Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : SAFESKIN -- Ignore unavailable to you. Want to Upgrade?

To: David Rubin who wrote (547)	1/15/1999 6:01:00 PM
From: Beltropolis Boy	Respond to of 828

darwinism in effect: LIG bails out of the glove business. key quote: "Our quality didn't cut it against the competition." ----- London Intl to Cut Costs, Jobs to Face Competition London, Jan. 15 (Bloomberg) -- London International Group Plc, the world's No. 1 maker of condoms, said it would cut about 10 percent of its workforce in Alabama and close its London headquarters to combat rising competition in surgical gloves, its second-biggest product line. LIG, which makes Durex condoms and Regent surgical gloves, said it would cut 50 jobs at its Alabama subsidiary, Aladan, a 1996 acquisition that fell short of giving LIG a major foothold in the U.S. surgical gloves market. LIG said the job cuts would save about $5 million a year. LIG spent $69.5 million in cash and shares in 1996 to buy privately held Aladan, a leading surgical gloves manufacturer. Since then, it has faced competition from Safeskin Corp., a San Diego company with some 40 percent of the U.S. market. LIG said it would shift Aladan production to premium brands like Skinsense and cut production of cheaper gloves to avoid rival competition. ''It's a business they might not have chosen to buy into in hindsight,'' said Paul Diggle, analyst with SG Securities in London. ''The commodity-glove bit of the market isn't economical.'' Profit Warning LIG shares fell 30 percent in December to a two-year low when it reported a loss of 9.8 million pounds ($16.27 million), down from a previous profit of 5.7 million pounds, and warned that fiscal 1999 pretax profit would be marginally less than the year before. LIG blamed currency hedges, sluggish condom sales and low-cost Asian imports into the U.S. surgical glove market for the slump. Shares hit a low of 115.5 pence on Dec. 22 from a year's high of 231p on July 21. The rose 4 pence to 122p today. Diggle called the share drop ''an overreaction,'' and said the shares are ''a steal'' at this price. ''They will gradually sort this out,'' said Diggle. David Davies, LIG's finance director, said the Aladan acquisition has been troublesome for the company. Nonetheless, he said LIG needed a bigger foothold in the examination-gloves market, which the acquisition achieved. ''Our quality didn't cut it against the competition,'' said Davies in an interview. ''It was an expensive route to get into the examination-glove market, but we are glad to have entered the market. LIG also said it would boost manufacturing capacity at its condom plant in Bangkok, Thailand, which will cost about 4 million pounds. LIG, which has about 22 percent of the world condom market, faces strong competition from Carter Wallace Inc. in the U.S. and Pacific Dunlop Holdings Ltd. elsewhere. In unbranded condoms, sold mostly for UN Aids programs and the military, the company has 30 percent of the world market, said Davies. Headquarters to Move LIG also said it would close its London headquarters and move it to Broxbourne, England, which would lead to a loss of 25 jobs and save about two million pounds a year. It said it would make a three-million-pound provision in its accounts to cover those costs. ''The group is confident that total net exceptional costs for the year will not exceed the 15 million pounds charged in the first half of 1998/99,'' said LIG.