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2 0 0 7 Full Year Results

2 0 0 7 Full Year Results. April 2008. DISCLAIMER. Safe Harbour Statement

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2 0 0 7 Full Year Results

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  1. 2 0 0 7Full Year Results April 2008

  2. DISCLAIMER Safe Harbour Statement This presentation contains forward-looking statements (made pursuant to the safe harbour provisions of the Private Securities Litigation Reform Act of 1995). By their nature, forward-looking statements involve risk and uncertainty. Forward-looking statements represent the company's judgement regarding future events, and are based on currently available information. Consequently the company cannot guarantee their accuracy and their completeness and actual results may differ materially from those the company anticipated due to a number of uncertainties, many of which the company is not aware of. For additional information concerning these and other important factors that may cause the company's actual results to differ materially from expectations and underlying assumptions, please refer to the reports filed by the company with the ‘Autorité des Marchés Financiers’.

  3. AGENDA • Introduction • Market trends • Acquisitions • Product launch • Full year accounts • Outlook

  4. INTRODUCTION

  5. INTRODUCTION • 2007, a transition year between 2 decertifications in the US • After a great performance in 2006 • Market conditions more difficult than expected during H2 in the US • Sales growth of 2.4% excluding exchange rate effects • Slight improvement in current operating margin at 26.1% of total sales • Pursued policy of return to shareholders • More intense preparation for the future • Acquisitions • Major product launch • Accelerated optimisation of the Group’s organisation

  6. MARKET TRENDS

  7. Evolution towards more complex Internet-based digital franking machines MARKET TRENDS • Postal sector evolution • Mail volumes generally flat • Deregulation in Europe: 2008-2011 • Opening up to competition • A situation being still different depending on the countries • Economic and competitive pressure within postal organisations in North America and in Europe for: • Greater efficiency / productivity • Better service / flexibility • Mailing systems: a critical CRM tool for postal organisations • Enhancement of the mail preparation function • Acceleration of equipment renewal • Customer acquisition of new accessories

  8. Irreversible shortening of the product life cycle MARKET TRENDS Decertification of the remaining electronic machines in the USA 2008 Main steps Decertification of all electronic machines inCanada and partially in the USA2006 Shape-Based Pricing in the USA 2007 Decertification of the mechanical machines in theUSA 1996-1999 2006 Pricing in Proportion in the UK 2004-2005 Frankit in Germany 2001-2002 Decertification of the mechanical machines in theUK 2000-2001 Switch to the Euro and « intelligent » franking machines inFrance

  9. ACQUISITIONS

  10. SIGNIFICANT ACQUISITIONS • Reinforcement of the product range through acquisitions, following the « rounding the core » concept • PFE, higher volume folders/inserters • ValiPost, industrial mail • NBG, RFID technology • Distribution optimisation through dealer acquisitions • In Europe • In the United States Sustained rate of the number of acquisitions

  11. PFE INTERNATIONAL LTD • Our most significant acquisition since 2002 • Worldwide leader in the high-end folders/inserters market • Sales of around £26 million in 2007,very low EBIT margin • Consolidation over 11 months in 2008 • Significant commercial synergies: product range and distribution • Objective: EBIT margin at 15% within 24 months Reinforcement of Neopost’s high-end folders/inserters product range

  12. VALIPOST • Acquisition in February 2007 • Leader in France in software solutions for industrial mailers: • Sorting by destination before printing • Identification labels and mail box tracker • Production planning • Top 6 French industrial mailers customers of ValiPost • Sales above €3 million in 2007,up 80% First steps of Neopost in industrial mail

  13. NBG ID • Neopost had owned 24% of NBG ID since 2004 • Stake increased to 100% in February 2008 • NBG ID activity: • Integrator of RFID technologies for the logistics sector • A promising portfolio in pallet and asset tracking • Important contract signed with Metro/DHL • Pilots in place notably at Mory and Kuehne & Nagel • Development of the RFID technology for applications in: • Parcels • Mail (on a longer term) • Sales around €2 million in 2007 Strategic choice to integrate RFID in the technological laboratory of Neopost

  14. IMPROVING DISTRIBUTION: EUROPE • Objective: to reinforce direct distribution • Dealer acquisitions in 2007: • Ruf AG in Switzerland (Zurich) in July 2007 • Ducourrier in Switzerland (Geneva) in October 2007 • 2 in Italy • 1 in Germany • Remaining opportunities in: • Switzerland • Scandinavia • Spain Continuing downstream consolidation of distribution

  15. IMPROVING DISTRIBUTION: US • Objectives: to reinforce direct distribution and to unify the network • 2007 deals • Acquisition of dealers: California, Colorado, Florida, Maryland and Wisconsin • Sale of territories: Alabama, Minnesota, Nevada and Pennsylvania Strategy of rationalising market coverage

  16. RATIONALISING OF NEOPOST US DISTRIBUTION indirect 69 67 60 56% 56% 40% 44% 24% 40 33 31 direct 0% Unified distribution (installed base covered by a single network, in %) Direct/indirect distribution (installed base covered, in %) Potential for rationalising still significant

