Issue 4353. Last Updated: 03/20/2010

Condom Maker Gets Boost After Buying Russian Firm

Reuters

LONDON — Condom maker SSL International got a boost in half-year results from its newly acquired Russian business BLBV and said the country is now set to become its biggest single market with the introduction of its own Durex brand of contraceptive sheaths.

SSL, whose products also include Scholl foot-care treatments, said the performance of its new Russian condom distributor had beaten expectations and it now sees rapid growth as it launches its own brands in the world’s biggest country.

“As Russia becomes more western facing, we are ready to exploit this and make our own condoms available through our new distributor,” CEO Garry Watts said in an interview Tuesday.

He said Russia would become its biggest business with a 60 percent share of the country’s condom market, and expects to see growth in sales of more than 10 percent in the coming years from the distributor, which employs 3,500 people and operates over 11 time zones.

SSL increased its stake in BLBV to 50.6 percent from 15.5 percent on June 1, giving the British group four months of increased contributions for its half-year period.

“We believe today’s results support the share price progression, and we expect to upgrade our earnings forecasts by around 5 percent,” analyst Sally Taylor said at Cazenove.

She added that a key upside was the rise in gross margins by 1.8 percentage points year on year as the company moves to selling more higher margin products and benefits from low cost manufacturing.

The group’s operating profit rose 46 percent in the six months to Sept. 30 to £57.1 million ($94.9 million), ahead of the average market forecast of £50.5 million according to Thomson Reuters I/B/E/S Estimates and with the Russian business contributing £10.5 million.




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