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NEWSWORTHY

ISSA Profitability Report Reveals Sales Disparity

By Alex Runner
Each year, many jan/san distributors await the results of the International Sanitary Supply Association’s (ISSA) Distributors’ Profitability Report. Although the 2004 report won’t be released to distributors until mid-September, Sanitary Maintenance was allowed a sneak peek last month.

Salient information in the report, which uses 2003 sales data for its analysis, reveals that most jan/san distributors still have not experienced the kind of growth expected from the sluggish economy. In comparison with 2002 sales data, profit margins, return on assets (pre-tax) and financial leverage were stagnant.

However, not all jan/san distributors had the same sales results. ISSA breaks down its analysis between “typical” ISSA distributors and “high-profit” ISSA distributors. “Financial performance varied widely within the ISSA in 2003,” according to the report. “The typical firm had [annual] sales of $4,238,249 and a pre-tax profit of 1.4 percent. In contrast, the high-profit firm had sales of $4,094, 223 and profit of 6.1 percent.”

ISSA cites five “critical profit variables” (CPVs) that contribute to the disparity between typical and high-profit distributors: 1) sales per employee, 2) gross margin percentage, 3) operating expense percentage, 4) inventory turnover (times), and 5) average collection period (days).

In the category of sales per employee, for example, typical distributor employees sold $208,960 in jan/san supplies and equipment. High-profit distributor employees sold $223,736.

Another revealing statistic was the average number of times a distributor had to turn over product inventory. Typical distributors experienced an average inventory turnover of 6.6 times in 2003. High-profit distributors averaged 7 times.

Further analysis in the report demonstrates that some product lines are more profitable than others. While distributors who focused on chemical products had a profit margin of 0.9 (percent of sales), those that focused on cleaning equipment reached 1.4 percent. Companies that focused on paper sales reported 1.7 percent. High-profit distributors had a staggering profit margin of 6.1 percent in 2003.

Perhaps the most interesting part of the report for many distributors will be the trend analysis. ISSA gives statistics for the past five years, showing that although typical sales volume is up $765,249 since 1999, sales growth is down 3.6 percent during the same time period.

ISSA’s report was conducted by the Profit Planning Group, Boulder, Colo., and it can be ordered by contacting Anthony Trombetta.


NEWS MAKERS

Dow Increases Cost of Solvents
The Dow Chemical Co., recently raised the price of several manufactured solvents that are used to make a variety of industrial chemicals and goods. The prices of Methyl Chloride, Methylene Chloride, Chloroform, Trichorethylene, Percholoroethylene and Carbon Tetrachloride were all raised by $.06 per pound.

Freedonia: Four-year Growth for Pesticides
The U.S. pesticides market will “rebound from past declines to grow 1.3 percent annually through 2008,” says a new report from the Freedonia Group, Cleveland. Gains will be driven by healthy volume demand, improved pricing, and rising use of biopesticides and reduced-risk conventional pesticides. Freedonia also reports that herbicides will remain dominant in the $7.6 billion U.S. pesticides industry.

University of Maryland Reacts to Noro Outbreak
A University of Maryland dormitory, LaPlata Hall, was forced to temporarily shut down after 300 high school students were affected by the highly contagious norovirus. One-third of the students, who were at the university to participate in a summer program, received treatment at hospitals. All of the ill students complained of severe nausea, diarrhea and stomach cramps.

Although university students were scheduled to return to the school in late August, the dormitory was locked up so that every room, hallway and stair railing could be cleaned with bleach.

K-C Reports on Restrooms
Kimberly-Clark, Roswell, Ga., recently released a report claiming that one-third of student restrooms in the United States lack “basic sanitary supplies.” Almost 8 million middle and high school students who were surveyed said they avoid using student restrooms during the school day.


REGULATORY NEWS

The U.S. Occupational Safety & Health Administration (OSHA) recently issued a final rule on its U.S. respiratory protection code, called the Respiratory Protection Standard. The final rule included a revision that adds a “new quantitative fit-testing procedure to assist workers and employers in the proper fit and selection of respirators,” according to an OSHA press release.

“Selecting the proper respirator is a vital step in protecting a user against potential over-exposure and adverse health effects,” said OSHA administrator John Henshaw. “The additional fit-testing protocol will help employers and employees to select the right respirator based on the conditions in their workplaces.”

Customers occasionally ask their distributors about respirators for intensive maintenance and cleaning procedures, such as asbestos removal. End users who clean areas with hazardous indoor air quality (IAQ) levels are required to use respiratory protection.

The Respiratory Protection Standard requires employers to ensure the effectiveness of a respiratory device before issuing it to an employee with a five-step test. The test includes: facing forward in a normal standing position and holding one’s breath for 10 seconds; bending over for 30 seconds; vigorous head shaking; first redonning — putting the mask back on after it has been loosened and monitoring air intake; and second redonning.


NAW Reports Bush Has Strong Distributor Support

The National Association of Wholesaler-Distributors recently completed a straw poll that asked its members who they would vote for in the U.S. Presidential election — George Bush, John Kerry or Ralph Nader — if the election were held on that day.

About 81 percent of respondents said they would vote for Bush, while 17 percent said they would vote for Kerry. Less than one percent of respondents said they would vote for Ralph Nader or “Other.”

More than 3,400 wholesaler-distributor managers and executives voted in the straw poll, the largest response ever received by NAW to a political survey. In 12 of the states surveyed, Bush’s support was 90 percent or higher. In five states, including Kerry’s home state of Massachusetts, support for Bush was below 70 percent.

“We’re not surprised that senior executives strongly support the president given his initiatives to strengthen the economy,” said NAW president Dirk Van Dongen. “But, his margin was uniform throughout the management ranks of those participating in the poll — branch and other middle management participants expressed the same level of support for the president. This seems to make the case that all of them are clear about the positive impact of the president’s economic policies.”

NAW will repeat the poll in early October.

posted on: 9/1/2004







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