Neopost publishes annual results
2002 financial year: Strong growth and record increase in profitability Consolidated sales up 32% Operating income (EBIT) up 60% Net income up 83% First dividend Paris, 1 April 2003 – Neopost, the European leader and number two world-wide supplier of mailing solutions, today announced record growth in sales and profitability in its 2002 financial year (ended 31 January 2003). The year was a busy one on the acquisitions front, with the completion of the Ascom Hasler and Stielow deals. These gave Neopost a new dimension with boosted sales to more than E800m on a pro-forma basis. Sales growth came with a surge in profitability, with EBIT up 60% and net income up 83%. Reported figures*
Euro million 2001 2002 Change
Sales 575 761 +32.3% (1)
Operating income (EBIT) 83 133 59.50%
% of sales 14.50% 17.50%
Net income 38 70 82.90%
% of sales 6.60% 9.20%
Pro-forma figures**
Euro million 2001 2002 Change
Sales 853 831 (2.6%) (2)
Operating income (EBIT) 107 137 28.20%
% of sales 12.50% 16.50%
Net income 47 71 52.70%
% of sales 5.50% 8.50%
* Ascom Hasler North America consolidated for 11 months, Ascom Hasler outside North America consolidated for 8 months, and Stielow consolidated for 5 months ** Ascom Hasler and Stielow figures included for the whole year in 2001 and 2002 (1) up 37.6% at constant exchange rates (2) up 1.1% at constant exchange rates Jean-Paul Villot, Neopost's Chairman and Chief Executive Officer, made the following comments: 'Our 2002 financial year will go down as one of major acquisition activity, due to the purchases of Ascom Hasler and Stielow, and one of very strong profitability growth. We have managed to integrate acquisitions, streamline our organisation, improve productivity, launch new products and invest in new technologies all at the same time. This has made Neopost increasingly competitive, despite the tough economic environment. The credit for this must go to our staff, who have worked hard together to achieve this remarkable performance, while continuing to prepare for the future.' Major external growth In 2002, Neopost integrated the companies acquired during the year. Ascom Hasler North America was consolidated as of 1 March 2002 (i.e. for 11 months of the financial year), Ascom Hasler's activities outside North America as of 1 June 2002 (8 months) and Stielow as of 1 September 2002 (5 months). Sales grew by 32.3 or by 37.6% at constant exchange rates. Most of this growth was due to acquisitions, although there was also some organic growth. On a pro-forma basis, Neopost's sales grew by 1.1% at constant exchange rates, and by 2.5% excluding Stielow. This is despite a high base for comparison in 2001, when the company benefited considerably from additional revenues related to the euro conversion programme (E9m in the French market alone). Improved profitability Although the initial impact of acquisition-related synergies will show through only in 2003, Neopost's operating income (EBIT) grew by 59.5% to E133m in 2002, while net income jumped by 82.9% to E70m. This strong earnings growth was due to the following factors : – Operating losses at Neopost Online were reduced to E14m in 2002. Neopost Online will no longer have any impact on Neopost's earnings in 2003. – The company kept a very tight grip on spending, and there was a build-up in sales of new digital products, which generate wider margins. – Recent acquisitions made a positive contribution to operating income.
– Interest charges were under control at E25m, despite the financing of the
Ascom Hasler and Stielow deals.
