By Matthew Henry

SYDNEY: GUD Holdings, the owner of the Sunbeam and Victa brands, has spoken out about the past year in the company’s 2007 annual report released yesterday, reflecting on the success of Sunbeam and the continuing woes of the iconic Victa lawnmower brand.

GUD said each of the markets it plays in were increasingly competitive this year, which put pressure on gross profit margins across the company. Cost increases in raw materials and the continuing effects of the drought, which has in particular impacted the Victa business in recent years, also added to margin pressure.

“However, similar to the prior year all businesses either retained or grew market share,” said GUD Holdings managing director, Ian Campbell, in a joint statement with chairman Clive Hall.

“This is a strong endorsement of the strength of the brands GUD owns and manages; one of the premium brand portfolios in consumer and industrial markets in the Asia-Pacific region.

“Leading the way is Sunbeam, the group’s largest business. Sunbeam has been steadily increasing its market share in Australia, despite being the long standing, unambiguous leader by a substantial margin in small electrical appliances.”

Campbell said Sunbeam’s dedication to product design and innovation coupled with its strong emphasis on product quality and appeal across a broad consumer base resulted in a solid performance in the market and a strong reaffirmation of its market leadership.

Sunbeam introduces 70 new product designs or updates every year.

“In New Zealand, where Sunbeam has not held the market leadership position, those same qualities of innovation, contemporary design and product quality have underpinned market share gains across a number of important product categories and in the market overall,” he said.

However, the Victa business has continued to suffer due to the ongoing drought with mower sales dropping 13 per cent over the previous financial year.

Campbell said Victa maintained market share in the face of heavy discounting from its competitors.

“2007/08 will see this business increase its level of imports threefold, with the objective of improving profit margins in a very competitive industry,” said Campbell.

GUD also said its acquisition of the Oates cleaning products brand has not gone to plan since it bought the company in July 2005.

“With all major competitors sourcing products offshore and with the continued strengthening of the Australia dollar, Oates was rapidly becoming uncompetitive by operating two local factories,” said Campbell.

“As recently announced, Oates is now transitioning to the same business model as that instilled at Sunbeam; a model that retains an essential product design and development capability and sources product from qualified, competent and cost-competitive offshore suppliers. This process at Oates is well underway and will be completed in the 2007/08 financial year.

“There will be a $5.9 million after tax one-off, restructuring charge in 2007/08 and, as with prior similar activities in the GUD Group, a rapid payback is expected.”

GUD will hold its annual general meeting of shareholders on Friday 2 November in Melbourne.