VENTURES: Indigo's Profits Nothing To Be Sniffed At
Recent Western Cape Business News
ONE of the Cape Town-based stars of the food conglomerate AVI does not offer a tasty brand…rather it makes some profitable (s)cents.
While perhaps a little hidden behind AVI’s array of well known food brands, Epping-based cosmetics specialist Indigo has lately been adding a pleasant whiff to the conglomerate’s bottom line.
Indigo Cosmetics was formerly known as Yardley of London and has been manufacturing and distributing Yardley cosmetic products in Southern Africa since 1955.
Yardley was bought out of its UK parent company by AVI (subsidiary National Brands, to be exact) in 1992, which led in 2003 to the formation of a separate company under the Indigo umbrella.
AVI also snapped up the Yardley trademark for Sub-Saharan Africa in 1998 as well as the trademark for the Lenthéric house name for the whole of Africa. More recently, AVI bought the Lenthéric trademark for the rest of the world.
The business has been successfully expanded under AVI, and Indigo now also holds license and manufacturing agreements for world-renowned brands such as Coty, Adidas, Nailene, Monteil and Rimmel. Other brands in these licenses include the ‘celebrity fragrances’ linked to stars like David Beckham, Antonio Banderas, Celine Dion, Kylie Minogue and Kate Moss.
While the brands are impressive, Indigo’s numbers are even sweeter. In the half-year to end December Indigo’s revenue grew by 11% to R419 million while operating profit increased by a most impressive 34% to R57 million (thanks to a marked jump in trading margins from 11% to 13.5%).
AVI notes that revenue growth at Indigo came courtesy price increases implemented during the second half of the last financial year as well ongoing growth in volumes (where the company scored in the body sprays category).
The interim performance was no fluke. In the year to end June 2009 Indigo’s revenue increased by 17% to R730 million with directors reporting solid growth across the Yardley, Coty and Lentheric brands.
With volumes vibrant across most categories, Indigo’s operating profits jumped 28% to R94.5 million.
CBN reckons Indigo’s operating profits should comfortably exceed R100 million for the financial year to end June 2010 – especially noting a contention from AVI directors that Indigo “historically has thrived in harder economic times” as it benefits from the increased appeal of affordable luxuries.
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