SSL halves dividend after sale of hospital businesses
Friday 28 May 2004
SSL International, the company behind Durex condoms and Scholl sandals, is halving its dividend after completing the disposals of its hospital supplies businesses.
The news came with another set of disappointing annual results, showing falling margins and poor sales of several brands. SSL shares dipped 3p to 310p.
The company, though, pointed to improving fortunes as a result of product launches including the Durex Play lubricant and Scholl Party Feet gel pads to make high heels more comfortable. Garry Watts, who stepped up to become chief executive in April, promised that new product launches under these brands would add spice to sales in the coming months.
SSL cut its final dividend from 8.4p last time to 4.2p, and promised more restructuring to save £20m in costs.
Mr Watts said: "The dividend cut can't come as a surprise to anybody since we cannot afford anything like we had been paying now that the business is a third of its original size."
The cost-savings programme will focus mainly on group overheads but will not kick in until later in the year because of remaining contractual ties with the disposed businesses.
SSL launched what it hoped would be a £300m disposal programme 18 months ago to help pay down debt, and it is likely to finally raise £260m. At the weekend it sold its hospital gloves and antiseptic scrubs business to the venture capitalists Apax Partners for £173m. Write-offs associated with the disposals pushed the company into the red in the year ended 30 March, with losses of £7.5m compared with profits of £39.1m last year.
Analysts believe the new slimmed-down SSL will be more attractive to a bidder. Last year, the company held talks with Reckitt Benckiser, but the FTSE 100 household goods giant failed to make an offer.
Mr Watts said: "My appointment as chief executive did not come with a mandate to sell the company, but rather to get on and run it." However, he said the company would put more emphasis on "brand value" - the profit attributable to the company's brands after manufacturing and marketing costs - because this is the figure that "will determine what a predator might get if it were to buy us".
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