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ACCO Brands Corporation Message Board

  • dymolabels dymolabels Apr 28, 2011 5:58 AM Flag

    A blip or a trend?

    Volume blip for ACCO
    27 April 2011 - Lincolnshire (IL), USA

    ACCO CEO Bob Keller said that the company was still on track to achieve its financial goals for the year despite a drop in sales volumes in the first quarter.

    ACCO’s volumes for the first quarter were down by about 4%, leading to essentially flat Q1 sales of $310.3 million versus market expectations of $319 million.

    Keller said that a combination of customers reducing inventories and fourth quarter buy-forwards prior to price increases had led to a $14 million shortfall in Q1 sales, but that the situation had largely normalised by the end of the quarter.

    “Underlying product demand is in line with our expectations,” said Keller during today’s conference call.

    ACCO Brands Americas

    The volume issue was most significant in the US, and ACCO’s Americas division saw Q1 volumes decline 7% while sales were down 4% to $152.2 million.

    Operating income decreased to $5.5 million compared to $8.3 million last year, due to lower sales and higher go-to-market and promotional spending. This included an extra $1 million on initiatives to gain more sell-through on ACCO’s durable products such as trimmers, shredders, boards and binding and laminating products.

    ACCO Brands International

    International sales in the quarter were $116.8 million, a decrease of 1% in local currency terms. Volumes were down 2% due to inventory reductions by certain customers.

    International operating income came in at $5.5 million, compared to $10.2 million in the same quarter last year, mainly to almost $4 million in costs related to the rationalisation programme in Europe.

    Excluding charges, profit margin in Europe declined by 1% to 8.1% due to lower volumes and higher raw materials costs.

    Computer Products Group

    Computer Products net sales increased 4% to $41.3 million.

    Volume increased 1% due to new products – mainly iPhone and iPad accessories – and growth in the US.

    Computer Products operating income was $9.3 million, compared to $8.1 million in the

    prior-year quarter, and operating margin expansion was mainly due to lower selling, general and administrative expenses.

    Conference call takeaways

    Today’s conference call was briefer than normal as only a handful of analysts participated.

    Bob Keller said that customer inventory reductions had come about after improvements to ACCO’s own supply chain meant that customers felt more comfortable increasing their inventory turns with the company.

    He reiterated on several occasions that customer relationships were strong, perhaps anticipating some nervousness amongst investors about the volume declines.

    No real details were given about the private label initiatives with Walmart and Target, but Keller did say that ACCO was selling more products through Amazon.

    The CEO also revealed that further price increases had been agreed in the US and Europe for July and that ACCO had been able to implement freight surcharges due to the recent rises in fuel prices.

    The EU rationalisation plan and moves to improve the performance of the print finishing unit were described as progressing as planned

    ACCO’s outlook for 2011 remained unchanged as it confirmed its projected sales growth of 4-6% and an earnings per share increase of over 30%.

    The company's share price was slightly positive during morning trading on Wall Street.

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