BB Societe BIC SA

BIC Group - Press Release
Clichy - 04 August 2016
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Second quarter and first half 2016 Results

First half results in line with Group full-year 2016 outlook

·          First Half Net Sales: 1,133.3 million euros, down 0.1% as reported and up 5.4% on a constant currency basis¹

o    Consumer business up 5.9% on a constant currency basis

o    BIC Graphic up 2.3% on a constant currency basis

·         First Half Normalized¹ IFO: 207.9 million euros - Normalized¹ IFO margin: 18.3%

o    Excluding the impact of the special employee bonus²

-      Normalized¹ IFO: 219.3 million euros, down 8.3%

-      Normalized¹ IFO margin: 19.4%

·         First Half Net Income Group Share: 140.1 million euros, down 20.6%

o    EPS Group Share: 2.98 euros, down 20.3%

·         Second Quarter Net Sales: 616.0 million euros, down -1.1% as reported and up +4.2% on a constant currency basis¹
Q2 Normalized¹ IFO: 131.6 million euros - Normalized¹ IFO margin: 21.4%

·         Net cash position at the end of June 2016: 98.2 million euros

Commenting on BIC Group's half-year results, Bruno Bich, Chairman and Chief Executive Officer, said: "H1 2016 results are in line with our Full Year 2016 outlook, with solid Net Sales growth on a comparative basis across all consumer categories and regions, notably in Eastern Europe, the Middle-East and Africa. We had a promising back-to-school sell-in in Stationery, both in Europe and North America. In Lighters, growth was driven by our sleeved lighter strategy and distribution gains. In shavers, we continued to benefit from the success of our added-value products such as the new BIC® Soleil Shine shaver for women in the U.S. In H2 2016, we will continue to invest in R&D and brand support in order to fuel medium- and long-term growth and we remain confident of achieving our Full Year objectives."

In 2016, we expect to deliver mid-single digit growth in Net Sales on a comparative basis. Excluding major macro-economic disruptions or currency fluctuations, Normalized IFO margin^[2] should decline by between 100 and 150 basis points as a result of accelerated Brand Support and R&D investments aimed at fueling profitable medium- and long-term growth. We also expect to maintain Net Cash from operating activities at current levels despite an increase in development CAPEX.

H1 2016 Net Sales were 1,133.3 million euros, down 0.1% as reported and up 5.4% on a constant currency basis. The strong negative impact of currency fluctuations (-5.5%) was mainly due to the depreciation of Latin American currencies against the euro.   

• Consumer business grew 5.9% on a constant currency basis with good performances across all regions (Europe +9.8%, North America +3.4%, Developing Markets +5.9%).
• BIC Graphic Net Sales increased by 2.3% on a constant currency basis.

H1 2016 Gross Profit margin was 49.3% compared to 50.2% in H1 2015. Excluding the impact of the special employee bonus, Gross Profit margin would have been 50.0%. Q2 2016 Gross Profit margin represented 50.0% of sales compared to 49.3% in Q2 2015.

H1 2016 Normalized IFO was 207.9 million euros (Normalized IFO margin of 18.3% or 19.4% excluding the impact of the special employee bonus). Q2 2016 Normalized IFO was 131.6 million euros.

• Consumer business Normalized IFO margin was 21.5% in H1 2016, a decline of 3.0 points (down 2.1 points excluding the impact of the special employee bonus) attributable to increased investment in brand support and research and development. Q2 2016 Normalized IFO margin was 23.8% compared to 25.3% in Q2 2015.
• BIC Graphic Normalized IFO margin fell by 0.7 points in H1 2016 to a negative 5.4% (if the impact of the special employee bonus is excluded, it increased 1.5 points to a negative 3.2%). Q2 2016 Normalized IFO margin was 2.5% compared to a negative 3.0% in Q2 2015.

Income before tax fell back to 200.3 million euros compared to 253.3 million euros in H1 2015. Net finance revenue was a negative 3.4 million euros (compared to 11.8 million euros in H1 2015) due to unfavorable H1 2016 fair value adjustments to U.S. dollar denominated financial assets in compared to December 2015 (fair value adjustments booked in H1 2015 were favorable).

Net income Group Share was 140.1 million euros in H1 2016, a 20.6% drop as reported. Q2 2016 net income Group Share was 89.1 million euros, down by 10.3% on a reported basis. The effective tax rate in H1 2016 was 30.0%.

EPS Group Share were 2.98 euros compared to 3.74 euros in H1 2015, down by 20.3%. Normalized EPS Group Share decreased by 18.1% to 3.04 euros compared to 3.71 euros in H1 2015. EPS Group Share in Q2 2016 was 1.89 euros compared to 2.10 euros in Q2 2015, down by 10.0%.

