Sano Manages to Push Up Profits in Competitive Diaper Market

The harsh competition in the market of cleaning supplies has not prevented the veteran company Sano, which manufactures cleaning supplies, detergents, and toilet paper, to sustain growth in revenue and profits during the whole of last year. The company's annual report for 2001, which was released yesterday, shows 7 percent growth in 2001 and an 8 percent growth in profits over the previous year.

Sano's net profits reached NIS 43.8 million in 2001, as sales reached NIS 476 million, compared with a profit of NIS 40.5 million and sales totaling NIS 443 million in 2000.

Sano CEO Alex Landberg said that the company had not lowered its prices despite aggressive competition. "We didn't lower prices, but some of our products were not sold to the extent that we had expected," he said.

Sano leads the market of cleaning supplies, providing Israeli consumers with 49 percent of their household products; but Sano's cleaning products constitute only a third of its sales. Sano also controls some 30 percent of the toilet paper and paper towel market. In 2001, Sano sold some 14,000 tons of paper.

One of the company's most grueling battles is over disposable diapers. Sano controls 9 percent of this market with its product Litufim, which accounts for some 5 percent of its sales. The company is finding it difficult to compete with Procter & Gamble, the American-based company that manufactures the top-selling Pampers. P&G offers its diapers in Israel at a lower price than in Turkey, where the diapers are manufactured. Hadera Paper (AIPM), which manufactures Huggies and Titulim, competes with P&G for control of the market, and Sano has not been able to carve itself a substantial niche between the two companies.

Sano is currently involved in a legal dispute with the paper manufacturer Shaniv, in which Sano has a 41.6 percent stake, over the price of the paper manufactured by Shaniv for Sano. Sano, who is Shaniv's biggest client, has reduced its purchases from Shaniv because of the dispute, indirectly causing itself damage.