Results paint a mixed picture

0

 

The financial results for 2006 are slowly being unveiled and a tale of contrasts is beginning to emerge.
As some companies appear to be wallowing in the doldrums, others are seizing opportunities, taking initiative and grabbing precious market share, revenue and increasing value.
But according to one analyst report, a new threat is appearing on the horizon as non-speciality retailers such as warehouse clubs, discounters and, recently, drugstores, are "posing a greater than anticipated competitive threat".
United Stationers reported net sales for 2006 of $4.5 billion, up 6.3 percent from $4.3 billion in the prior year. The company said the increase was attributed to strong growth in the jan/san supplies category.
Net income for 2006 was $132.2 million, an impressive increase of 36 percent from $97.5 million in 2005. Dick Gochnauer, president and CEO, said: "In 2006, we made considerable progress on many fronts. We improved our margin management capabilities and are positioning ourselves to take our War on Waste (WOW) to the next level. A workforce reduction was the first step in lowering our cost structure… Our goal is to remove $100 million in annual costs within five years."
He added: "We are looking forward to achieving strong financial performance in 2007 and are off to a good start… We are focusing on six key value drivers that will help us reach important milestones: deliver profitable sales growth, drive out waste, grow our private brands, optimise our assets, leverage the potential of our Sweet Paper acquisition and enhance our marketing capabilities."
Among the big boxes, Office Depot reported moderate increases after accelerating the pace of its store expansion and remodelling programme by opening 115 new stores and overhauling a further 176. For 2006, sales were $15 billion, an increase of five percent from the prior year. Excluding the 53rd week of 2005, sales for the year increased six percent as compared to 2005. Comp sales for the year in the North American Retail Division increased by a mere two percent.
Buhrmann meanwhile suffered a knock on its reported figures after admitting that the corporate restructure of its North America Division had resulted in a greater than expected negative impact.
On the manufacturing side, Esselte Europe was cheered with impressive results that reflected significant improvements in all of its key business indicators.
Sales growth was experienced in Europe in all core branded categories of focus. In particular, sales of Leitz-branded products saw their best year since 2000. Even outside Germany, sales increased by more than five percent. The launch of the highly innovative and award-winning Leitz 180 Lever Arch File was a key contributor to revenue growth.
"Stepping up the pace of targeted innovation and the effective rollout of these products on a European basis has helped us to lead in the vast majority of our markets," Barry Mc Cool, VP of marketing for Esselte Europe, told OPI.
In February, Avery Dennison reported a slight year-on-year increase with net sales of $5.58 billion in 2006, compared to $5.47 billion the previous year.
Commenting on the spate of year-end results, industry analyst Rob Sweers told OPI: "Office Depot has come out with results that show there is a bit of slippage in the US market.
"I have also heard the explanations from Buhrmann, admitting that there was an adverse influence from the reorganisation of the firm which meant it was internally instead of externally-focused and as a result, was missing business.
"The Christmas holiday this year fell on a Monday and Tuesday, and many people decided to take the entire week off – I think that explains this unusually flat week at the end of the year.
"It’s usual that the last month in the quarter and the last week in the month are the most important in terms of the seasonal patterns within the periods. Arguably, you can say that if the last week in the last quarter is weak, then that can have an impact.
"I did notice some interesting elements from the figures. There are some areas that seem to be in standstill and there are slowdowns at firms that are directly or indirectly linked with the OP business.
"ACCO Brands, for example, had a warning out at the beginning of the year which wasn’t particularly good.
"My impression is that this is a bit of a phenomenon. It is a fact that results and development have been stagnant during 2006 and for that reason we have seen a slight slowdown at the end of the year. But we also had erratic figures when we look at the economic picture as a whole."
Announcing its impressive results, paper and packaging giant Stora Enso said that demand was stronger in newsprint and uncoated magazine paper, but weaker in coated magazine paper. Prices were higher in newsprint, but remained virtually unchanged in all magazine papers.
The company reported stronger market demand than it did last year in coated fine paper but weaker demand in uncoated fine paper. Uncoated fine paper prices rose slightly, while coated fine paper prices remained stable.
A clear gap is beginning to develop between the companies that have successfully embraced and integrated change and those that have not.