Art and Fragrance struggles in current economic climate

By Katie Bird

- Last updated on GMT

Related tags Term Perfume Time

Rising costs and a negative exchange rate have led niche perfumer Art and Fragrance to report significant losses for the first half of 2008.

The Switzerland-based company has also announced a new investor for the fragrance and crystal glass business Lalique that it acquired in February this year.

Restructuring hits bottom line

Although sales from both Lalique and the company’s existing fragrance and cosmetics business were stable, the rising price of raw materials and significant restructuring costs led to an overall loss of CHF 5 million for the first half of the year.

Including Lalique’s sales, the operating revenue for the period came in at CHF 45.9m.

Art and Fragrance’s existing fragrance and cosmetics business accounted for CHF 16.1m, remaining constant on figures from the same period last year.

In contrast, sales at the recently acquired Lalique rose 10 per cent in comparison to last year’s figures, which the company says fulfils expectations that the new addition will be the driver for future growth in the perfume division.

Despite the positive sales Lalique posted an EBIT loss of CHF 6.4m. According to the company this is mainly due to restructuring costs that are in line with expectations and Art and Fragrance still expects Lalique to be posting a net profit for 2009.

In addition, rising raw materials costs and a strong Swiss franc negatively affected the bottom line.

Due to its niche position in the market Art and Fragrance says it will be unable to pass on the rising costs to consumers until early 2009, and raising the price of finished products even at this point will not fully compensate.

Looking to the future, the company remains cautious and states that it does not expect economic conditions to improve significantly in the short term.

Investor for Lalique

The company also announced it has acquired an investor for Lalique which it bought for €44m in the spring.

Paris-based Financière Saint Germain (FSG) has paid €20.5m for a 49.2 per cent share in the business.

Art and Fragrance will use the proceeds for future growth of the business, as well as fund acquisitions in the perfume and cosmetics sector. The Lalique perfume business however does not form part of the transaction and will remain entirely under the control of the company.

FSG is a private holding company of the Amouyal family, and also owns Cristalleries Royales de Champagne, a crystal glass business.

Commenting on the investment, Art and Fragrance’s chairman Silvio Denz, said: “In the Amouyal family, we are gaining a strategic shareholder for Lalique who is prepared to make a long term commitment and has considerable knowledge in the porcelain and crystal segments.”

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