Papoutsanis soaps: Hotel market increases turnover by 39% – Profits at 2.5 million euros

The turnover of the well-known Papoutsanis soap industry increased by 39% during the first half of 2022, with its revenue reaching 33.6 million euros, compared to 24.2 million euros in the corresponding period a year earlier.

According to the company, this significant increase in turnover is attributed to the restart of the hotel market in Greece and abroad and to the high performance of industrial sales of special soap masses abroad and production for third parties, combined with increases in selling prices (mainly of the last two categories) in order to pass on the cost increase as much as possible.

In this context, comparing the first half of 2022 with the corresponding period of 2021 the 39% increase in sales is attributable by 22% to an increase in sales volume compared to 2021 and 17% to an increase in prices.

Exports

Exports amounted to 22.2 million euros in the first half of 2022, representing 66% of the total turnover and recording an increase of 54% compared to the corresponding period last year.

Energy costs weighed on the gross margin

Gross profit was positively affected by sales growth in the current period and amounted to 9.8 million euros compared to 8.0 million in the corresponding period of 2021, showing an increase of 22%.

In contrast, the gross profit margin decreased to 29.3% compared to 33.2% in the first half of 2021, mainly affected by the significant increase in energy costs (electricity and natural gas). In the first half of the year the additional energy cost for the company was approximately 1.0 million euros which translates into a gross margin charge of almost three percentage points (3%) compared to last year.

The consequences of the termination of cooperation with Elgeka

Pre-tax profit came to 3.3 million euros, compared to profits of 3.0 in the first half of 2021.

It is noted that the results of the six months have been burdened with a non-recurring loss of 384 thousand euros, as it arose after the issuance of the arbitration decision regarding the termination of cooperation with the company Elgeka SA, which until the end of 2020 distributed Papoutsanis’ branded products in large retail chains.

Profit after tax amounted to 2.5 million euros and was at the same level as in the first half of 2021

The results before earnings before interest, taxes, depreciation, and amortization amounted to profits of 4.9 million against profits of 4.0 million euros in the first half of 2021, increased by 22%.

Rise of the hotel market

15% of total revenue comes from sales of Papoutsanis branded products in Greece and abroad, 20% from sales to the hotel market compared to 8% in the corresponding period last year, 44% from production of products for third parties and 21% from industrial sales of soap bars.

Raw materials continue to become more expensive

It is worth noting that in the first half of 2022 the prices of raw materials/packaging materials, transportation and energy continued their upward trend that had already started in the second half of 2021, while the difficulties remain in securing the necessary quantities in certain categories of materials.

At the same time, the ongoing war in Ukraine increases the pressure on some of the raw materials produced there and mainly on energy costs, while of course the uncertainty regarding the general development of the economy is constantly increasing.

Already, unprecedented inflationary pressures across all goods combined with the continued rate hikes by central banks are significantly affecting consumption internationally.

Overview by business sector

Branded Products: The category shows a decrease of 8% due to the significantly downward trend of the overall retail market and mainly the market of antiseptic products.

It is worth noting that in the Greek market during the first half of 2022, the categories in which Papoutsanis operates saw a total drop in value of the order of 8.5% compared to the corresponding period of 2021, with the largest losses recorded in the category of antiseptic products (-33.9%).

Excluding the antiseptic product category, the sales value of Papoutsanis brand products showed an increase of 8%, “running” faster than the market and therefore gaining a significant share.

Hotel Products: Significant sales increase of 236% compared to 2021.

The specific category moved at very slow levels last year due to the impact of the pandemic, while this year the relevant sales are increasing both in Greece and abroad.

Third party products (industrial sales, private label): Sales increase by 15% compared to 2021. The increase came from the significant strengthening of partnerships with multinational companies for the production of their products and the continuous development of the variety of product categories offered by Papoutsanis .

Industrial soap mass sales: There was an increase of 86% in the first half of 2022 in this category, which mainly concerns exports. The development is due to the international consolidation of Papoutsanis in the sector, the expansion of the clientele as well as the continuous strengthening of productsoffered.

To serve the growing needs, the new soap mass production unit, which has been operational since the second half of 2021, has already succeeded in doubling Papoutsanis’ production capacity, while with the availability of synthetic soap masses, products with a reduced environmental footprint, Papoutsanis offers specialized solutions for the specific market.

Optimism

With the company’s management expressing optimism for the full year “despite the challenges in the macroeconomic environment and geopolitical tensions”, the listed company remains focused on its goal of strong, sustainable growth and the continued strengthening of turnover while improving profitability.

In this direction for the second half of the year:

• Estimates for the course of hotel products are particularly positive and an enhanced turnover compared to that of 2019 is expected.

• In the branded products market, which has been showing a decline since the first half of the year, the goal is to strengthen the position of Papoutsanis’ products in consumer preference by gaining a greater market share and the company’s entry into new categories.

• In the categories of third-party producers and soap mass, the goal remains to maintain and expand the clientele and partnerships as the company continuously improves productivity and reduces production costs.

Further price increases

For some product categories, additional price increases have already been implemented, which for the second half of the year lead to an additional average increase of 4% – 5%, the company reports.