North American sales push Neopost to 5.7% profit increase

Neopost, the mail processing equipment provider, has posted a 5.7% increase in profits for the whole of 2010. The French company, which describes itself as the number two supplier in the world for mail processing solutions, said its revenues were up 5.8% year-on-year to 965.6m euros.

This was boosted by currency movements but represented a 2% growth assuming constant exchange rates, it said.

Net income was up 6.1% to 156.9m euros, while operating profit grew by 5.7% to 248.1m euros compared to the 234.7m recorded for 2009.

Neopost said its operating margin reached 25.7% of sales.

Denis Thiery, the company’s chief executive, said 2010 had seen a stability in Neopost’s revenues and a resumption of growth compared to the recession-hit 2009.

He said: “We resumed growth in 2010 thanks to the positive momentum we have established in North America and the resumption of sales of equipment, particularly those of document management systems. Our productivity efforts have enabled us to record a continuation of our margins at a high level and thus generate a net increase of over 6%.”

Sales

Neopost said turnover for its mailing systems, which represent more than two thirds of its sales, declined by 1.1%, but that sales in its document management and logistics systems, making up just under a third of turnover, balanced the decline.

Neopost operates currently operates in 18 countries, with 5,500 employees, serving clients in 90 countries.

Sales in the company’s largest market, North America, grew by 4.8% at constant exchange rates, even though the US Postal Service did not increase postal rates during the year.

Success came partly thanks to a reorganisation of the business in 2008 and 2009, but also from good performances in the sale of document management systems and the IS franking machines.

Neopost saw mixed fortunes outside North America, with a 2.4% drop in turnover in the French market, which “remains difficult”, and a 2.9% decline in the UK, which has been hit by a freeze in public spending.

Sales were up 1.2% in the “volatile” German market, and up 8.3% in other world markets thanks to particularly good results in Scandinavia.

2011 outlook

Looking ahead, the Neopost CEO said 2011 “looks good”.

This year, the company is intending to build on the success of its document management systems division with new product launches including two folder/inserter products, one entry-level and one high-end.

It will also push the marketing of its franking machines.

The company said it was expecting continued prospects in North America following the maturing of a “significant” number of its contracts this year, but was also expecting the mixed performance in Europe to continue.

Predicting growth of between 2% and 4% for the year at constant exchange rates, the company said operating income would likely be between 25.5% and 26% of turnover.

Thiery said of 2011 expectations: “The pace of growth should increase. We are especially prepared to qualify the best opportunities in North America. Strengthening our direct distribution, the restructuring of our organization and renewal of our product lines are all assets in this context. We continue to optimize our business model by offering our customers worldwide solutions ever more innovative and competitive.”

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