BIC Q1 2021 Results: Net Sales More Than Doubled In Nigeria

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BIC, a world leader in stationery, lighters and shavers has announced robust results driven by the exceptional growth of U.S. Lighters in Q1, propelled by a shift in market dynamics and trading environment in both Pocket and Utility lighters in Q1’21 Result.

In South Africa, while the overall market was also challenging, declining 9.8%, we grew share by 1.6 points in value in Coloring.

In Nigeria, Net Sales more than doubled, underpinning the continued positive momentum in the BIC’s acquisition of Lucky Stationery and BIC’s efficient route-to-market strategy in the region.

  • Challenging underlying market trends in core Writing Instruments, worsened by the pandemic in developing countries
  • Solid performance of Rocketbook in Digital Writing
  • Continued growth in e-commerce, driven by all channels of trade, and share gains in key markets
  • Improved manufacturing costs are driven by procurement efficiencies
  • Sustained Free Cash Flow and solid Net Cash Position

Gonzalve Bich, Chief Executive Officer commented

“Our first-quarter performance was positively impacted by exceptional results in our U.S. Lighter business. Rocketbook, our digital writing business, doubled its sales vs the same period last year, with strong results across all online channels.

In Shavers, we were able to grow in added-value products and in e-commerce amidst underlying weak market trends. While we continue to effectively navigate through a challenging trading environment, we remain cautious for the balance of the year due to uncertainties related to the pandemic, particularly in Latin America and India.

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With our Horizon plan serving as our North Star, I am encouraged by the direction that we are taking and the capabilities we are building throughout our organization that will drive accelerated profitable growth.”

The Stationery category continued to be strongly affected by ongoing school and office closures and evolving consumer shopping habits. Latin America, Africa and India, with traditional trade highly impacted by the pandemic remained the hardest hit.

In Europe and North America, sell-out was negatively impacted by the decline in core Writing Instruments segments, such as Ball Pens, at the expense of more positive trends in Coloring.

In Europe, while we lost share in value due to headwinds in core segments, we gained a 0.5-point market share in France10 and 2.1 points in the U.K in Coloring. Sell-in performance was driven by a rebound in demand from Office suppliers in France and Italy and robust e-commerce growth.

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In North America, after a weak start to the year, the market rebounded in March and reached 6.2% growth in Q112, driven by Gel and Coloring. We lost 1.1 points market share in value in total Stationery, though we continued to gain share in both Coloring Markers and Coloring Pencils.

In line with our Horizon strategy, we continued to pave our way in the Digital Writing segment with Rocketbook’s integration well underway and outstanding performance, as sales more than doubled versus the same period last year.

Back-to-School seasons in the Southern Hemisphere were heavily disrupted in most countries.

In Latin America, Brazils’ market was down 49.3% in value due to the lockdown measures13. Yet, we gained 2.3 points value share, thanks to gains in both Ball Pens and Coloring markers13.

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In India, Cello Net Sales grew double-digit thanks to improving domestic market conditions in Q1 and positive momentum in e-commerce.

Q1 2021 Human Expression division adjusted EBIT margin was 2.6% compared to 0.7% in 2020. This increase was driven by higher Net Sales (including Rocketbook’s), lower Brand Support investments and manufacturing costs savings linked to Procurement efficiencies, which more than offset unfavourable Forex (from Latin American currencies versus USD).

2021 Outlook (based on current market assumptions)

Despite a better-than-expected start of the year and an exceptional performance in Lighters, our Full-Year Net Sales outlook remains unchanged, although we now expect to be at the high end of our +5% to +7% growth objective at constant currencies.

The trading environment remains volatile in Latin America, Africa and India, and the visibility of the upcoming Back-To-School is reduced due to evolving consumer shopping habits. The Group will provide an update on overall business trends alongside its half-year results in July.

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The full Year 2021 operating margins should improve thanks to tight management of input costs and further manufacturing efficiencies. The Full Year 2021 Free Cash Flow is expected to be above 200 million euros, driven by strict control of CAPEX and Working Capital.

First Quarter 2021 Net Sales increased 25.6% at constant currencies. The unfavourable impact of currency fluctuations (–9.5 points) was mainly due to the decrease of the U.S. dollar and BRL against the euro4. Excluding the impact of acquisitions and divestitures, growth on a comparative basis was 20.9%.

Growth was driven by the Flame For Life division, with a favourable comparison base, and U.S Lighters contributing approximately 13.5 points to the Group’s Net Sales growth on a comparative basis. This exceptional performance was driven by a shift in market trends (U.S Lighter market grew 11.1% in value YTD March) and customers calibrating Q1 orders to meet unexpected consumers’ demand.

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BIC’s overall performance was also boosted by increased pricing vs. Q1 2020, additional distribution, and some customers’ pre-buys ahead of the May 2021 price increase. Our new E.Z. Reach Utility Pocket Lighter continues to be a success, reaching 3.2% of the total Pocket Lighter market at the end of March.

In Human Expression, Rocketbook more than doubled its Net Sales compared to Q1 2020, growing in all online channels, and propelled by efficient promotional activities on Amazon. Nevertheless, the overall Stationery category remains highly challenging, and BIC’s core Writing Instrument business continues to be hit hard by home-schooling and consumers’ evolving shopping habits.

The Blade Excellence division performance was driven by our added-value 5 blades and Hybrid Flex ranges. While the underlying Shaver markets remained weak in the U.S., we held in-store market share globally and outpaced the online market, gaining +2.2 points market share year-to-date March.

E-commerce (excluding Rocketbook) delivered a solid +42% growth compared to the same period last year, propelled by a continued outstanding performance in Pure Players channels (+82% year-on-year) and the rebound of Omniretailers (+20%). Sales grew in most regions, and we continued to gain or hold market share in key markets, supported by increased digital brand support.

In line with the “Invent the Future” roadmap, we achieved a 7.0 million euros incremental benefit in Q1, of which 2.3 million euros in direct and indirect procurement. We continued to adapt our organization by further streamlining our Stationery manufacturing footprint in India from five to four factories.

The impacts from Raw Materials price increases were negligible in Q1 (-0.1 pts on Gross Profit). However, despite improved procurement efficiencies and active mitigation plans, including alternative material sourcing and the use of recycled materials, we expect the current challenging feedstock market conditions to persist in Q2 and weigh on Full Year 2021 Gross Profit margin.

Q1 2021 Free Cash Flow before acquisitions and disposals totalled 36.0 million euros, including 15.9 million euros of CAPEX. Net Cash Position was 393.6 million euros, positively impacted by 173.9 million euros of proceeds from our headquarters’ sale.

The Q1 Gross Profit margin improvement was driven by the strong increase in North America Lighter sales, a decrease in Brand Support above Net Sales and savings linked to manufacturing efficiencies. This was partly offset by adverse forex from Latin American currencies against the U.S. dollar. The strong increase in Net Sales positively impacted Q1 2021 Adjusted EBIT.

Q1 2021 non-recurring items included 167.7 million euros from Clichy Headquarters sale gain, 3.0 million euros from Pimaco divestiture gain, and 3.9 million euros of restructuring costs related to the transformation plan.

Q1 2021 finance revenue decrease is due to 2020’s strong favourable impact of the fair value adjustments to financial assets denominated in USD (versus BRL and MXN).

Q1 2021 effective tax rate was 29.2%, whereas Q1 2020 effective tax rate, excluding Cello impairment, was 31.2%. The decline is primarily due to the decrease in the statutory French tax rate in 20218.

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