After conquering slow-moving ketchup, Crystal Lake-based packaging company AptarGroup Inc. is taking aim at perfume samples, which executives peg as a $100 million-a-year business.
The company has developed a disposable paper and foil dispenser that lets users spray themselves with fragrance - a big departure from the ubiquitous scented paper samples sticking out of magazines. Aptar, which also makes flip-up caps on bottles of ketchup and shampoo, sees the perfume innovation as key to maintaining steady earnings growth and robust stock performance.
The company had record sales in its fourth quarter, and its shares hit an all-time high in late February just before the market plunged. Still, the shares have risen 28 percent in the past six months.
Aptar, which also makes pump sprayers and aerosol valves, is finding profitable wrinkles in low-margin businesses. The company's silicone seals allow condiment makers like H.J. Heinz Co. to offer plastic squeeze bottles that dispense ketchup from the bottom, eliminating the waits associated with glass bottles.
``If you can introduce a product that has a value-added feature, then [consumer products makers] can recover the cost of that,'' Aptar Treasurer Ralph Poltermann said. ``Consumers will pay for convenience.''
To sell its new perfume samplers, Aptar is hoping to leverage its long-standing relationships with fragrance and cosmetics makers, which accounted for 30 percent of its $1.6 billion in annual sales last year.
Wall Street is anticipating the sampler and other new products will help Aptar hit pay dirt in 2007. That should allow it to reach analysts' target of a 10 percent increase in sales and a 17 percent boost in earnings per share, which last year were $2.87.
``They've got a nice run ahead of them,'' said Christopher Manuel, a Cleveland-based analyst with KeyBanc Capital Markets, which has a ``buy'' rating on the stock. ``The company is making more money than it ever has before,'' Manuel said.
Net income for the fourth quarter ended Dec. 31 rose 15 percent from the year-earlier period to $27.2 million, as sales jumped 25 percent to $422.4 million.
The stock has been a reliable performer this decade, rising 135 percent between 2000 and 2006, compared with a 3.5 percent drop in the Standard & Poor's 500 Index during the same period.