On October 25, 2024, Beijing time (October 24, US Eastern Time), Aptar Group (hereinafter referred to as Aptar), a global pharmaceutical and cosmetic packaging giant, released its third-quarter financial report, showing positive performance growth:
In the first three quarters of this year, Aptar's revenue (sales revenue) reached US$2.73 billion, a year-on-year increase of 3%; net profit (net income) was US$270 million, a year-on-year increase of 22.7%. In the third quarter, Aptar's revenue was US$909 million, a year-on-year increase of 2%; net profit was US$100 million, a year-on-year increase of 19%.
Aptar President and CEO Stephan B. Tanda said that the company once again achieved strong growth this quarter, mainly due to sales growth in the two business segments of Aptar Pharma and Aptar Closures, which increased by 8% and 3% year-on-year respectively.
However, Aptar's second largest business, the beauty segment (Aptar Beauty), performed poorly, with sales revenue falling 7% year-on-year in the third quarter.
As of press time, Apta's market value reached US$11.24 billion, or approximately RMB 79.9 billion.
1.Global Top 3 Cosmetic Packaging Materials
Founded in 1940, Apta is a global leader in designing and providing drug delivery, consumer product packaging dispensing and active packaging solutions. Its products include various types of spray pumps, lotion pumps, vacuum pumps, flip caps, press caps, aerosol valves, etc., which are used in the beauty, daily chemical, food, beverage and pharmaceutical industries.
At present, the group has 55 production bases in 22 countries around the world, with more than 13,000 employees, providing services to more than 5,000 customers, including beauty and daily chemical related customers such as Dior, Bulgari, L'Oreal, Procter & Gamble, Unilever and other well-known international companies.
In the past three years (2021-2023), Apta's overall revenue has been above 3 billion US dollars and has maintained growth. According to the 2023 annual report data, the sales revenue of the three major business boards of medicine, beauty, and caps were 1.52 billion, 1.27 billion and 700 million US dollars respectively, accounting for 43.6%, 36.4% and 20% respectively.
From the perspective of the global cosmetics packaging market, according to data from QYR (Hengzhou Bozhi), the world's core cosmetics packaging manufacturers include Albéa, Apta, Silgan Holdings, Axilon and HCP Packaging, and the top five manufacturers account for approximately 15% of the global market share.
Among them, Albéa, Aptar and Silgan Holdings are the few companies with sales exceeding one billion US dollars in recent years: Silgan Holdings is the world's leading rigid packaging manufacturer for consumer goods. Its products mainly include steel and aluminum containers for food, customized plastic containers and distribution and special closures (caps), etc. It also has some cosmetics and daily chemical packaging businesses, which account for a small proportion. Its sales in 2023 were US$5.99 billion; Albéa was once considered the world's largest cosmetics packaging manufacturer, and it has a leading position in plastic and composite hoses, mascara, lipstick, powder boxes and other fields. The official website shows that its sales in 2023 were US$1.3 billion.
Comparing the revenue scale of last year, Apta ranked second in overall revenue among the above companies, second only to Silgan Holdings (US$5.99 billion). Comparing only the sales revenue of the beauty packaging business, Apta's beauty sales in 2023 (US$1.27 billion) are almost the same as the once "world's largest" Albéa (US$1.3 billion).
Although there are no precise statistics, considering that Apta's packaging business also includes a certain degree of beauty and daily chemical packaging products, the sales of Apta's beauty packaging related products may be comparable to those of Albéa.
2.Perfume packaging sales under pressure
As the second largest business segment of the group, Aptar Beauty covers multiple segments including perfume, cosmetics, skin care, personal care and home care. Its products include fine mist nozzles, dispensing pumps, airless packaging, aerosol valves and bag valves, lipstick packaging, etc.
Compared with the outstanding performance of the other two business segments, Apta Beauty's sales revenue fell 7% this quarter. Taking into account the impact of exchange rates, core sales fell 6% from the same period last year. The company revealed in its financial report that about 4% of the core sales decline can be attributed to the reduction in sales of tool products, and the remaining 2% decline was due to poor product mix.
