By  on June 13, 1994

PARIS -- The Benckiser Group, which owns the Lancaster Group beauty company, said Friday that net profits plummeted 60.8 percent last year to 33.1 million marks ($19.9 million) at current exchange.

Dr. Peter Harf, the chairman and chief executive officer of Benckiser, and the president of Lancaster Group, discussed the 1993 results at its annual financial meeting held Friday in Frankfurt.

He said that for 1994, the group, which is based in Ludwigshafen, Germany, is expecting profits to regain the 1992 level of $50.8 million (84.4 million marks).

Harf attributed the sharp drop in profits to high investment costs in sales and marketing for Benckiser's detergents in Eastern Europe, and for Lancaster products in the U.S., Canada, the U.K. and Australia.

Profits were also adversely affected due to restructuring costs for firing employees and other charges related to Harf's decision to move Lancaster corporate headquarters to New York earlier this year.

Other factors that depressed results included restructuring costs for other foreign subsidiaries and the currency devaluations in Spain and Italy.

Earlier this year, Benckiser announced that net sales increased 10.4 percent to $2.86 billion (4.76 billion marks) in 1993.

The U.S. emerged as Benckiser's biggest single market with sales last year of $722.89 million (1.2 billion marks).

Divisional sales by country were not broken out.

Sales for Lancaster grew 15.3 percent to $562.8 million (934.3 million marks) in 1993, with the U.S., Canadian, U.K. and Australian markets achieving roughly 200 percent growth.

Duty-free sales also jumped by about 50 percent, Harf noted.

Lancaster's growth was attributed mainly to intensified marketing efforts and to the successful launch of Lancaster's Skin Therapy treatment product.

Overall, the Lancaster Group accounted for 19.6 percent of total Benckiser sales, compared to 18.8 percent in 1992.

Benckiser's detergent division accounted for 53.8 percent of sales, while mass-market cosmetics and personal products represented 24.7 percent of sales, up 19 percent from 1992, due to the full-year consolidations of Coty Inc., which was acquired in 1992.

Sales were also consolidated on a full-year basis for the U.K.'s European Brands Group and the Netherlands' General Cosmetics Group.Looking forward, Benckiser is expecting that 1994 sales will grow 6 percent by year-end. First-quarter sales for this year rose 6.8 percent, Harf said.

While the firm is not planning any acquisitions in the near term, Harf said it would not pass up "promising opportunities should they present themselves, especially in East Asia."

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