At the end of June 2016, the Group's net cash position stood at 98.2 million euros.

Net cash from operating activities was +61.6 million euros with +196.1 million euros in operating cash flow. The negative change in working capital and others of 134.5 million euros was mainly related to the seasonality of trade receivables. Net cash was also impacted by increased investments in CAPEX as well as dividend payment (including the special dividend) and share buybacks.

• Ordinary dividend of 3.40 euros per share and special dividend of 2.50 euros per share paid in June 2016.
• 60.7 million euros in share buy-backs at the end of June 2016 (487,025 shares purchased at an average price of 124.60 euros).

Stationery

Stationery H1 2016 Net Sales decreased by 0.9% as reported but grew by 5.6% on a constant currency basis. Second quarter 2016 Net Sales were down 1.1% as reported but increased 4.0% on a constant currency basis.

Developed Markets

• In Europe, the increase in H1 Net Sales was in the high single-digits thanks to a strong back-to-school sell-in in all countries, notably in France and Eastern Europe.
• In North America, we delivered mid-single digit growth in H1 on the back of a good back-to-school sell-in and the continued success of our "Champion brand" strategy, especially in the BIC® Atlantis range.

Developing Markets

H1 2016 Net Sales were stable.

• In Latin America, 1 HHH1 Net Sales declined slightly. In Brazil, we continued to increase our market share. In Mexico, we experienced delayed Q2 back-to-school shipments which should be realized in Q3 (sell-in).
• In the Middle-East and Africa, we delivered high single-digit growth along with market share gains in South Africa.
• H1 Domestic Sales of Cello Pens increased mid-single digit thanks to new product launches, notably in the Butterflow^TM range.

H1 2016 Normalized IFO margin for Stationery was 13.3% compared to 15.7% in 2015. Excluding the impact of the special employee bonus, Normalized IFO margin for Stationery would have been 14.1%. The year-on-year decline is attributable to investments in brand support in Europe and North America to boost growth, and an increase in operating expenses, as well as currency devaluations in Latin America. Q2 2016 Normalized IFO margin was 17.5% compared to 17.1% in Q2 2015.

Lighters

H1 2016 Net Sales of Lighters decreased by 0.3% as reported but grew by 5.4% on a constant currency basis. Second quarter 2016 Net Sales were down 0.7% as reported but increased 5.4% on a constant currency basis.

Developed markets

• Europe delivered high single-digit growth in H1 Net Sales driven by promotions and sleeved lighters in Western Europe as well as strong growth in Eastern Europe (distribution gains).
• North America achieved low single-digit growth in H1 when compared to a good H1 2015, which had benefited from customers buying ahead of price adjustments implemented in Q2 2015.

Developing Markets

In H1 2016, growth in Net Sales was in the high single-digits.

• In Latin America, growth in H1 Net Sales was in the high single-digits with a strong performance in Mexico (distribution gains).
• In the Middle-East and Africa, we enjoyed double-digit growth in H1.

H1 2016 Normalized IFO for Lighters was 39.3% compared to 39.7% in 2015. Excluding the impact of the special employee bonus, Normalized IFO margin for Lighters would have been 40.0%, thanks notably to a higher Gross Profit margin. Q2 2016 Normalized IFO margin was 40.5% compared to 41.6% in Q2 2015 due notably to higher operating expenses.

Shavers

H1 2016 Net Sales of Shavers increased by 3.3% as reported and by 9.9% on a constant currency basis. Second quarter 2016 Net Sales were up 2.0% as reported and by 9.0% on a constant currency basis.

Developed Markets

• In Europe, H1 Net Sales growth was in the high single-digits, driven by a good performance in Eastern Europe. We benefited from the success of products such as the BIC^® 3, BIC^® Miss Soleil^® and BIC^® Flex and Easy shavers.
• In North America, we delivered mid-single digit growth in H1. We increased our market share by 2.2 points to 29%^[5] thanks to our added-value products including the Flex range (BIC® Flex 3, BIC® Flex 4 and BIC® Flex 5 shavers), our Hybrid offers (BIC® Hybrid 3 and BIC® Hybrid 4 Flex shavers) as well as the BIC® Soleil Shine shaver.

Developing Markets

We registered double digit growth in H1 sales.

• In Latin America, all product ranges contributed to this growth, especially the BIC® Comfort 3 shaver.
• In the Middle-East and Africa, we achieved mid-single digit growth in H1 driven by our triple-blade products and the BIC® Flex 3 shaver.

