Mario Guevara: We had a good year, results were consistent with our expectations and performance indicators are up. The Consumer business (stationery, lighters and shavers), 85% of net sales, saw an increase of 5.3%. This positive performance made up for the contraction in Advertising and Promotional Products (APP), down 9.2% for the year. All in all, I think it’s very positive – our Group’s net sales rose by 2.8%. We have a very solid base, and that means good things for the future.
Mario Guevara: 2012 was the year things balanced out between developed markets where sales grew by 5.6% and developing markets where they grew by 4.7%. Back to school season in Europe was good for stationery sales even while the overall economic environment was quite strained. Lighters and shavers also performed well in North America.
Mario Guevara: That’s right, net sales for shavers grew 10.1% in 2012. The triple-blade shavers, both the classic BIC® 3 version and the BIC® Hybrid/ BIC®Easy model with moveable blades played a big role in that success. Thanks to innovations like these, we have won market share in most of the geographic zones where we are present, including the United States, a particularly competitive environment. That’s quite a feat and one we should celebrate! In Latin America, we also increased our sales thanks in particular to an improved distribution network. But this success is first and foremost of the result of the quality work that our very committed teams do around the world.
Mario Guevara: The economic context is not really one that favors promotional products, particularly in Southern Europe which has been hit very hard by the crisis. In the United States, after a slightly positive first quarter, our results were affected by the implementation of a new ERP system and the temporary glitches in customer service that the changeover caused. However, despite net sales that declined again in 2012, our IFO margin remained resilient. We are convinced that BIC APP can bounce back. We have the utmost confidence in our teams.
Bruno Bich: In 2012, we significantly increased our industrial investments. Out of €125M invested, half went to increasing production capacity for existing products or for the launch of new products. For example – our new writing instrument plant in Tunisia, which will serve the Middle East and North African markets, will be completely operational, as announced, by the end of 2013 with a total investment of around €12M. In response to the success of our lighters we are increasing production capacity in all four of our plants. We are also expanding our shaver packaging operation in Mexico for North American markets. Regarding new products, we have developed and launched a new super smooth ink currently used for pens specific to the Asian market and we are launching in 2013 new moveable blade shavers including one for young men in Europe, another for women in the USA and a refillable four-blade shaver for men in Latin America. We are also paving the way for future growth at BIC. In 2012, we increased our R&D budget by more than 36% to bring additional support to portable fuel cell device project. At the end of 2011, we bought Angstrom, a company specialized in portable fuel cell technology and have since successfully incorporated it into the business. We are now working with the CEA, the French government-funded technological research organization specialized in nuclear and alternative energy sources, for the development of a pilot line for micro-fuel cells. We expect to launch a product within the next four years. In France we also launched the BIC® Education solution for elementary schools.
Bruno Bich: First I want to remind everyone that the original goal of this duty, created in 1991, was not to protect the European lighter industry but to stop unfair competition from some Chinese flint lighters manufacturers. The European Commission renewed this tax three times, which I stress, in reality has practically never been paid because people have massively circumvented it for the past 20 years, which Brussels has again recently recognized. We will continue to defend our Group interests, our shareholders and our employees in Europe against two forms of undeniable unfair competition in particular: first, the non-respect of safety standards and the danger that it poses to consumers while penalizing the manufacturers who have made massive investments in order to respect those standards. Second, the imbalance between the custom duties which are 2.7% for lighters coming into the European market from China and 25% for lighters exported from Europe to China!
Bruno Bich: First of all, our teams. I would like to mention our R&D engineers who master the latest technologies in order to ensure constant improvements in the performance of our products as well as designing new, ultra high performing production machines. There are the production teams in every factory we have around the world, where they focus daily on improving quality and optimizing costs. I would also like to mention the sales and marketing teams because they are out there in the field and have an in-depth knowledge of their markets, finance and administration teams who provide the discipline, accuracy & analytics to support effective decision making. The skill, ingenuity, motivation, experience and multicultural diversity of our teams are the key to our success. Thanks to them, our products, quality and always at the right price, meet consumer expectations and provide them with the right products they use every day. Our obsession with quality and the right price as well as being truly open to change and innovation are the strengths of our company.
Bruno Bich: We have to keep in mind that the global economic environment remains volatile, with particularly difficult market conditions in Europe. In this context and in order to prepare the future for our Consumer business (stationery, lighters and shavers), we continue to support our brand and our key products along with investments and innovation with the launch of new products.
Also, we place our trust in the new management that has been put in place to stabilize and increase BIC APP sales, proposing new products and new printing technology that offers a wide range of colors as well as numerous options for small runs of personalized products. We are of course maintaining our solid balance sheet and a regular shareholder remuneration. After two good years, 2013 will be a year of transition but our net sales and profitability goals will be in keeping with our medium-term objectives. We are very proud of the commitment that our 9,000 employees show on a daily basis and we have the greatest trust in them. Thanks to them, BIC can continue to offer high-quality, useful, attractive and innovative products in an often difficult economic context. They all deserve our sincere gratitude.