  17. MAJOR PRODUCT LAUNCH

  18. Price IJ-110 1 – IJ range renewal in mid-range IJ-90 IJ-80 2 – Product range complement between IJ-25 and IJ-40 IJ-70 IS-440 Lowend IJ-60 IS-420 IJ-50 Highend IS-350 IJ-40 Volume IJ-25 About 10-30/day About 30-200/day >200/day MAJOR LAUNCH OF MAILING SYSTEMS IS-480 IS-460

  19. Manual barcode reader USB mass storage External printer Weighing Platform range IS-350 IS-420 IS-440 IS-460 IS-480 Mixed size feeder Compact dynamic scale Inserter connection ENHANCED HARDWARE OPTIONS

  20. IS-350 IS-420 IS-440 IS-460 IS-480 100 Department upgrade Differential weighing Online Services Mail accounting systems TECHNOLOGICAL BREAKTHROUGH IN TERMS OF CONNECTIVITY AND SOFTWARE

  21. MAJOR LAUNCH OF MAILING SYSTEMS • Product range encompassing 50% of the worldwide franking machine installed base • Launch programme • April 2008 => in the US • 2008 / 2009 => UK, Germany, France • Ergonomics • Ease of use: customer interface, «smart start», simplified access • 1st colour touch screen • Eco-conception: • Decrease in the weight of both machine and packaging • Increase of the component recyclability Strong competitive edge and increased revenue per customer

  22. IS480

  23. FULL YEAR ACCOUNTS

  24. GROWTH EXCL. EXCHANGE RATE EFFECTS Sales(€ m) +22.0 -33.4 918.5 907.1 2006 2007 Growth excl. currency impacts Currency impacts Growth of 2.4% at constant exchange rates

  25. HIGH COMPARISON BASES ON THE 3 MAIN MARKETS 2007/2006 change* 2007 sales: €907.1m North America + 0.0% North America 38% Rest of the world 11% + 1.2% France Germany 7% United Kingdom - 2.9% United Kingdom 16% Germany + 12.7% France28% Rest of the world + 18.8% Geographic balance between North America and Europe * At constant exchange rates

  26. STRONG GROWTH IN DOCUMENT SYSTEMS 2007/2006 change* 2007 sales: €907.1m Document and logistics systems Mailing systems - 0.3% 27% Document and logistics systems + 10.6% Mailing systems 73% Complementarities between the 2 activities * At constant exchange rates

  27. STRONG GROWTH IN RECURRING REVENUES 2007/2006 change* 2007 sales: €907.1m Rental & financial services Services and supplies Recurring revenues + 8.4% 30% 33% Equipment sales - 6.6% Equipment sales 37% Complementarities between equipment sales and recurring revenues * At constant exchange rates

  28. SLIGHT IMPROVEMENT IN PROFITABILITY Current operating margin (Current operating income / sales, %) 26.1 26.0 24.8 23.4 21.5* 21.0* 20.6* 19.6 20.7 18.6 19.2* 16.7 * Excluding Neopost Online

  29. SLIGHT IMPROVEMENT IN PROFITABILITY • Recurring revenues • Increase in revenues coming from supplies: • Revenues increased by 19.4% excl. exchange rate effects, i.e. 13.6% of total Group revenues in 2007 • Financial services development (leasing and postage financing): • Revenues increased by 21.2% excl. exchange rate effects, i.e. 8.0% of total Group revenues in 2007 • Productivity improvement • Currency impacts under control (EUR/USD and EUR/GBP) Relevance and strength of Neopost’s model

  30. Gross Margin 706 708 +0.2% As a % of sales 76.9% 78.0% EBITDA 297 303 +1.9% As a % of sales 32.3% 33.4% Current operating income 239 237 -0.7% As a % of sales 26.0% 26.1% CURRENT OPERATING MARGIN OF 26.1% € m 2006 2007 Change % Sales 919 907 -1.3% Relevance and strength of Neopost’s model €/$ 2007 = 1.38 and 2006 = 1.26 ; €/£ 2007 = 0.69 and 2006 = 0.68

  31. ACCELERATED OPTIMISATION OF THE GROUP’S STRUCTURE • Research & Development • Grouping together some R&D centres • to strengthen R&D capacities within a budget of 5% of sales • Supply chain • 2 logistics platforms (Europe and USA) • Direct shipment • Optimisation of refurbishing unitS • to reduce supply chain cycles and inventories • Distribution • Within the context of the optimisation of the US distribution • Standardization of the ERP and of the franking machine resetting systems • to improve productivity and customer service

  32. ACCELERATED OPTIMISATION OF THE GROUP’S STRUCTURE • Schedule • R&D and supply chain: H1 2008 • US distribution: 2008-2009 • Cost • €20 million (net impact of €13 million) • Provisions recognised in the accounts at 31/01/2008 • €6 to 7 million savings per year by 2010 • Mainly cash To improve current operating margin growth

