A renowned ASX-listed consumer staples company producing some of the world’s most recognisable brands, Pental Limited (ASX:PTL) is a full end-to-end service provider of consumer goods in Australia, New Zealand and Asia.
The Company is the largest Australian manufacturer of bar soaps, liquid bleach and firelighter cubes.
An Australian home without the superior quality and constantly innovated Pental products is a rare sight. The Company has been leveraging its fully integrated supply chain and FMCG expertise and has been trusted by families for generations.
2019 Performance- Increased Sales and Profit
FY19 was a challenging year for the Australian consumer goods market, with aggressive competition and price cutting. However, Pental was successful in protecting its market share and shelf space as it continued investing in marketing and price matching initiatives in key categories and segments.
Consequently, PTL witnessed sales growth, especially in branded bleach, cleaners and firelighters, with net sales revenue up by 32.7% relative to the prior corresponding period. The underlying profit after tax for the period too was up by 32.5% ($3.45 million). The Board also declared a final fully franked dividend of 1.3 cps.
One event cannot be left unmentioned while discussing PTL’s 2019 performance- the strategic partnership with Duracell, which was quickly integrated after it commenced in September 2018. The partnership not only reinforced PTL’s credentials as an efficient and attractive distribution partner for other multinational brands in Australia and New Zealand but enabled the Company to leverage its existing infrastructure to gain scale and achieve better recovery of the fixed costs.
Besides these, the Company was dedicated towards looking for ways to curb production costs and better target the increasing share of private label in the fast-moving consumer goods market. There were quite a few developments on the existing product line, which garnered the interest of consumers up to PTL’s expectation.
PTL’s Business Scorecard (Source: PTL’s Report)
Pental’s Brand Enhancements in FY19
Some of the well-known brands of Pental include White King, Huggie, Sunlight, Duracell, Country Life, Velvet, Softly, Janola, Pears, Little Lucifer and Jiffy. Let us acquaint ourselves with a few developments that occurred in the Company’s existing product line across FY19-
- In January 2019, Softly welcomed two iconic brands, Martha’s and Lux Pure Soap Flakes to the family with a fresh new look
- In March 2019, the first Tradies Bar Soaps launched in Chemist Warehouse
- Across the border, PTL’s brands hit the shelves in Shanghai, China post partnerships with strategic distributors, in May 2019
- In the same month, May 2019, Huggie added new formulations specifically designed to make laundry time faster and easier
- June 2019 witnessed PTL’s Softly wool wash to become Australia’s first Woolmark-certified detergent after it passed meticulous independent testing
Besides these products undergoing enhancements, few other PTL products continued to bag awards- Huggie fabric softener, White King Bathroom Cleaner and Pears Hand Soap won a Canstar Blue Award for ‘Most satisfied customers’, Janola was voted Highly Commended in the Cleaning Products category for the Reader’s Digest New Zealand 2019 Trusted Brands awards- to name a few.
Currently, the Company is focused on R&D of technical resources to develop new products and enhance the current product ranges. It is also exploring development of natural, personal care and home hygiene products. Innovation in toilet cleaners is also in works and the Company has been tendering for private label contracts to further enhance its product pipeline.
PTL expects intense competition and price cutting in the consumer goods market to prevail in the medium to long term. However, backed by the strategic distribution partnerships (Duracell and Pears), focus on productivity improvements, a leading innovation pipeline, strong investment in field and merchandising support, cost out initiatives flowing and the hunt for new distribution opportunities, PTL will continue to support brands such as White King, Janola and Huggies.
Further, on the product front, innovation will continue to remain a key to Pental’s long term success as it explores opportunities to introduce brand extensions. A brand realignment strategy is in works, with key customers, within the household laundry liquid wash segment, focused on creating a power brand and sub brands. The Company also plans to replace one of its old liquid lines in FY20.
Across borders, PTL will tap opportunities in South Korea, China, Indonesia, Thailand and Taiwan.
Share Price Information
PTL last traded on 12 February 2020 at $0.315 and the Company has a market cap of $42.92 million on the ASX. The stock has an annual dividend yield of 6.35% and is available at a P/E ratio of 22.34x. In the past six months, it has generated returns of 1.61%.
Cognisant of the tough market conditions, PTL’s executive team remains determined to use their extensive experience and lead the business. It would be interesting to watch this consumer powerhouse unfold its brand enhancements in the first year of a new decade, as families continue to entrust the brand for its superior quality.
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