A mixed bag for CE in Q2

2 August 2007 — Amsterdam (NL): Corporate Express has posted its results for Q2, which showed disappointment in the US offset by positive sales in Europe and Australia.

Net sales for the world’s largest contract stationer rose 1.2 percent to €1.6 billion ($2.2 billion), from €1.58 billion in 2006.

 

Office products North America reported a 1.1 percent decline in sales at constant rates. Organic sales growth amounted to -3 percent, compared to -1 percent in Q1. CE blames the disappointing figures on "continued soft economic conditions and increased price competition". The division’s furniture business also continued to experience soft sales as "customers tend to be more cautious on spending on discretionary items".

 

Frans Koffrie, Corporate Express president and CEO, said: "Clearly the office products industry is facing a challenging environment in the US. The soft economic conditions in this market negatively impacted our sales and operating results. Management attention is focused on adapting our US operations to address the increasingly competitive market circumstances and to improve our results. Steady progress is made with stabilising our operations and we are in the process of identifying possibilities to reduce our cost base, especially in non-sales related areas. We are taking a cautious approach regarding US market developments for the remainder of the year. Nevertheless we expect our North American business to show a sales development in line with market before the end of the year."

 

In Europe, net sales increased by 37.9 percent, at constant rates, to €301.8 million, compared to €219.7 million last year. Organic growth amounted to 5 percent which the company said showed favourable market conditions in the region with growing employment and "solid" economic conditions. The strongest sales growth was recorded in the Nordics, the UK and France with facility supplies achieving another impressive quarter with strong sales growth.

 

Australian sales rose by 9.1 percent, at constant rates, to €207 million generated by "sales across its diverse market sectors, and driven by healthy growth in facility and breakroom services and the contribution of Educational Experience". CE said it had further strengthened its position in the educational sector by acquiring Raeco, a provider of supplies and educational materials to libraries with annual sales of AUD 16 million.

 

Koffrie added: "Our OP divisions in Europe and Australia performed well, both showing 5 percent organic growth. In Europe, mid market showed above average growth with ATG and our merchandising efforts contributing to an improving operating result in Europe against the same quarter last year. The Australian operations benefited from healthy growth in facility and breakroom and the addition of Educational Experience resulting in another set of strong results."

 

In the report, CE also outlined its plans to sell ASAP Software to Dell for $340 million, said to be "a significant next step in bringing more focus to our business to be a single-source office products and services supplier". The company also said it will acquire Canada-based Davenport Office for CAN$71 million to strengthen its position in the country.

 

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