Neopost announces first quarter results

Paris, 10 June 2003 – Neopost, the European leader and number two world-wide supplier of mailing solutions, today announced consolidated sales of €192.8m for the first quarter of its 2003 financial year (three months ending April 30 2003). This represents an increase of 14.8% compared to the first quarter of 2002 and of 27.0% excluding currency effects.
On a pro forma basis, i.e. including Ascom Hasler and Stielow sales for the whole of Q1 2002 and Q1 2003, sales fell by 10.2%. Excluding currency effects, sales were slightly down 0.7% on a pro forma basis.
Jean-Paul Villot, Neopost’s chairman and chief executive officer, made the following comments:
‘Our acquisitions are continuing to pay off, allowing us to generate sales growth of 27.0% excluding currency effects. On a pro forma basis, sales were stable (down 0.7%), in line with our forecasts. This is a very satisfactory performance for us, given the economic context and the high base for comparison in 2002 caused by the euro conversion programmes. We are especially pleased that, on a constant exchange rate basis, pro forma sales grew in our three main markets of North America, France and the UK in the first quarter.’
Reported sales
Euro million Q1 2003* Q1 2002** Change Change
(excl. currencies) North America 77.9 80.5 -3.2% +18.7% France 58.1 51.5 +12.8% +12.8% UK 24.1 20.7 +16.4% +29.3% Germany 19.1 2.7 +607.4% +607.4% Rest of the world 13.6 12.5 +8.4%% +10.1% Total 192.8 167.9 +14.8% +27.0%
* Ascom Hasler (North America and rest of the world) and Stielow consolidated for the full three months
** Ascom Hasler North America consolidated for two months, Ascom Hasler rest of the world and Stielow not yet acquired
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Pro forma sales
Euro million Q1 2003***
Q1 2002*** Change
Change
(excl. currencies) North America 77.9 91.8 -15.2% +4.0% France 58.1 51.5 +12.8% +12.8% UK 24.1 26.6 -9.5% +0.6% Germany 13.2 14.3 -7.9% -7.9% Rest of the world 13.6 23.9 -43.2% -42.4% Sub-total 186.9 208.1 -10.2% -0.4% Stielow’s non-core businesses 5.9 6.6 -9.2% -9.2% Total 192.8 214.7 -10.2% -0.7%
*** Ascom Hasler (North America and rest of the world) and Stielow included for the whole of Q1 2002 and 2003
Excluding Stielow’s non-core businesses, which Neopost plans to divest in the 2003 financial year, sales were stable (-0.4%) on a pro forma basis and at constant exchange rates.
In North America, sales grew by 18.7% at constant exchange rates, due to the integration of Ascom Hasler. The success of the IJ35/45 franking machines and the gradual introduction of the folder/inserter range by the Hasler network enabled Neopost to maintain growth (+4.0% on a pro forma basis, excluding currency effects), despite the tough economic climate.
In France, where Neopost already controls more than 65% of the installed base of franking machines and where there has been no change in the scope of consolidation, Neopost generated strong sales growth of 12.8%, despite the weak economic background. A postal rate change in April 2003 contributed to this performance, however, excluding this postal rate change, growth was still positive at +3.%.
In the UK, sales grew by 29.3% due to the integration of Ascom Hasler. On a pro forma basis, sales growth remained positive at 0.6%, despite the high base for comparison in Q1 2002, when the company started to benefit from the mechanical franking machine decertification programme.
In Germany, Neopost has considerably strengthened its position, multiplying its level of sales by 7 with the acquisitions of Ascom Hasler and Stielow. As expected, sales fell on a pro forma basis, due to difficult market conditions following the surge caused by the euro conversion programme. Germany was one of the countries that benefited most from the euro effect in 2002, creating an unfavourable base for comparison in 2003.
The integration of Stielow is on track. Neopost is actively working on plans to divest Stielow’s non-core businesses.
In the rest of the world, Neopost is experiencing a fall-off in business in Europe after the euro conversion programmes (in Italy, the Netherlands and Belgium). The company is also suffering from weak exports by the former Hasler network. Neopost’s digital range is not yet fully available in export markets, while the production of Hasler’s former electro-mechanical products has been stopped following the closure of the Bern plant.
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Outlook
Sales in the second quarter of 2003 will again suffer from comparison with the second quarter of last year, since the company benefited from a postal rate change in US in June 2002, leading to $13m of additional sales. However, the consequences of the euro conversion programmes and the end of electro-mechanical products for export markets should ease.
It will therefore take until the second half of 2003 for Neopost to show again positive organic growth.
The dollar’s weakness against the euro will mechanically reduce Neopost’s pro forma sales. However, thanks to a good balance between dollar-denominated sales and expenses, currency movements will not damage either EBIT margin or net margin. Currency hedging will limit the negative impact of exchange rate movements on net income.
In conclusion, Jean-Paul Villot said: ‘The integration of Ascom Hasler is now complete, and we confirm our cost savings of at least €22m in 2004, of which at least 50% will be achieved in 2003. The integration of Stielow is going to plan. Losses at Neopost Online have been stopped for good. Neopost’s first-quarter performance showed that the company is continuing to grow in its main markets, despite the tough economic environment. Currency risks are under control. As a result, we remain very confident regarding our target of achieving a substantial improvement in earnings and profitability in 2003.’
Diary
Neopost’s shareholders’ meeting will take place on 9 July 2003 (second notification). The dividend of €1 per share excluding tax credit – subject to shareholder approval in this meeting – will be paid on 11 July 2003.
First-half sales will be published on 9 September 2003 after the close of trading on the stock exchange.
Neopost
Neopost is the European leader and number two worldwide 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 and a net profit of euro 70 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 Florence BONIFACE, Gavin Anderson & Company Tel: 01 45 36 31 39 Tel: 01 42 94 66 83 Fax :01 45 36 30 30 Fax: 01 42 94 25 69 E-mail: [email protected] E-mail: [email protected]
Or consult our Internet site: www.neopost.com
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