Asaleo cleans up with 15 pct profit lift

Toilet paper maker Asaleo says it’s on track to increase full year earnings, despite headwinds from a strong greenback.

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Shares in the company behind Sorbent toilet paper and Libra tampons have soared after it delivered a higher-than-expected first half profit.

It also announced plans to launch a share buyback of up to $100 million before the end of December.

Shares in the company were 12 cents, or 7.79 per cent, higher at $1.66 at 1350 AEST.

Net profit, excluding costs associated with the company’s 2014 stock market listing, was $32.5 million for the six months to June 30, up from its $28.2 million pro-forma result in the prior corresponding period.

Chief executive Peter Diplaris says the results were driven by an improved sales mix and manufacturing cost cuts.

He described the first half as challenging, with the Australian dollar falling and increased competition in the tissue and personal care categories.

Despite this, Asaleo maintained its guidance of low-to-mid-single digit growth for its full year net profit and underlying earnings.

Chief financial officer Paul Townsend said Asaleo had an advantage in being a local manufacturer of feminine hygiene products, and its incontinence products are also part locally manufactured and part Euro-denominated imports.

“Our competitors on the other hand are importers from Asian countries that we believe are US dollar-denominated,” he said.

“Which in the longer term places us in a relatively stronger position than our competitors in a US dollar strengthening, stable Euro environment.”

For future growth, Asaleo will focus on product innovation and marketing initiatives for its four core brands, like the July launch of Handee’s `This is the good sheet’ kitchen wipes campaign.

“Each (brand has) a new television commercial and a major thrust into digital media as a communication platform,” Mr Diplaris said.

Online sales for Treasures nappies and Tena incontinence products began in July, which Asaleo believes will become an important source of sales.

Mr Diplaris said customers enjoy the convenience and discretion of this service, noting a surge in online sales of incontinence products for men in the first month.

In June, the company also expanded product distribution into Papua New Guinea, utilising tax incentives to export from Fiji to other parts of Melanesia.

ASALEO PROFIT

* Pro forma net profit up 15 per cent to $32.5m

* Pro forma revenue up one per cent to $305.9m

* Unfranked interim dividend of four cents