BB Societe BIC SA

BIC Group - Press Release
Clichy - 25 April 2018
                  

First Quarter 2018 Results

Net Sales: 415.4 million euros, down 1.5% on a comparative basis^[1]

Normalized¹ Income From Operations: 69.6 million euros

Normalized¹ IFO margin: 16.7%

Net Income Group Share: 48.6 million euros, down 1.9%

Normalized EPS Group Share: 1.06 euros compared to 1.17 in 2017

Net cash position: 184.6 million euros

Commenting on the Q1 2018 results, Bruno Bich, Chairman, and Chief Executive Officer said: "Stationery Q1 2018 Net Sales are encouraging. In Lighters, we benefited from distribution gains in Traditional Channels and increased in-store visibility. In Shavers, Net Sales continued to be impacted by category disruption. Yet, our new product launches have been well received by consumers. As anticipated, Brazil performance remains weak, as a result of challenging market conditions and retailers' inventory adjustments. In this volatile environment, we continued to invest in Human Resources and Brand Support to sustain our long-term goals.

 We remain committed to achieving our Full Year 2018 objectives."

We expect 2018 Group Net Sales to increase between +1 and +3% on a comparative basis, with all categories contributing to the growth. Major factors affecting sales performance could include continued competitive pressures in Shaver, further inventory reductions from retailers, and continued softness in the Brazilian economy.
Gross Profit will be impacted by an increase in raw material costs, higher depreciation, while we will continue to invest in targeted Brand Support and Operating Expenses.
2018 Normalized Income from Operations will also be impacted by sales performance. Based on these factors we expect Normalized Income from Operations margin to be between 17% and 18%.

Unaudited figures

As of January 1, 2018, the BIC Group has applied the following IFRS standards:

• IFRS15 "Revenue from Contracts with Customers." 2017 financial data has been restated.
• IFRS 9 "Financial instruments,"
• IFRS 16 "Leases" has been early adopted.
  

Q1 2018 Net Sales totaled 415.4 million euros, down 12.2% as reported and down 1.5% on a comparative basis. The unfavorable impact of currency fluctuations (-9.2%) was mainly due to the depreciation of the U.S. dollar and Brazilian real against the euro. On a comparative basis, Europe Net Sales decreased by 0.4%, North America by 0.1%, and Developing markets by 3.8%.

Q1 2018 Gross Profit margin was 53.8%, compared to 52.8% in Q1 2017.

Q1 2018 Normalized IFO was 69.6 million euros.

Income before tax decreased to 67.6 million euros, compared to 74.8 million euros in Q1 2017. Net finance revenue decreased to a negative 2.0 million euros compared to a positive 0.7 million euros in Q1 2017. Q1 2018 was negatively impacted by fair value adjustments to financial assets denominated in USD when compared to December 2017.

Net income Group Share was 48.6 million euros, a 1.9% decrease as reported. The effective tax rate was 28.1%.

EPS Group share was 1.06 euros, flat compared to Q1 2017. Normalized EPS Group share decreased by 9.4% to 1.06 euros, compared to 1.17 euros in Q1 2017.

At the end of March 2018, the Group's net cash position stood at 184.6 million euros.

Net cash from operating activities was +37.0 million euros, with +75.2 million euros in operating cash flow. The negative 38.2 million euros change in working capital was mainly driven by inventory increases when compared to December 2017 to prepare for expected sales activity for the rest of the year. Net cash was also impacted by investments in CAPEX as well as share buybacks.

• Ordinary dividend of 3.45 euros per share proposed at the Annual Shareholders' Meeting on May 16, 2018.
• 21.2 million euros in share buy-backs at the end of March 2018 (265,009 shares purchased at an average price of 80.07 euros).

Stationery Net Sales decreased by 8.3% as reported but increased by 2.0% on a comparative basis.

• In Europe, Net Sales were flat, with a slight decline in France and the UK, partially offset by distribution gains in Southern Europe.
• In North America, Net Sales increased low-single digit thanks to a good start to the year in the Modern Mass Market and a strong performance in online sales. Our market share grew by 0.9 points^[5].
• In Latin America, we achieved a low-single digit increase with solid execution in Mexico, offsetting a weak performance in Brazil, due to inventory adjustments by several retailers.

• In the Middle-East and Africa regions, Net Sales increased double-digits mainly due to a robust back-to-school season in South Africa, which resulted in market share gains.

