HWI loses $29.1 million in six months, Breville performs strongly

By Sarah Falson

BOTANY: Breville’s parent company, Housewares International (HWI), today posted serious losses of $29.1 million for the half-year ended 31 December 2006, including a loss of $6.1 million from the Australian Homewares division which has now lost $11.4 million in a year.

In its half-yearly report to the Australian Stock Exchange, HWI blamed the disappointing non-electrical Homewares results on the entire HWI group’s low profits of $8.1 million when compared with the $14.1 million amassed in the corresponding period last year.

Consumer products marketer, McPherson’s, planned to purchase HWI’s Homewares business up until last week when the table-top products-maker made its troubles public.

“The primary cause for the decrease in underlying profit after tax was the $6.1 million loss of the Australian Homewares business. These continuing losses primarily resulted from fierce market competitiveness, in particular significant direct importing by major customers and associated discounting,” said the report.

The HWI electrical business made $14.2 million all up, with the company citing “continuing international growth”, mainly attributed to the Breville brand, for “partly offsetting the twin effects of difficult Australian trading conditions and the cost of continues investment in the group’s USA operations and product innovation platform.”

The company blamed “a very competitive marketplace characterised by slow sell through in the Christmas period and the unexpected demise of Retravision in NSW".

Group sales for the period increased from $236.2 million in the second half of 2005 to $238.1 million. The electrical side of the business made $109.7 million in sales which is 5.9 per cent lower than the year before.

According to the report, international sales increased by 11.1 per cent to $88.8 million, and in the USA alone Breville sales grew a “pleasing” 19 per cent.

Due to the troubling Australian Homewares results, the company declined to forecast sales for the second half of 2007, and mentioned instead that it is still reviewing the possibility of a sale of the division to any one of a “number of parties that have indicated they are interested.”

Furthermore, the company was unable to consider an interim dividend (profit) for shareholders due to the “significant write downs being applied against distributable reserves.”

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