BIC sees Q2 recovery
BIC says that a good performance in Europe and Latin America led to a recovery in its stationery consumer business during the second quarter.
Overall, the company saw its stationery unit sales climb by 4.7 percent at constant currency rates to r202.6 million ($314 million).
The consumer business was boosted by good Back-to-School shipments in Europe and a strong performance in Latin America.
The US, however, remains a difficult environment for the company and BIC admits that it was impacted by a slowdown in the office superstore retail channel.
The company’s promotional products business posted a high single-digit decline during the quarter
as promotional spending in the US continued to decline and a softening of demand was also felt in Europe.
"After a weak first quarter 2008, our results improved in the second quarter," said CEO Mario Guevara.
"Although the overall economic environment remains uncertain, we will continue to manage our business for the long term and we maintain our full-year 2008 outlook."
Depot strikes Singapore deal
Office Depot has announced a strategic alliance with Singapore office supplies company Netbizz.
The alliance sees Netbizz become Office Depot’s dedicated partner in Singapore for the provision of office products and services for international contract clients.
As well as delivering the standard array of office supplies and consumables, Netbizz also offers security systems and software, office renovation and space planning, car leasing and air conditioner servicing.
"Singapore is a key market for many global companies and the new relationship between Office Depot and Netbizz Office Supplies will provide a complete procurement solution for both new and existing customers," said Teddy Chung, Managing Director for Office Depot Asia.
Netbizz, founded in 2001, currently counts around 4,000 customers in Singapore.
Tesco ties up Indian deal
The UK’s biggest retailer Tesco has announced plans to enter the Indian market in partnership with local conglomerate Tata Group.
Similar to Wal-Mart’s deal with Bharti, Tesco will enter the cash-and-carry wholesale market with its Indian partner and plans to invest around $118 million in the venture over the next two years.
The first outlet is expected to open in Mumbai by the end of the year before expanding to other major markets such as Delhi and Bangalore. Tesco has also entered into an agreement with Tata to help the Indian group develop its Star Bazaar hypermarket format.
For a fee, Tesco will provide technical support as Tata looks to expand the chain from its current four outlets to 50 over the next five years.
German dealer group Büroring says that the positive growth trends of last year have continued into 2008.For the first seven months of the year, the group says that total sales have risen by 6.8 percent, or r5.6 million ($8.7 million), compared to the same period last year.
Managing Director Carsten Marckmann said that after the significant growth in 2007 (7 percent), he was not expecting a similar result this year. "Although in the quiet school summer holiday period we are seeing growth," he added.
HP expands environmental SmartWay programme
Hewlett-Packard (HP) says that it has qualified all PC, printing and server products shipped throughout Canada and the US for the Environmental Protection Agency’s (EPA) SmartWay logo labelling programme which aims to reduce the fuel consumption, greenhouse gases and other air emissions of surface transportation carriers.
In April, HP became the first company to have the SmartWay logo placed on its product packaging after it certified that its surface transportation carrier network for consumer accessories, desktop and monitor products was composed entirely of SmartWay-compliant carriers.
HP has now qualified the complete surface transportation carrier networks for its business desktops, monitors, notebooks, servers, storage, thin clients and workstations, as well as all imaging and printing devices.
"With more than 210,000 partners and retailers in the US and around the globe, HP is working to not only reduce the environmental impact of its own products and operations, but also the impact of our entire supply chain network," according to Tony Prophet, HP’s Senior VP of worldwide supply chain operations.
HP says that it has a company-wide goal to increase the use of SmartWay transport carriers for all of its products.
Major Irish dealers announce merger
Irish office supplies and equipment companies Bryan S Ryan and Office Evolutions have announced they are to merge to create a new r25 million ($37 million) firm.
The new entity combines Ryan’s role as Ireland’s Kyocera distributor with Office Evolutions’ position as the country’s leading Canon reseller to create what is being hailed as Ireland’s largest "infrastructure solutions" company.
The combined firm will be headed by Office Evolutions’ Managing Director Brian Whyte and sees the departures of Ryan’s Managing Director Gary Rafter and Chairman Tom McCormick.
Westcoast announces telecoms deal
UK wholesale distributor of IT products and services Westcoast has entered into a partnership with B2B telecoms distributor Avenir Telecom.
Westcoast said that the deal will enable it to offer customers a fully converged IT and telecoms solution.
Jasmine Gledhill, Westcoast’s Group Marketing Director, said: "Many of Westcoast’s resellers currently only talk to their customers about hardware or software. By offering them access to an experienced team that understands B2B mobiles and all the tariffs that are available, we are helping our resellers move into other areas of business and to increase their revenue opportunities.
"For the end-user, the ability of a reseller to offer a fully converged, mobile data solution is a key selling point."
Durable sees Splash success
Durable says that it has had an enthusiastic response in the UK to its Splash promotional campaign for its computer cleaning products.
