Sunbeam’s parent company GUD has blamed “disappointing” financial results from the appliance company on difficult trading conditions caused by a decline in the Australian small appliances market, a lack of innovative new products and the declining Australian dollar.
In GUD Holdings full year results released today, Sunbeam sales were down 9 per cent year on year to $117.2 million and the underlying EBIT was down 83 per cent to 1.5 million. In the financial year that saw Sunbeam appoint a new CEO in December, restructuring costs totalled $2.1 million.
The company said the hit to sales was affected by, “continuing competitive conditions in the small appliances market, including continued inroads being made by pod and capsule coffee machines against traditional manual espresso machines, growth of new entrants, especially European brands, and a declining market in Australia, in both unit and value terms.”
Sunbeam’s core segment— manual espresso machines — has been affected by the growing popularity of newer products, the company said. “Equally, the emergence of products such as the multi-purpose Thermomix, has affected demand across a number of traditional food preparation and small cooking appliances.”
GUD also said that “insufficient innovative new products” affected Sunbeam’s performance and “gross profit margins were further affected by an inability to put through price rises to offset the cost increase effects of the declining Australian dollar.”
To address this issue GUD said an innovation hub has been established and initial product ideas are currently undergoing market testing. Potentially, these products will be launched in late 2014-15.
Overall, GUD’s net profit after tax was $17.7 million for the year ended 30 June 2014. The underlying EBIT was down 13 per cent to $49 million and underlying NPAT was $31 million, down 17 per cent on the year before.
Total revenue of $591.6 million declined 1 per cent. The results were due to a poor performance from Sunbeam and warehouse and logistics business Dexion. Sales increased in all other areas of the business, including Oates cleaning products.
“The 2013-14 financial year was one of transition for GUD and its businesses. Although the results for Sunbeam, and Dexion are disappointing, we expect to see markedly improved performance in FY15 and beyond, following the initiatives we have put in place, which include the major restructuring programs at Dexion,” GUD Holding managing director Jonathan Ling said.
“In positioning GUD for the future we have introduced new management at Dexion, Sunbeam and Davey and implemented number of group-wide change programs, including a major drive on product and service innovation from which we expect tangible results by early FY16,” Mr Ling said.
“The long term success of GUD is also tied to the realisation of the product and service innovation initiatives currently occurring in every business. I am encouraged, following recent presentations of the first ideas, that these will provide GUD with substantial growth,” Mr Ling said.