Dr Scheller continues strong market performance

By Simon Pitman

- Last updated on GMT

Dr Scheller Cosmetics says it has managed to continute its improved
financial performance by maintaining sales growth and increasing
its gross profit for its first quarter ending in March.

The company announced sales of €18.44m, which matched the improved results recorded for the same period of 2005. The company also said that gross profit grew by €331,000, which the company said was mainly attributable to the decrease in the cost of materials, which was €300,000 lower than the prior year.

Likewise group's EBIT was also up to €430,000 on the previous year, compared to €241,000 in the previous year. Earnings after taxes reached €120,000, compared to the €559,000 the company earned in the previous year, but was within its estimated range.

Share prices recently peaked at €7.50, up from €5.50 at the start of the year, suggesting that the financial world has been encouraged by the company's comeback, after suffering major financial problems in recent years due to falling sales.

Recently it announced full year 2005 results, with sales up from €72.1m in 2004 to €77.6m and net earnings up from €1.2m to reach €1.7m.

The company, which specialises in cosmetics, skin care and dental care sectors and is based in Eislingen, Germany, has managed to edge its way out of a difficult period that culminated in a loss of €2.5 million in 2003.

After this the company initiated a significicant cost reduction programme in the spring of 2004, which bought about a turn around by the end of the year. The company also set about introducing a number of new products to the market and increasing distribution channels.

Further more, the buy-out by the Kalina group at the start of this year is also expected to generate further growth, as the company increases its sales opportunities in the rapidly expanding Russian retail market.

Kalina is the largest supplier in the Russian market for the skin care, oral care and hair care categories and has a distribution network that touches on 23,000 outlets throughout the country.

During the course of the year Dr. Scheller intends to concentrate on the expansion of its Manhattan brand, making additions to both its colour cosmetic range and its sink care ranges for both men and women.

The company is also intending to capitalize on market entry opportunities that are now available to it in Russia, by tapping into Kalina's comprehensive distribution and marketing network.

Medium-sized Dr. Scheller says it is unable to compete with the larger players on the saturated Western European and domestic market, so it will turn to Russia as a means of leveraging its sales by tapping into Kalina's existing marketing, distribution and manufacturing machinery.

Kalina is the largest supplier in the Russian market for the skin care, oral care and hair care categories and has a distribution network that touches on 23,000 outlets throughout the country. In recent years it has achieved sales growth that has topped 30 per cent.

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