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SHAREHOLDERS’ LETTER N°44

BIC Group’s Shareholders' Letter of December 2018.

portrait of Gonzalve Bich

EDITORIAL

Dear Shareholders,

 

Looking at our results for the third quarter and nine months of 2018, we were able to deliver strong performance across our three categories, in line with our expectations. This was achieved in a challenging and volatile trading environment, as our businesses remain exposed to numerous headwinds such as raw material price increases; transportation strikes in both Brazil and India; and import issues in the Middle East and Africa. Stationery delivered solid growth notably thanks to strong e-commerce performance in the US and Europe, and the successful launch of Cello One pen in India. We outperformed our markets during Back-to-School season in the Northern Hemisphere. All three categories performed well in Mexico, particularly in Lighters where we expanded distribution, notably in smaller convenience stores.  And in Shavers, despite overall market softness, we continued to post growth in Eastern Europe and see positive impacts from our new product launches in Europe such as the BIC Flex 5 Hybrid.

 

To address the challenges that we face in our different markets, to build on BIC’s history of success and to meet the rapidly-evolving needs of consumers globally, we must reimagine BIC to become more agile, more integrated and more innovative.

 

We have already started to take actions in order to pursue these long-term goals. End of August, we announced the acquisition of a historical Kenyan partner, inclusive of the manufacturing facility and distribution assets, therefore strengthening our footprint in Africa through a more efficient route to market.

 

In mid-October, we filed an infringement complaint with the European Commission for lack of surveillance of Lighter safety compliance in France and Germany, aimed at preventing the circulation of too many potentially dangerous lighters available for sale in the European market. By initiating these proceedings with the European Union, BIC is acting in the interest of all consumers.

 

End of November, we received an offer from Tahe Outdoors to acquire BIC Sport, our water sports subsidiary. This transaction was consistent with our strategy to focus on our three main businesses and reinforce our leadership position across our three categories.

 

However, these actions are not enough and we must accelerate them. This is why, mid-December, we initiated a review of our organization to design a plan aimed at increasing operational performance and ensure ongoing and sustainable profitability. We will share the outcomes of this review during the first quarter of 2019. Yet, I am fully confident in the ability and engagement of our teams to succeed.

 

As we come closer to our full year results publication, we remain committed to our full year outlook as we continue to invest in growth opportunities and drive operational effectiveness.

 

Gonzalve Bich, Chief Executive Officer

2018 NINE MONTHS PERFORMANCE

Find the full press release here

Net Sales
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Net Sales by Category
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Change in Net Sales by Category
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Normalized IFO Margin(2)
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(1) Comparative basis: at constant currencies and constant perimeter. Figures at constant perimeter exclude the impacts of acquisitions and/or disposals that occurred during the current year and/or during the previous year, until their anniversary date.

(2) Normalized: means excluding non-recurring items (for more information, please refer to the 3Q and 9M 2018 Results press release).

NEWS

haco agreement

HACO INDUSTRIES KENYA LTD TRANSFERS ITS STATIONERY MANUFACTURING AND DISTRIBUTION TO BIC

On Aug. 31th, 2018, Haco Industries Kenya Ltd and SOCIETE BIC formally announced their agreement for the transfer of manufacturing facilities and distribution of BIC® products to BIC.

The definitive agreement will result in the transfer of the manufacturing facilities in Kenya and the distribution of Stationery, Lighters, and Shavers in East Africa from HACO Industries to BIC. Subject to the Kenyan Competition Authority approval, the transfer is expected to be completed by 1st January 2019.

This transaction is in line with BIC’s continued growth strategy in Africa, and the longterm growth plans of HACO Industries, which aims to diversify its portfolio and presence in Western & Southern Africa.

european parliament

BIC FILES A COMPLAINT WITH THE EUROPEAN COMMISSION FOR LACK OF SURVEILLANCE OF LIGHTER SAFETY COMPLIANCE IN FRANCE AND IN GERMANY

On Oct 18th, 2018, BIC announced that it has filed an infringement complaint with the European Commission for lack of surveillance of noncompliant Lighters in France and Germany. The complaint concerns noncompliant Lighters that are either imported or sold on these domestic markets, impacting the entire European Union due to the free movement of goods.

The seriousness of this issue has been broadly acknowledged by the European Commission, the European Parliament, the Highest French Courts, and the relevant NGOs.

bic sport

BIC RECEIVES AN OFFER FOR THE ACQUISITION OF BIC SPORT

On November 20th 2018, BIC announced that it has received an offer from Tahe Outdoors to acquire BIC Sport, its water sports subsidiary, for a total Enterprise Value between 6 and 9 million euros, contingent upon BIC Sport’s future financial results.

This transaction, expected to close by 31-December-2018, is consistent with BIC’s strategy to focus on its three categories (Stationery, Lighters, and Shavers) in order to reinforce its leadership position in its categories around the world.

Founded in 1979, BIC Sport pioneered the windsurf industry and progressively diversified its activities to include surfing, kayaking, junior racing dinghies and stand up paddleboarding. Headquartered in Vannes (France), BIC Sport sells its products in more than 90 countries, with strong positions in Europe, North America and Asia Pacific.

Tahe Outdoors is one of the largest and fastest growing European manufacturers of paddle sport and kite surfing equipment. Established in 1989, Tahe Outdoors sells its products in 50 countries and manufactures in France, Germany, and Estonia.

