Ceramco to push bras in Britain

A slimline Ceramco is set to launch its Bendon business in Britain. DITA DE BONI reports.

Ceramco Corporation, after years of restructuring, is stripping back its residual business and will launch its branded intimate apparel in Britain.

Trading as Bendon Group, the company hopes to eventually push into Europe on the strength of the Elle Macpherson range of underwear.

The new strategy was outlined yesterday to shareholders, when the company also posted a $1.43 million loss for the March year, slightly less than last year's $1.5 million deficit.

The push toward Europe, with the focus on intimate apparel, comes months after Ceramco sold its last significant non-Bendon business, China Clays, to French mineral concern Imerys.

Shareholders approved the Clays sale and appeared to agree to the company's single focus.

More than 30 residual companies under the Ceramco Corporation banner, including Ceramco itself, will be liquidated.

Shareholders will receive $16.1 million immediately in a 1-for-4 share swap, resulting from a paring of the company and proceeds from the sale of Clays.

Shareholders should get about $20 million more of the spoils in the next two years, leaving a "dynamic intimate apparel company," chairman Ian Parton said.

"We are the dominant brand in Australia and New Zealand ... So I would like to reaffirm our intention to aggressively grow the business."

Analysts the Business Herald contacted wondered how long the streamlined group would last on the New Zealand Stock Exchange.

Ceramco confirmed there had been several expressions of interest in the business but would not name possible suitors.

In reporting its year-end result, Ceramco said pretax earnings for both China Clays and Bendon gained, though non-recurring costs and losses of $9 million from discontinued Bendon operations and the disposal of the Microsilica division resulted in a post-tax loss of $1.43 million.

Group-wide revenues gained 4.9 per cent to $93.5 million.

The China Clay division recorded a revenue rise of 22 per cent to $15.5 million in the year, while Bendon revenues rose 5.6 per cent to $77.9 million.

Both companies combined had pre-tax earnings of $10.3 million.

Ceramco said it would not pay a dividend, due to the loss caused by non-recurring costs through the year. It will consider a payout closer to its annual meeting in August.

With the divestment of China Clays and other residual businesses, Mr Parton said, Ceramco was now able to move into a third market with Bendon.

It was in talks with a British apparel company to help marketing and distribute the range, expected to be available there by July 2001.

Ceramco also disclosed it had contracted Rothschild bank to help its expansion into Britain and expected to outlay capital of about $10 million over the next two to three years.The product would be funnelled into middle-to-upper-range retailers in Britain, and Bendon chief executive Hugo Venter said the company expected $30 million annualised earnings by the end of 2003 from there.

It has also identified Germany as a promising destination for its product.

Mr Venter said that with just two years of growth likely from New Zealand and Australia, Britain was the "logical place" to move.

The British market for mid-to-premium-end lingerie was worth around $NZ4.3 billion, and the entire underwear market around $9 billion.

Ceramco denied it would consider moving to Australia - where 60 per cent of its turnover comes from - saying its creativity, product innovation and corporate function would be kept in New Zealand.

Since Ceramco announced the sale of China Clays in April, its share price has strengthened steadily.

From a low of $1.25 on March 30 this year, its value has climbed to close yesterday down 2c at $1.70.

There was general consensus among commentators that Ceramco's shareprice was mildly undervalued, and might correct now that its list of involvements had been pared, but most suggested the company was a more attractive target for the same reason.