  33. NET INCOME BEFORE PROVISIONS FOR OPTIMISATION € m 2006 2007 Change % €/$ 2007 = 1.38 and 2006 = 1.26 ; €/£ 2007 = 0.69 and 2006 = 0.68

  34. NET INCOME € m 2006 2007 Variation % €/$ 2007 = 1.38 and 2006 = 1.26 ; €/£ 2007 = 0.69 and 2006 = 0.68

  35. WORKING CAPITAL REQUIREMENT UNDER CONTROL € m 2006 2007 Change % Inventories 50 43 -13.6% +9.8% Trade receivables* 143 157 +6.7% Prepaid income (157) (167) -5.5% Other payables and receivables (289) (273) -5.3% Total excluding leasing (253) (240) WCR maintained at a very high negative level *Include only trade receivables in 2006 and 2007. In last year presentation, income tax receivables and other receivable were also included

  36. STRONG CASH FLOW GENERATION € m 2006 2007 297 303 EBITDA (96) (90) Capex (net of disposals) Change in working capital requirements 62 (13) Taxes (65) (54) Cash from operations* 198 146 Exceptional improvement of WCR in 2006 * Before leasing, debt service, dividends and share buybacks

  37. PLANNED INCREASE OF GEARING 31/01 2008 31/01 2007 € m 595 496 Financial debt (149) (158) Cash and marketable securities 446 338 Net financial debt 493 537 Equity 90.5% Net debt/equity 63.0% Net Debt / EBITDA 1.5 1.1 10.5 15.8 EBITDA / Financial charges Impact of acquisitions, financial services development and return to shareholders

  38. PURSUED POLICY OF RETURN TO SHAREHOLDERS • For 2006: • 2.1% of total shares bought back between July 2006 and July 2007 • 655 782 shares for €62.1 million • € 3.30 dividend paid in July 2007 • €102.6 million • Total value returned to shareholders: €164.7 million • For 2007: • Buy-back of at least 2% of total shares • €3.65 dividend per share (€113 million) 100% of the increase in shareholder’s equity returned to shareholders

  39. 10% INCREASE FOR 2007 DIVIDEND In € 4.99 5 4.75 4.35 4.32 4 3.65 3.58 3.50 3.30 3.00 • EPS 3 2.75 2.30 2 1.25 1.26 1.00 1 • Except. dividend Pay-out ratio: 43% 45% 98% 69% 66% 77% A dividend of €3.65 per share for 2007, i.e. a yield above 5%* * Based on the closing price of the 31st of January 2008 (€67.83)

  40. OUTLOOK

  41. CONTINUING BENEFITS OF THE NEOPOST MODEL • Development of higher margin activities • High end • Supplies • Leasing • Postage financing • Online services • Structure optimisation • Research & Development • Supply Chain • Distribution Potential to improve operating profitability

  42. OUTLOOK • Impact of PFE consolidation over 11 months in 2007 • Sales: €942 million • Current operating margin: 25.2% • 2008 • Sales: • Growth of at least 3% excluding PFE consolidation • PFE impact: around 3 percentage points of growth (at constant exchange rates) • Current operating margin: gain of 50 bps (from a current operating margin of 25,2% in 2007 including PFE) • Beyond 2008 • Continued technological and regulatory evolutions • Neopost model for profitable growth will continue to bear fruit • Optimisation programmes and PFE synergies • Current operating margin above 26%

  43. APPENDIX

  44. CONSOLIDATED BALANCE SHEETS (1/2) FY 2006 FY 2007 Assets € m Goodwill 575 529 47 Fixed intangible assets 53 135 144 Fixed tangible assets Financial investments 14 15 5 4 Other long term assets 425 Leasing receivables 399 Deferred tax assets 45 44 50 43 Inventory Trade receivables 157 143 72 49 Other short-term assets Cash and marketable securities 150 158 TOTAL 1,668 1,588

  45. CONSOLIDATED BALANCE SHEETS (2/2) FY 2006 FY 2007 Liabilities € m Shareholders’ equity 537 493 Provisions 40 42 Long-term financial debt 312 285 Short-term financial debt 184 310 Deferred tax liabilities 23 26 Prepaid income 157 167 Other short term liabilities 335 345 TOTAL 1,588 1,668

  46. RETURN TO SHAREHOLDERS POLICY July 2005 July 2006 July 2007 July 2008 € m 104 138 157 136 Net income (previous year) 4 Exercised stock options (previous year) 12 11 10 Oceanes conversion 135 0 0 0 Impact on equity 243 150 168 146 Ordinary dividend 48 69 103 113 Special dividend 64 25 0 0 71 63 62 50 Share buy-backs Return to shareholders 183 157 165 163 Number of shares (in millions)* 30.9 31.5 31.4 31.0 2% of total shares bought back in 2007/2008 *Does not include treasury stock held for cancellation

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