H1 2016 Normalized IFO margin for Shavers was 12.3% compared to 20.2% in 2015. Excluding the impact of the special employee bonus, Normalized IFO margin for Shavers would have been 13.4%. This year-on-year decrease was due to increased investment in research and development and in brand support, notably in the U.S. (launch of the new BIC® Soleil Shine shaver and continued investment in the BIC® Flex 5 shaver). Q2 2016 Normalized IFO margin was 13.8%, compared to 19.1% in Q2 2015, due to a negative FX impact on Gross Profit margin and continued investment in research and development and in brand support, notably in Brazil (TV campaigns to promote the BIC® Soleil and BIC® Comfort 3 shavers).

Other Consumer Products

H1 2016 Net Sales of Other Consumer Products decreased by 12.2% as reported and fell by 10.9% on a constant currency basis. Second quarter 2016 Net Sales were down 16.6% as reported and by 15.3% on a constant currency basis.

BIC Sport registered a double-digit decline in its H1 Net Sales on a constant currency basis.

H1 2016 Normalized IFO for Other Consumer Products was 0.8 million euros (1.0 million euros excluding the impact of the special employee bonus), compared to 2.2 million euros in H1 2015. Q2 2016 Normalized IFO for Other Consumer Products was 1.2 million euros compared to 2.9 million euros in Q2 2015.

BIC Graphic Net Sales for H1 2016 increased by 0.8% as reported and by 2.3% on a constant currency basis. Second quarter 2016 Net Sales were down 2.7% as reported but increased by 0.3% on a constant currency basis.

In Europe, BIC delivered good performances in key countries such as France and Germany. In North America, our "Good Value" line and new products continued to perform well, driving growth in both Hard Goods and Writing Instruments.

             
H1 2016 Normalized IFO margin for BIC Graphic was a negative 5.4% compared to a negative 4.7% in 2015. Excluding the impact of the special employee bonus, its Normalized IFO margin would have been a negative 3.2%, thanks to lower operating expenses compared to H1 2015. Q2 2016 Normalized IFO margin for BIC Graphic was a positive 2.5% compared to a negative 3.0% in Q2 2015, benefiting from lower cost of production and operating expenses.

The review of the strategic alternatives for BIC Graphic is proceeding as planned.

As of June 30, 2016, the total number of issued shares of SOCIÉTÉ BIC was 47,954,871 shares, representing:

• 69,515,427 voting rights,
• 68,362,013 voting rights excluding shares without voting rights.

Total number of treasury shares held at the end of June 2016: 1,153,414.

• Constant currency basis: constant currency figures are calculated by translating the current year figures at prior year monthly average exchange rates.
• Comparative basis: at constant currencies and constant perimeter. Figures at constant perimeter exclude the impacts of acquisitions and/or disposals that occurred during the current year and/or during the previous year, until their anniversary date. All Net Sales category comments are made on a comparative basis.
• Normalized IFO: normalized means excluding non-recurring items as detailed on page 3.
• Free cash flow before acquisitions and disposals: Net cash from operating activities - net capital expenditures +/- other investments.
   
• Free cash flow after acquisitions and disposals: Net cash from operating activities - net capital expenditures +/- other investments - acquisitions/disposals of equity investments / subsidiaries / business lines.
• Net cash from operating activities: principal revenue-producing activities of the entity and other activities that are not investing or financing activities
• Net cash position: Cash and cash equivalents + Other current financial assets - Current borrowings - Non-current borrowings.

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SOCIETE BIC consolidated and statutory financial statements as of June 30, 2016 were approved by the Board of Directors on August 3, 2016. A presentation related to this announcement is also available on the BIC website (www.bicworld.com).
This document contains forward-looking statements. Although BIC believes its expectations are based on reasonable assumptions, these statements are subject to numerous risks and uncertainties. A description of the risks borne by BIC appears in the section, "Risk factors" in BIC's 2015 Registration Document filed with the French financial markets authority (AMF) on March 23 2016.

For more information, please consult the corporate website: www.bicworld.com

BIC is a world leader in stationery, lighters, shavers and promotional products. For more than 60 years, BIC has honored the tradition of providing high-quality, affordable products to consumers everywhere. Through this unwavering dedication, BIC has become one of the most recognized brands in the world. BIC products are sold in more than 160 countries around the world. In 2015, BIC recorded Net Sales of 2,241.7 million euros. The Company is listed on "Euronext Paris" and is part of the SBF120 and CAC Mid 60 indexes. BIC is also part of the following SRI indexes: FTSE4Good Europe, Euronext Vigeo Europe 120, Ethibel Sustainability Excellence Europe, STOXX ESG Leaders and Gaia Index.

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