– The tax charges were optimised by acquisitions. This earnings growth is especially impressive given that Neopost maintained its heavy R&D investment and launched numerous new products in 2002. Neopost's range of digital franking machines was reinforced by the launch of the IJ35, IJ45, IJ85 and IJ105, while the range of folder/inserters has now been completely revamped in the space of two years following the arrival of the SI76 and SI92. Overall, Neopost's EBIT margin rose from 14.5% to 17.5%, while net margin increased from 6.6% to 9.2%. Successful integration of Ascom Hasler The integration of Ascom Hasler has been a success, and has progressed in line with Neopost's plan. Neopost's production is now regrouped between France, the Netherlands and China, and its R&D is now carried out in three sites in France, the Netherlands and the USA. Distribution networks have been merged in all European countries and in Canada. Ascom Hasler's repair centre in the USA has been transferred to Mexico, where Neopost's centre was located. The new organisation is fully operational, management teams have been integrated and product ranges have been harmonised. Reorganisation of Stielow underway The acquisition of Stielow, which came a few months after the Ascom Hasler deal, was a strategic opportunity for Neopost. It enabled Neopost to become Germany's second-largest supplier of franking machines with 21% of the market, and number one supplier of folder/inserters, with market share of 50%. As previously announced, Stielow's non-core businesses are being sold, and Stielow and Neopost's German back-offices are being merged. Neopost confirms that its German business should be generating EBIT margin of 10-15% by the end of 2003. Healthy financial position Neopost's strong cash flow in 2002 made it much easier for the company to finance acquisitions. Although the cost of acquisitions in 2002 was E283m – including acquisition fees and restructuring costs – Neopost's net debt increased by only E173m. Neopost's current financial position will enable it to fund future organic growth and acquisitions, due to strong cash flow resulting from substantial recurrent revenues, which generate strong margins. Proposal to pay a first dividend Neopost's strong financial position means that it now planning to start paying dividends. In its meeting earlier today, the Board of Directors decided to submit a resolution to the next AGM proposing a dividend payment of E1 per share with respect to the 2002 financial year. This will result in a total payment of E30.3m, equal to 43.5% of net income. Outlook In 2003, Neopost's sales should reflect the full impact of acquisitions carried out in 2002, with the exception of Stielow's non-core businesses. Neopost's pro-forma 2002 sales, which totalled E831m, included a E26m contribution from non-core Stielow businesses, which Neopost intends to sell. Sales in the first half of 2003 will suffer from a high base for comparison, since sales in the first half of 2002 still benefited from the end of the euro conversion programme and a postal rate change in the USA. In the second half, the base for comparison will revert to normal, enabling Neopost to achieve moderate growth at constant exchange rates. Although Neopost has significant dollar exposure in terms of sales, dollar movements are likely to have only a limited impact on margins in 2003, since Neopost's dollar exposure is well balanced between sales (43%), cost of sales (44%), operating expenses (40%) and debt (40%). Currency hedging carried out during the year should also substantially reduce the impact of a weaker dollar on operating income (EBIT) and net income. Operating income (EBIT) and net income should improve significantly in 2003 due to the elimination of losses at Neopost Online, increased sales resulting from acquisitions, and acquisition-related synergies. Synergies of E22m are expected in 2004, with at least E11m of these coming in 2003. As regards 2004, Neopost has confirmed its target of increasing overall EBIT margin to 20-22 even with a weak dollar. In conclusion, Jean-Paul Villot said: 'We are pleased to be in a position to offer shareholders a first dividend, and we would like to thank them for their loyalty and confidence. We are fully confident in Neopost's ability to achieve steady earnings growth. Neopost plays a central role in the mailing of letters and parcels, and is actively involved in the transformation of this process, under the combined influence of technological progress, postal deregulation and the changing needs of postal services, transportation companies, and all users that send and receive mail.' Diary Sales for the first quarter of 2003 will be published on 10 June 2003 after the close of trading on the stock exchange. About Neopost Neopost is the European leader and number two world-wide supplier of mailroom equipment and logistics solutions. Neopost offers the most advanced solutions for online or off-line postage, large volume mail insertions, occasional parcel delivery and logistics management and traceability. Headquartered near Paris, France, Neopost has a direct presence in the world's top mailing and logistics markets, i.e. the USA, France, Germany, the UK, Canada, Italy, the Netherlands, Belgium, Spain, Ireland and Japan. Neopost products are sold in 70 countries. In 2002, Neopost generated sales of euro 760.6 million. In 2002, Neopost acquired Ascom Hasler, the world number three supplier of mailing solutions, and Stielow, Germany's leading supplier of folder/inserters. Neopost is listed on the Premier Marché of Euronext Paris and is a constituent of the SBF 120 and Next 150 indices. For any additional information, please contact: Gaële Chagnaud, Investor Relations Tel: +33 1 45 36 31 39 – Fax: +33 1 45 36 30 30
E-mail: [email protected]
or visit our website: www.neopost.com
Florence Laroche, Gavin Anderson & Company
Tel: +33 1 53 83 31 72 – Fax: +33 1 53 83 31 62
E-mail: [email protected]
