published Friday, January 30th, 2009

Chattanooga: Chattem unbottles potent profits, defying economy


by Brian Lazenby

During a time when many companies face difficult times, Chattem announced on Thursday record revenues for 2008 and an 11 percent hike in profits.

“It was a good year for Chattem despite the general economic downturn,” said Bob Bosworth, the company’s president. “We are very pleased with the results of ’08 and are excited about things in ’09.”

Officials at Chattem, which manufactures and markets a wide array of health care products, toiletries and dietary supplements, announced that total revenue for the fiscal year ending Nov. 30 was $454.9 million. That’s a 7.4 percent increase from the $423.4 million the company generated in fiscal year 2007.

Net income for 2008 rose to a record $66.3 million compared to $59.7 million in 2007, an 11 percent jump, officials said.

Record income for the company’s 129-year history despite discontinued sales of Icy Hot heat Therapy, which the company voluntarily recalled during the first quarter of 2008.

For the most recent quarter, total revenues were $105.5 million, up 4.9 percent from the $100.6 million generated in the fourth quarter of fiscal year 2007.

The company’s earnings per share were $3.42 for the quarter, up from $3.08 during the same period a year ago.

Zan Guerry, chairman and chief executive, touted an 8 percent increase in sales for the 12 weeks ending Dec. 27 for the company’s five major brands, which include Gold Bond, Icy Hot, ACT, Aspercreme and Bullfrog.

He said he has “spring fever” regarding products and advertising campaigns that Chattem plans to launch between February and May 2009.

“Never before have I felt such excitement about Chattem, particularly starting in the spring,” Mr. Guerry said.

Andrew Wolf, an analyst with BB&T Markets, said Chattem has remained profitable because its products often are the last ones consumers cut out during a bad economy.

“People are still going to tend to their itches and rashes,” he said. “If the economy tends to improve, they are in pretty good shape, but if it continues to worsen, it could eventually catch up with them.”

Chattem’s stock closed Thursday at $66.63 a share, down $2.54 from Wednesday’s close.

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