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.
see how it plays out today...hedge funds have been propping this up to keep price higher but at some point if they can't keep it where they want it, they'll drop it and you could see a freefall effect. volume hasn't been outrageous but if it gets more volatile that may change..know when to dump and preserve your stake.
unfortunately u may be right..about by the price action, i know how this hedge fund has driven it up..and also how easily they cud short it way down..orderly, of course..but instead of bouncng back to 9.50...it's been forced to close at the low...so..i like the company,spirit and the product line/...just FWIW!
real simple....no profit, no growth = poorly run company. why would you invest your hard earned money into a losing company? unless all you do is day trade...I gripe about this company because I don't want to see people waste their money on a go nowhere stock. that's my motive Louis. wait a couple more quarters and you'll beging to notice the pattern...you want a good stock to watch? check out BPL, FGP, APU, KMP...stocks with growth and profit.
i've found when there is someone posting continually against a particular stock, there's a reason behind it...
that's all i'm saying...
i leave it up to investors to try and deduce the "why"..?
i've already made up MY mind....
thanks Louis....for all your incredible sharing of knowledge. you're a fountain of information on this stock...oh yes, that's right ..you've uttered not one fact or figure yet in two years of being here. just bashing as usual.