• In India, Cello Pens Domestic Net Sales were flat on a comparative basis. Cello continues to streamline its portfolio through a product trade-up strategy and is gaining awareness through impactful Brand Support initiatives. In March, the "Surprise Test" video was recognized as the #1 advertisement amongst the Top 5 Advertisements worldwide, reaching 13 million views in its first month.

Q1 2018 Normalized IFO margin for Stationery was 6.3% compared to 3.6% in Q1 2017, with manufacturing efficiency's improvement offsetting the unfavorable effect of Raw Materials.

Q1 2018 Net Sales of Lighters decreased by 11.3% as reported and by 0.5% on a comparative basis.

• In Europe, Net Sales increased mid-single digit with performance driven by distribution gains and increased visibility in Traditional Channels in France and Russia.
• In North America Net Sales increased low-single digit, reflecting increased visibility and a favorable mix effect in the Modern Mass Market, distribution gains in Traditional Channels, and lastly, retailers' buy-in ahead of the price increase implemented on April 1, 2018.
• In Latin America, we experienced a low-double digit decrease, due to on-going inventory adjustments by retailers in Brazil.

Q1 2018 Normalized IFO margin for Lighters was 35.7% compared to 37.2% in Q1 2017. The increase in Raw Materials and Brand Support, as well as unfavorable absorption of fixed costs (mostly OPEX), partially offset manufacturing efficiency's improvement.

Q1 2018 Shavers' Net Sales decreased by 15.9% as reported and by 6.0% on a comparative basis.

• In Europe Net Sales decreased low-single digit reflecting a soft market environment in France and Southern Europe, in spite of the strong performance in Eastern Europe with Net Sales in Russia growing four times faster than the market thanks to the BIC® Flex 3 hybrid.
• Net Sales declined high-single digit in North America, affected by on-going market disruption and retailer changes in planogram and inventory management. At the end of March, the U.S. one-piece wet shave market was down      -2.8% in value^[6].  BIC underperformed the market, losing 0.2 points resulting in 27.4% market share, in spite of the encouraging performance of new products launches.
• In Latin America, we experienced a low-single digit decline, reflecting on-going pricing pressure and increased competition in Mexico. We outperformed a declining Brazilian market, growing share in both the male and female segments. 
• In the Middle-East and Africa, Net Sales decreased double-digits, due to a decrease in promotional activities (strong Brand Support investments during the African football championship in Q1 2017).

Q1 2018 Normalized IFO margin for Shavers was 7.9% compared to 12.3% in Q1 2017, as a result of Net Sales decline (notably in North America), increase in Raw Materials and unfavorable absorption of fixed costs (mostly OPEX).

Q1 2018 Net Sales of Other Products decreased by 31.4% as reported and by 14.0% on a comparative basis.

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

Q1 2018 Normalized IFO for Other Products was a negative 2.2 million euros, compared to a negative -3.0 million euros in Q1 2017.

As of March 31, 2018, the total number of issued shares of SOCIÉTÉ BIC was 46,635,693 shares, representing:

• 68,083,950 voting rights,
• 67,158,810 voting rights excluding shares without voting rights.

Total number of treasury shares held at the end of March 2018: 925,140

• Constant currency basis: constant currency figures are calculated by translating the current year figures at prior year monthly average exchange rates.
• Organic growth or 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.
• Gross profit is the margin that the Group realizes after deducting its manufacturing costs.

• Normalized IFO: normalized means excluding non-recurring items as detailed on page 3.
• Normalized IFO margin: Normalized IFO as a percentage of Net Sales.
• Net cash from operating activities: principal revenue-generating 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 (except financial liabilities following IFRS 16 implementation).

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SOCIETE BIC consolidated and statutory financial statements as of March 31, 2018, were approved by the Board of Directors on April 24, 2018. 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 2017 Registration Document filed with the French financial markets authority (AMF) on March 21, 2018.

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 and thanks to everyday efforts and investments, BIC has become one of the most recognized brands and is a trademark registered worldwide for identifying BIC products which are sold in more than 160 countries around the world. In 2017, BIC recorded Net Sales of 2,041.4 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 Socially Responsible Investment indexes: CDP's Climate A List, CDP's Supplier Climate A List, Euronext Vigeo - Eurozone 120, Euronext Vigeo - Europe 120, FTSE4Good indexes, Ethibel Pioneer and Ethibel Excellence Investment Registers, Ethibel Sustainability Index (ESI) Excellence Europe, Stoxx Global ESG Leaders Index.

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