Pitney Bowes is hoping that ecommerce and direct mail opportunities will help drive up sales in the second half of the year, after recording a gloomy second quarter.
But the company has updated its guidance to suggest that following a weaker than expected first half, the whole of 2012 will likely see revenues either flat or declining 4% on last year’s.
The world’s largest mailroom equipment provider said last week that its revenues slipped 5% during its second quarter of the year, compared to the same period in 2011, down to $1.2bn.
The decline was only 3% when currency changes were excluded, and the company said currency changes were sufficient to nudge performances at its production mail and management services segments into revenue declines.
But, in particular Pitney Bowes said during the second quarter the decline in its small and medium-size business division continued at a 5% rate excluding currency influences.
Earnings per share for the quarter as a whole at Pitney Bowes was down 2% to 0.49 per share.
In the year to date, Pitney Bowes said its revenue has declined 4%.
Murray D Martin, the Pitney Bowes chairman, president and CEO, said his company expected certain “drivers” to boost results in the second half of 2012.
“These drivers include expansion of ecommerce and direct mail opportunities in Mail Services, new print outsourcing services provided by Management Services and increased backlog of equipment orders for Production Mail,” said Martin.
Pitney’s Small and Medium-sized Business Solutions division, which includes sales of mailing equipment in North America and internationally, saw its Q2 revenues down 8% on a reported basis to $453m for the quarter.
Earnings before tax (EBIT) were down 6% compared to Q2 2011, to $190m.
The company said its North America operations saw an 8% decline in revenues to $453m, and a 5% decline in EBIT to $168m in the quarter, with lower equipment rentals, as well as the delayed impact of lower equipment sales seen in previous quarters. Some productivity improvements were seen in the quarter, and the company noted that take-up of its Connect+ mailing system was improving.
The international side of the SMB division saw revenue increasing 1% when the affects of currency fluctuations were taken out, although a 6% decline to $165m with currency changes. Earnings fell by 19% to $22m for the quarter, affected by currency changes and also a change in the company’s mix of business.
Pitney Bowes said its equipment sales and supplies revenue grew as the company began selling its Connect+ product line in Germany. Sales are also beginning in France as of the third quarter. But, meter numbers remained flat in Europe, although some growth is being seen in emerging markets.
Enterprise business solutions
Within its large business customer segment, Pitney Bowes said revenues fell 3% or 1% excluding currency change, to $627m, while EBIT was up 11% to $61m.
Much of the improvement in earnings came from the company’s mail sorting operations, with its Standard Mail volumes in the United States increasing, with the company taking advantage of workshare discounts for the US Postal Service. Mail Services revenue was up 5% to $141m, but some of the 176% increase in the $27m EBIT was the result of last year’s figures being so badly affected by the fire at the company’s Dallas presorting plant.
Elsewhere in the Enterprise Business Solutions division, Pitney Bowes said its Worldwide Production Mail segment saw revenues down 8%, earnings down 39% as large customers delayed capital investment decisions for new mailing equipment. Earnings were also affected by the company’s continuing investment in its digital mail platform, Volly, which is now approaching a launch in the United States and in Australia (run by Australia Post) later in 2012.
Pitney Bowes said software sales remained flat in its Enterprise segment compared to the same quarter last year, with good demand in the Americas offset by lower sales in Europe.
And, the Management Services segment saw print outsourcing revenues sliding 5%, earnings down 37%, hit by weak economies in Europe. The company said it was expecting an improvement in its business demand now being seen to translate into revenue growth later in 2012.
Source: Post&Parcel/Pitney Bowes