In fact, this is the third consecutive quarter this year that the performance of Apta Beauty's business segment has been poor. Analysis of the financial report data shows that Apta Beauty's sales in the first, second and third quarters of this year increased by 0%, -2% and -7% year-on-year respectively, showing a clear downward trend.
In the third quarter of this year, although the revenue in the personal care and home care track increased, it could not offset the challenging comparison of sales in the high-end perfume packaging track in the same period last year. In the third quarter of last year, the sales of Aptar Beauty business segment increased by 7% year-on-year, mainly due to the strong performance of beauty dispensing solutions for high-end and mass perfumes.
Aptar Beauty Some products, pictures from the official website
A paradoxical phenomenon is that perfume is undoubtedly one of the few sectors that has performed well in the sluggish beauty market in recent years. It is not difficult to see from the recent financial reports released by international beauty giants that the strong resilience shown by the perfume business has become one of the few bright spots in the dismal performance:
Estee Lauder's net sales in fiscal 2024 fell 2% year-on-year, with perfume becoming the only sector to maintain growth; LVMH Group's sales in the first half of the year fell 1% year-on-year, but the perfume and cosmetics department grew organically by 6%; Shiseido's sales in the first half of this year only increased by 2.9% year-on-year, but its fragrance brand achieved a double-digit growth of 15%...
Stephan B. Tanda explained in a later earnings call that the decline in high-end perfume packaging sales was only a short-term problem and a "normal channel destocking" phenomenon. In other words, because perfume brands had previously purchased enough packaging materials, customer purchasing demand was not strong in the third quarter.
He said that the company remains optimistic about the perfume (packaging) business because consumer demand for perfume products remains strong, so the sales of the perfume (packaging) business may rebound in the coming holiday season.
3.China market remains weak
Compared with the short-term impact of "destocking", the weakness of Apta's beauty and cosmetics business in the Chinese market is a long-term challenge.
Apta also mentioned in its financial report that sales of the beauty department have gradually recovered in the North American market, while China has continued to be weak, which has also become the focus of analysts in the earnings call.
Although the Chinese market accounts for a small proportion of the Apta Group's overall sales (only 4.4% in 2023), since a large part of the performance of the company's customers, beauty brands, relies on a large Chinese consumer group, the performance of the Chinese market has a significant impact on Apta's overall performance.
Aptar's strategic layout also shows how much it attaches importance to the industry: in 1995, Aptar entered China and established a manufacturing base to provide packaging products for international brands in the daily chemical and pharmaceutical fields; in 2018, the company established its China headquarters in Suzhou Industrial Park to provide strategic support and resource guarantees for the development of the Asia-Pacific market; in October 2019, Aptar invested 500 million yuan to establish a new factory in Guangzhou-Guangzhou Yitong Packaging Co., Ltd. was officially completed and put into production; on April 8, 2024, Aptar China's intelligent production and R&D headquarters opened with a total investment of approximately US$100 million, covering an area of 78 acres and a construction area of 63,000 square meters. It is the largest single investment in the group's history in Asia.
Aptar China Intelligent Production and R&D Headquarters
Stephan B. Tanda also said in the conference call that the weakness of the Chinese market has affected not only the company's sales in Asia, but also its sales in Europe, because "many beauty customers produce products in Europe and then sell them to China."
Regarding the performance of the Chinese market, Stephan B. Tanda believes that it is not a recession, but a problem of "no growth", and the entire industry has not rebounded strongly from the impact of the epidemic as expected.
Stephan B. Tanda also said that the above problems are more obvious for Western customers. In fact, he has seen good progress for Chinese customers, and consumers' obsession with Western brands is gradually weakening.
It can be seen that under the background of the overall pressure on the development of the Chinese beauty market and the continuous rise of domestic beauty brands, not only international beauty brands face huge competitive pressure, but also international packaging giants face considerable challenges.
Looking forward to the fourth quarter, despite the difficult environment facing the beauty industry, Apta still expects revenue to grow in the fourth quarter, bringing a strong end to the year.