Since the campaign started four months ago, 4,000 people have entered the online competition with almost half of them winning prizes.
The Splash campaign was designed to promote and raise awareness of Durable’s range of environmentally friendly computer cleaning products and all entries will go into a grand draw at the end of the year where the first prize is a trip for two to experience dolphin and whale watching first-hand.
VP of Marketing Stewart Anderson commented: "Splash has been a huge success in its first few months. We are continually aiming to raise awareness of our environmentally friendly computer cleaning products, working in partnership with the Marine Connection."
Durable is organising its annual Computer Cleaning Week from 22-27 September.
Mega Brands trying to raise cash
Troubled Canadian toy and stationery manufacturer Mega Brands is issuing C$75 million ($70 million) in convertible debentures to stave off a liquidity crisis.
The move comes after a majority of board members believed that the company was in "serious financial difficulty due to inadequate liquidity" in the run-up to the holiday season when there is an increased strain on working capital requirements. Investors Fairfax Holdings will acquire C$64 million of the debentures while Mega Brands’ founder Victor Bertrand will purchase C$7 million.
The debentures will pay annual interest of 8 percent and will mature on 31 August 2013.
Before that date, the debentures can be converted to Mega Brands’ shares for a price of C$3.19 – if fully converted, they would represent almost 40 percent of the company’s shareholding.
Mega Brands’ directors said that the transaction was "reasonable in the circumstances".
The Montreal-based vendor has been looking to offload its stationery business – valued at around $200 million – for some time, with Pelikan and Newell Rubbermaid being cited as possible suitors.
Special report: ACCO under pressure
When there is a downturn in the global OP market there is nowhere to hide, and ACCO Brands’ Q2 results released last month made for depressing reading.
Shares in ACCO following the results release slumped by 20 percent, dipping below the $7 mark for the first time ever, as the company reported lower sales and earnings, reduced its yearly outlook and warned of market deterioration continuing to the end of 2009.
Quarterly sales decreased by 5 percent to $440 million, but actually fell by 10 percent on a local currency basis, while volumes dropped alarmingly by 11 percent. Excluding charges, net profit decreased 46 percent to $6.3 million compared to $11.7 million last year, as volume declines hit fixed cost margins and the price of raw materials rose.
Looking at each of ACCO’s business segments:
• Comparable sales in the Office Products Group dropped by 10 percent to $209 million, hit mainly by weakening demand in the US and the UK, but also by softening demand in Canada and mainland Europe. Operating margins were down by 19 percent due to lower sales volume, unfavourable product mix and higher raw material, freight and distribution costs.
• Document Finishing also saw a 10 percent fall in comparable sales and operating income was down by almost 25 percent.
• Lower consumer demand for iPod products hit Kensington’s sales during the quarter and the Computer Product Group posted a 2 percent comparable sales drop. The fall in operating profit for the segment, however, was less dramatic than the other two divisions, slipping by 3 percent to $10.8 million.
CEO David Campbell admitted that the current economic downturn would be "longer and more severe" than had been originally foreseen and ACCO lowered its 2008 sales forecast to a low-to-mid single-digit drop and said that it expected EPS to also be below previous forecasts.
To combat the current negative market conditions, ACCO announced that it will accelerate its cost reduction programme and said that it will cut between 250-300 extra jobs and close a further two distribution facilities in the US.
"These productivity improvements are aggressive but necessary to deal with the weaker economic environment that we face," said Campbell during a conference call.
"We also believe reduced overheads will make us a more affective competitor as our customers continue to consolidate globally."
ACCO also announced that it is looking at bids for its commercial laminating business and that it expects a sale to be concluded by the end of the year.
However, whereas a sale of the entire unit was previously envisaged, it will now sell off the commercial print finishing business and is merging the digital print finishing business into the document finishing group.
Reliance on OP
Unlike other companies with more diversified business models, ACCO’s flag is nailed firmly to the OP mast, and as a consequence it is being hit harder by the current economic difficulties.
30 percent of its sales come from Office Depot, OfficeMax and the new Staples/Corporate Express entity – when any of them face problems, it is going to hit ACCO, too.
It is also exposed to the most vulnerable markets – 51 percent of sales are currently generated in the US while 28 percent come from Europe, meaning that emerging markets are not contributing a great deal to the top and bottom lines.
Furthermore, the Staples/Corporate Express merger is expected to put further pricing pressures on ACCO over the coming months as volume purchasing deals are renegotiated, eating into ACCO’s margins.
New members for Office Gold Club
Germany-based brand manufacturer marketing group Office Gold Club has been boosted by the addition of four new members.
HSM, Mondi, Franken and Exacompta have opted to join the initiative, taking the total membership to 26. In addition, next spring’s Office Gold Club’s product roadshow will take in another country, with the addition of Switzerland following 2008’s inclusion of Vienna, Austria.