EDUCATION WEEK IN SOUTH AFRICA

BIC GLOBAL EDUCATION WEEK

BIC held its first-ever Global Education Week, from  Oct. 1-5, 2018, in support of its commitment to improve the learning conditions of 250 million children worldwide by 2025.

Education has the power to change the world. Unfortunately, more than half of the world’s two billion children under the age of 14 leave school without achieving the minimum proficiency levels. At BIC, one of the long-standing core goals is to improve lives through education. We all have a role to play, and BIC is proud to do its part to help make a difference.

During the BIC Global Education Week, BIC team members in 40 countries and across 63 BIC sites  volunteered up to a day of work to help to improve learning conditions for students within their local communities, doing their share to make a lasting difference impacting more than 41,000 kids, with varied meaningful actions ranging from homework support for children to complete school refurbishments.

About the huge engagement of BIC team members, the passion and the energy deployed during the week, Gonzalve BICH, Chief Executive Officer, said: “I am incredibly proud of all our team members around the world who volunteered last week to help improve learning conditions within their local communities. Thank you all for making the first #BICGlobalEducationWeek a success. Let’s maintain our efforts to make a lasting change together!”

BIC PRIZE

BIC AWARDED FOR THE QUALITY OF ITS FINANCIAL COMMUNICATION

A series of prizes were awarded to BIC in the past months: first the Group won the Financial Transparency Award by the editor Labrador for the quality of its Registration Document, shortly after the Group was awarded for its Annual Report with the Grand Prix for Editorial Communication by the magazine “Stratégies”, as well as awarded by COM ENT (a French association for professional communication) with a silver prize for the printed document and a gold prize for the print-into-web version.

bic flex 5 ad

NEW BIC FLEX RAZORS’ CAMPAIGN: ORIGINALITY, MODERNITY, AUDACITY!

Since the launch of its first monobloc razor, BIC continues to innovate the market and responds to the evolution of consumer needs towards more efficient products.

With the new Flex campaign, BIC intends to gain ground and convince consumers that its premium range "BIC FLEX" is THE ideal solution to meet their expectations.

At the heart of Flex campaign is a film directed by the talented Loren Denis in which BIC presents its latest innovation, the Flex 5 razor, through a unique story between a consumer and his Flex 5 razor, embodied by an incredible dancer. The different versions of the film are broadcasted on TV and digital platforms. The 360° campaign also showcases a dedicated website, and a massive point-of-sale communication. The campaign is rolled out gradually starting in the third half of 2018 in more than ten countries across Europe.

bic makerfaire

PARIS MAKERFAIRE

BIC as official partner of the MakerFaire Paris : If there is “one place to be” for innovation, co-creation and maker it is the MakerFaire! As official partner of this great event, BIC participated for the first time at its Paris edition during three days in November 2018. On the fair itself and on the BIC® booth, we welcomed around 20.000 visitors and 7.000 children for the Education day on Friday. They discovered, shared and co-created all around BIC® products, BIC innovation and BIC education. Besides appealing workshops on our stand, like 3D-printing, coloring contests, Augmented Reality, visitors could experience round-table discussions around Sustainability with the BIC® Ubicuity® project and meet artists of the BIC collection such as Mamadou Cissé, Etienne Cendrier, Blaise Guinin who showed live their artistic usage of BIC® products in cartoons and drawings, re-cycling creations. A great place to boost innovation and enhance creativity!

Next steps are to carry on co-creating with consumers all around the world.

bic advent calendar

BIC ADVENT CALENDAR : THE “IT” ON E-COMMERCE!

THE BIC® Advent Calendar, developed for e-commerce in France, UK, Germany and Italy, was immediately a success story on Amazon.co.uk. Only 2 weeks after the launch… Thanks to the right offer at the right price ad on time, BIC Advent Calendar was 6th best seller in the Advent Calendar browse category. French consumers can also find it some French modern mass markets.

PEN ART MASTER

BIC SOUTH AFRICA HELD THE 2nd EDITION OF PEN ART MASTER COMPETITION ON FACEBOOK

Free State artist Ennock Mlangeni is the winner of the 2018 BIC Art Master talent search contest. And his winning sketch was a portrait to commemorate Winnie Madikizela-Mandela drawn in ballpoint pen.

This year's competition received over 700 entries from all over the country. All entries were loaded onto the www. www.biccentral.co.za with the public voting for the top 20 finalists. The final three winners were selected by a BIC judging panel.

bic on jd.com

BIC® PRODUCTS ON LINE IN CHINA

A real Milestone for BIC China. After opening its first Lighter flagship store earlier this year on jd.com (the largest online E-tailer in China), BIC China has just opened its second flagship store dedicated to stationery, showcasing the most iconic BIC writing instruments as well as its dedicated coloring range for Kids, BIC KIDS.

hognny hallyday

LIGHT ON WITH JOHNNY HALLYDAY BIC® LIMITED-EDITION LIGHTERS

One year after he passed away, BIC decide to honor the very famous French singer Johnny Hallyday and launched 2 ranges of limited-edition lighters, each one decorated with a historical milestone in the artist’s life career. Available for all of his fans on the Modern Mass Markets and at Tobbaconists.

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