(AOF) – On the occasion of an investors day, Bic indicated that it was “on track to achieve its 5-year objectives set as part of the Horizon plan in 2025”. The manufacturer of lighters, razors, pens and promotional items anticipates an adjusted operating margin improving by approximately 150 basis points compared to the 2022 level of 14%, or 15.5%. It also plans to generate an additional €20 million in net free cash flow per year from 2024, adding to the current target of over €200 million.
Revenue is expected to grow annually by 5% to 7%.
During this day, management “will offer an overview of the shift towards growth made by the group since the launch of the plan in 2020, thanks to the deployment of new internal capacities”.
“The efforts of our Revenue Growth Management team are focused on growth in value rather than volume, behind the price and mix effect, the simplification of the portfolio and the maximization of product value (SKU), and the improvement of the effectiveness of our promotional policies”, declared Gonzalve Bich, Managing Director.
“At the same time, we are leveraging our global supply chain to minimize our production costs, guarantee the security of our supplies and reduce our delivery times.”
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Key points
– World number one in lighters with 55% market share, world number two in pens with 8% of the market and world number two in razors with 23% of the market, created in 1944;
– Defensive positioning with a range of quality products at the best prices, sales of €2.2 billion, divided between pens (38%), lighters (33%) and razors;
– 26% of sales made in emerging countries (mainly in Latin America, Brazil being the group’s 2nd market), behind North America (43%) and Europe (31%);
– Business model combining innovation capacity and industrial integration strategy (91% of Bic objects produced in its factories), resulting in an operating margin higher than that of competitors;
– Capital locked by the founding Bich family (46% of the capital and 60.1% of the voting rights), Nikos Koumettis chairing the board of directors of 12 members, Gonzalve Bich being general manager;
– Solid balance sheet with €1.8 billion in equity compared to €937 million in gross debt and a net cash position of €360 million.
Challenges
– Horizon 2025 strategic plan:
– annual growth greater than 5% for both stationery (Human expression), lighters (Flame for life) and razors (Blade excellence),
– industrial efficiency with €50 million in cumulative cost savings and generation of annual cash flows above €200 million by 2022;
– Innovation strategy financed at 1.1% of turnover for an offer of “sustainable” and safe products:
– innovation ecosystem: Internal innovation lab focused on data (discovery of new technologies that can be integrated into the group’s projects, partnership with Plug&Play, Data-Driven Invention Lab using consumer data, new Partnerships and new Business division,
– 110 patents filed in 2022,
– 9% of revenues from products launched less than 5 years ago;
– 2025 environmental strategy “writing the future together”:
– 2030 vs 2019 objectives: 100% renewable energy (76% in 2022) and 50% reduction in CO2 emissions for scope 1, 100% for scope 2 and 5% for scope 3 (suppliers) ,
– eco-circularity with 100% recyclable packaging (70% in 2022) and the offer of “sustainable” products with recycled or alternative plastics, refillable pens and razors made from recycled materials,
– environmental impact share buyback program;
– Expansion of markets via the subcontracting of high-precision blades for other brands (3 contracts in 2022) or tattoos with the American Tattly;
– Rationalization of the portfolio by reducing references by almost 12%;
– Reinforcement of the weight of e-commerce, to 10.2% of total sales
and continued market gains
.
Challenges
– Strong competition, particularly from Asia, in lighters (50% of the world market);
– Diversity of margins between branches, with lighters remaining the most profitable (35% operating margin compared to 13% for blades and 3% for pens);
-Faced with inflation in the costs of plastic materials, freight and energy, of €105 million in 2022, creation of strategic stocks, long-term contracts with suppliers and expansion of their number, increased use of recycled plastics, increase in prices and volumes but slightly negative impact on the margin;
– After a 13.8% increase in turnover, 2023 objective of 6 to 7% growth in sales and an improvement in the operating margin;
– Dividend up 11.9% to €2.56 and buyback of shares for €100 million.
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