EuroBusinessMedia (EBM): BIC, a world leader in lighters, shavers and stationery just reported first-half earnings. Mario Guevara, welcome, you are the CEO of Bic. In a few words, what can you tell us about your performance in the first-half in your three main lines of business?
Mario Guevara (MG): The first half of the year we experienced a good level of sales, our growth was 4.5% on a comparative basis and 6% on a constant currency basis and we are pleased to announce this result to the market that is in line with our outlook that we presented at the beginning of the year. In stationery, sales were a little bit soft - this was the result of delayed shipments and orders in North America and Europe. Despite this slow start, our income from operations did improve and did improve thanks to the measures we took in the past on the restructuring of our manufacturing unit in Milford, Connecticut in 2004 and also due to the integration of Pimaco. Pimaco, if you remember, was a company that we acquired last year in South America. So, despite the slow start, the back-to-school looks promising. The figures in July are encouraging, we went from -1.4% at the end of June to +1% growth at the end of July, plus the activity we are seeing at store level gives us the confidence to recover this slow start.
EBM: And what about the business performance in lighters and shavers in the first half?
MG: Lighters is another good start. Lighter sales were up 5.9%, thanks to our good performance in North America and Latin America. And also in Europe for the fourth quarter in a row we are increasing our sales. Profit-wise, we keep the good profitability of lighters. At the end of the first half, the IFO margin remains at 32.8%. That's a good improvement and good performance from our teams. Shavers: after we announced the launch of shaver Soleil System in the US and the UK, we can share with you that the launch is going as expected, as planned, despite the intense competition we experience in both markets and also thanks to the continued success of our one piece triple shavers all around the world. As we announced, the IFO was slightly below last year and due to the heavy investment we are putting behind the launch of Soleil System.
EBM: What is your business outlook for the full-year? Do you confirm your guidance of 4-5% sales growth?
MG: Due to the results that we experienced in the first half of the year, I'm pleased to confirm that the outlook for the year remains positive and we're confident that we'll be in the range of a growth of 4 to 5% on a comparative basis.
EBM: Let's go into more detail in each of the businesses, starting with stationery, which saw a decline in the first-half. Should we expect a rebound in stationery in the second-half of the year?
MG: Well, as I mentioned to you a few minutes ago, yes, the last signals of back-to-school in Europe and North America give us the confidence we will recover part of the slow-down we experienced during the first half of the year. The back-to-school is going as planned, this year we had more promotional activity that has given us much better visibility at store level in mass merchandisers and different retailers in
Europe in North America.
EBM: In shavers, you've just launched a new women's product, which caused a sharp increase in marketing costs. What is your target now in terms of market share?
MG: The launch of Soleil System is an important event for us, since it's the first shaver system we launch on the market. We launched it based on the strength we have built up on the Soleil brand, so our goal is to capture between 5 and 10% market share within the 18 to 24 months after the launch.
EBM: In lighters, what is your update on the state of the market in Europe, and how are distributors behaving ahead of the new child safety regulations which will go into effect next year? For example, are distributors already buying lots of new child safety lighters in anticipation of the law, and are they more likely to purchase them from yourself at BIC or from your Asian competitors?
MG: Well, what we have seen in the market so far here in Europe, is that the modern class of trade, they have already switched and they are buying child resistant [CR] lighters from us and from other suppliers. The traditional class of trade is still in the process of transition from non-CR to child resistant lighters. Also what we have observed is that the countries in the northern part of Europe have switched earlier to child resistant lighters compared to the countries in the southern part of Europe. At the end of June, 32% or our lighter sales are CR compared to only 8% at the end of March. And yes, we expect our customers to buy the good quality lighters, because of the safety and reliability of the BIC lighters.
EBM: You've just announced that you will buy Atchinson in the US, a maker of promotional bags. What can you tell us about this company, and how this new business fits into your strategy?
MG: We recently announced the acquisition of Atchinson. Atchinson is a company that manufactures and produces promotional bags, totes and coolers. They are located in Kansas City. This acquisition allows us to enlarge our product portfolio offering and our promotional product division. This clearly fits with our strengths in terms of distribution. We have a large network of distributors in the US. Atchinson has developed a very good quality portfolio of promotional bags. So combining their expertise in product design, plus our large network of distributors, should allow us to leverage the value of the company.
EBM: Finally, how would you describe your acquisition strategy going forward? Are you more interested in making a series of niche acquisitions, or could we see you make a transforming acquisition if the opportunity presents itself?
MG: I think I've shared with you, BIC pursues bolt-on acquisitions. In other words, we are looking for acquisitions between 10 to 15 million euros that fit perfectly with our company size. These bolt-on acquisitions should help us either to reinforce our geographical presence or to increase our international footprint. Pimaco and Atchinson are two good examples of this type of strategy. Now, if in the future the opportunity arises to consider a larger acquisition, certainly we will look for it.
EBM: Mario Guevara, CEO of BIC, thank you very much.
MG: Thank you.
