Slack start to the year



The OP industry has opened the financial year with a disappointingly soft set of results.
In the copier and printer sector, Xerox looked to have reported a boost in Q1 profit, up 17 percent to $233 million, with sales driven by a seven percent increase in post-sale revenue from digital systems. The company’s sales for the quarter were also up by four percent, to $3.8 billion, largely driven by a seven percent increase in post-sale revenue from digital systems.
Anne Mulcahy, CEO and chairwoman, put the jump in part down the rise of colour: "Xerox’s growth strategy focuses on increasing our install base of digital technology through new products and broader distribution, strengthening our leadership in colour, and expanding our services business. Success in these areas builds a healthy annuity stream that serves our company well for the long term.
Xerox’s total office revenue was up two percent in Q1, including a two-point currency benefit. Installs of office black-and-white systems were down five percent due to "activity declines for desktop devices", which were only partially offset by 11 percent growth in the company’s mid-range line of multifunction devices. Strong demand for Xerox’s colour WorkCentre range led to a 71 percent increase in install activity for colour multifunction systems.
However, some analysts see this result as being offset by a slight decrease in market share for the company as the MFP market becomes more congested.
Rival Dutch photocopier and printer maker Océ also failed to excite much enthusiasm, reporting only a slight rise in Q1 organic revenue. Total revenues in the first quarter were €729.2 million ($974.5 million), down 3.3 percent from €754.1 million in Q1 2006.
The company said its sales increased organically by 0.8 percent compared to Q1 2006 (including exchange rate effects of -3.3 percent).
Rokus van Iperen, chairman of the board of executive directors, said: "Wide-format printing systems booked an increase of almost five percent in revenues in the first quarter of 2007. The main drivers of this growth are our successful colour products. Sales of our black-and-white range are also developing well.
"Positive customer reactions to our own new products and third-party products will further boost the growth in sales. As a result there will be an increase in the number of printing systems installed in the market, bringing improved results for DDS as the year progresses."
In the office furniture sector, California-based HNI announced that Q1 net increased $10.2 million to $497.9 million as $14.7 million of incremental sales from acquisitions offset lower sales from the supplies-driven channel.
Stan Askren, HNI chairman, president and CEO, offered a gloomy outlook for the rest of the year after recent strong years level out.
"Our office furniture business did not perform as anticipated as soft orders in the supplies-driven channel resulted in lower overall sales growth and profitability."
Operating profit for the quarter decreased by $1.6 million, primarily as a result of lower volume. Askren added: "The office furniture industry has moderated. In particular, we’ve experienced softness in the supplies-driven channel. We do not anticipate these trends improving during 2007. In addition to our focus on accelerating growth, we are identifying structural and operating cost reductions in response to these market conditions."
During the quarter, the company made the decision to sell Smartspace (formerly Holga), a small, non-core component of the office furniture segment.
Disappointing results from SP Richards (SPR) revealed that Q1 net sales fell to $451.8 million compared to $465.9 million in the previous year. Operating profit increased slightly to $48.2 million from $47.7 million a year ago.
Thomas Gallagher, chairman, president and CEO of SPR’s parent organisation Genuine Parts Company, said: "SPR was down three percent for the quarter, partly due to a very strong first quarter last year, which was up 13 percent, and partly due to some demand softening in the office products industry over the past several months. However, this group has been one of our most steady performers over the years, and we are optimistic about its growth opportunities over the remainder of the year."
BIC Group’s Q1 stationery category net sales were also down 2.4 percent in constant currencies, compared to a rise of 5.1 percent in Q1 2006 and six percent in Q4 2006. On a comparative basis, excluding the integration of Pimaco, sales fell 4.6 percent.
In a statement the company said: "The first quarter performance is mostly explained by timing issues in our largest region – North America. Activity that usually occurs in Q1 is now scheduled for Q2, creating a disruption in quarterly sales. Our back-to-school programmes have been well received by the trade, and we expect to recover the shortfall through Q2 as we begin the process of shipping back-to-school orders.
"We forecast a successful back-to-school programme in North America and Europe, which gives us confidence that our full year objectives for stationery will be met."
The office product group’s net sales were €330.4 million ($448.3 million), down 3.1 percent compared to €341 million for the same period last year, an increase of three percent in constant currency.