Why GUD cut Sunbeam loose

GUD Holdings, Jonathon Ling said the company was better off with $35 million in its pocket now.

GUD Holdings, Jonathon Ling said the company was better off with $35 million in its pocket now.

Grand dame of SDA ours no longer

The industry watched as Sunbeam teetered on the brink of receivership in the nineties, mourned the loss of manufacturing to China and a flawed attempt to buy arch rival Breville, in the early 2000s but it could not survive the ravages of globalisation, according to its parent GUD Holdings.

More than two years earlier than expected, GUD Holdings has sold the rest of its stake in the Sunbeam brand, explaining to shareholders that competing against global suppliers has become too hard for “a little Australian”.

GUD will sell its 51% Sunbeam stake to its US-based joint venture partner, Sunbeam Products Inc, which trades as Jarden Consumer Solutions and owns a portfolio of appliance brands with $US2 billion a year in global sales.

JCS first came to the notice of the local industry when it bought 49% of the company in November, 2014. The company had been the global owner of the Sunbeam brand with the exception of the Australian and New Zealand markets, which until now have been owned by GUD.

According to GUD managing director Jonathan Ling who told the industry via the media earlier this year that it would be raising prices after a poor reporting season, it was tough conditions in the retail sector and competition from big global suppliers of small appliances that lay behind the decision to sell Sunbeam.

“It’s just gotten to be a very tough business that is dominated now by global players, and just being a little Australian, it’s too hard to survive,” he said.

“To survive in the appliance business you have to go international, and having to create another brand name in global markets is just too hard,” he said.

Ling said he expected to get about $35 million from both transactions, which are expected to completed in July 2016, adding that it was better for GUD shareholders to have $35 million in the bank now rather than have Sunbeam make losses for the next couple of years.

He said GUD would use the proceeds from the sale to reduce debt and invest in the group’s other businesses, which include automotive products, cleaning products, warehouse racking, locks and pumps.

GUD suffered a 90% drop in half year profit to $1.7 million, following $18.5 million in impairments related mainly to its Dexion storage and shelving business.

The Sunbeam business generated an earnings loss as currency movements forced up product costs and price increases were deferred.

Shares in GUD gained 70 cents, or 9.7 per cent, to $7.92.

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