ACCO 2006 sales up but Q4 OP sales fall

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7 February 2007 — Lincolnshire (IL): ACCO Brands has today reported its Q4 and full year results for 2006.

Q4 office products net sales decreased by 1 percent to $336.1 million from $340.7 million last year. Adjusting for the exit of non-strategic business as well as for currency, office products sales increased 2%.

 

The underlying increase was said to be driven by higher volumes and higher average selling prices in the US, offset by a decline in Europe where the company had lower volumes and lower average selling prices.

 

Q4 office products reported operating income of $6.8 million, compared to $26.2 million in the prior year period. Adjusted operating income was $31.2 million compared to 2005 pro forma adjusted operating income of $31.5 million. Adjusting for items affecting year-over-year comparability, adjusted operating income was $34.2 million in the current year, and margins increased to 10.2 percent from 9.2 percent.

 

According to the company, the underlying improvement was most notable in the US, offset by the decline in Europe.

 

ACCO’s total group Q4 net sales increased by 1 percent to $520.6 million, compared to $513 million a year earlier.

 

However, the company reported a Q4 net loss of $0.8 million, or a loss of $0.01 per diluted share, compared to net income of $26.2 million, or diluted EPS of $0.48 in the prior-year quarter.

 

The loss has been attributed to restructuring and non-recurring after-tax costs, which totalled $20.9 million ($25.3 million before tax), or diluted EPS of $0.39. The planned closure of the company’s Nogales plant in Mexico early next year accounted for $16.4 million of pre-tax charges.

 

Adjusted Q4 net income rose to $27.3 million, or diluted EPS of $0.50, compared to pro forma adjusted net income of $24.3 million, or diluted EPS of $0.45 a year earlier.

 

David Campbell, chairman and CEO said: "I am pleased to report that we grew both our top line and our bottom line in the fourth quarter."

 

He continued: "As we said earlier, the third quarter marked an inflection point for our business, with merger integration activities positively impacting earnings. Our fourth quarter results demonstrate our ability to achieve steady progress in improving sales and earnings."

 

During the quarter, ACCO identified approximately $30 million in revenue from non-strategic office products in Europe that it says it intends to eliminate during the year as it "works to simplify its operations and create a pan-European business model".

 

The company continued to pay down its debt by a further $55 million in the fourth quarter, resulting in total debt repayment of more than $155 million for the full year.

 

Net sales for 2006 were $1.95 billion, compared to $1.49 billion in 2005 and pro forma net sales of $1.94 billion. Adjusting for currency and exited business, pro forma sales for the year increased by 2 percent.

 

The company reported full-year adjusted EBITDA of $197.4 million, compared to adjusted pro forma 2005 EBITDA of $212.5 million.

 

In January, the company said that 2006 adjusted EBITDA would be lower than the 2005 pro forma level principally because of the absence of an expected fourth quarter buy-forward in its office products group ahead of a January 2007 price increase.