit

MELBOURNE: At its Annual General Meeting (AGM) held today Sunbeam and Victa’s parent company, GUD Holdings revealed a 32 per cent increase in 2005/06 net profit to $40.2 million, despite the difficult circumstances encountered throughout the last financial year.

“If we could encapsulate the year in one word, that word would be ‘challenging’,” said GUD chairman, Clive Hall.

GUD managing director, Ian Campbell, expressed the frustration felt by the business towards the company’s 2006 acquisition of Oates.

“It was a disappointment that the Oates business we acquired early in the 2006 financial year did not perform to our expectations. The sales growth we expected at the time of the acquisition did not eventuate," Campbell said.

“We needed to invest in establishing processes and procedures consistent with those required by a significant public company, and these take both time and money.

“Consistent with all our other businesses, we encouraged Oates to develop and put in place, a structured new product development process. New product priorities are now well understood and planned, and the outputs from this process should become evident in the market place in the near future,” Campbell said.

However, GUD did possess some good news at the AGM: Victa and Sunbeam performed well over 2006.

“One of the pleasing aspects of performance in 2006 was the growth in market shares which occurred across our activities,” said Hall.

“Notably, Sunbeam has retained leadership in the Australian small appliance market for over 24 consecutive months and increased its share in 2006.

“Additionally Victa, which in recent years had lost share to low priced Chinese imported mowers, regained some of that share by offering a targeted and more competitive product range. This occurred in a year when the number of mowers sold in Australia reached levels not seen for at least ten years,” he said.

Looking forward, Hall struggled to judge the outlook for the Victa brand considering the looming worsening of the drought.

“It is difficult to assess how Victa will trade over the year as the climatic conditions do not appear favourable for an extended mowing season in the major states. Having said that, in the first quarter Victa has traded well above last year on the strength of its focused product range and improved retailer listings,” said Hall.

Campbell believes the evolving face of the marketplace will play a significant role for Victa.

“The future challenges for Victa remain similar to those we have faced recently – product cost, a changing market place structure and increased competition. Additionally, we recognise that the place of the lawnmower in the Australian suburban context is changing, and we are reconfiguring our product offerings to reflect evolving consumer demands.

“For example, this season Victa is launching a small range of electric mowers, which suit smaller backyards and meet consumer preferences for environmentally friendly products.”

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