(BFM Bourse) – The company provided an update on its Horizon strategic plan launched in 2020. It is targeting an operating margin of around 15.5% by 2025 and annual growth of between 5% and 7%.
Bic takes out his notepad. The specialist in stationery, razors and pens provided an update on its five-year Horizon 2025 strategic plan this Monday.
Remember that this plan was presented in November 2020 by launching a series of strategic initiatives to expand the market for its various products, in order to return to a growth rate in line with 5% per year.
The idea is to evolve Bic’s operational model to gain market share in value, by projecting itself into addressable segments of these traditional markets. To give an example, in stationery, the company has turned to creativity (like pens for drawing temporary tattoos) and digital writing.
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Profitability higher than consensus
For lighters, Bic realized that it had perhaps placed too much emphasis on the lighter as a tool for cigarettes when around half of uses are not linked to tobacco. As an example on this point, the company launched its EZ Reach range in January in France (after the United States), which is similar to a utility lighter, allowing you to light candles or grill, while by having a child safety system.
Three years after giving the official launch of this “Horizon” plan, Bic draws up an interim assessment. The group explains that it has increased its revenues by a cumulative 600 million euros between 2020 and 2023 and is expected to generate a net cash flow of more than 200 million euros this year, for the fifth consecutive year.
Above all, the group has clarified its objectives for 2025. By the end of this last year, the company intends to achieve growth at constant rates of between 5% and 7%, which constitutes an improvement, since The group previously targeted a growth rate of 5% per year through this plan.
In addition, the company announced that it wanted to significantly improve its profitability, targeting an operating margin increasing by around 150 basis points (1.5 percentage points) compared to the 2022 figure which stood at 14%. According to Invest Securities, the consensus of analysts was forecasting 15.4% in 2025. Last but not least, the group announced that it wanted to generate 20 million euros more in free cash flow per year. from 2024. This will be added to the 200 million annual euros already contained in the plan.
Towards a “rerating”?
On the Paris Stock Exchange, the market appreciates the update of the company’s targets, with Bic shares increasing by 3.1% to 62.15 euros around 1 p.m.
This progress update follows the publication of second quarter results at the end of July, deemed “solid” by UBS. Buying on value, the Swiss bank believes that the stock should experience a “rerating” (an improvement in its stock market multiples) in the second half.
“Reorientation towards value-added products (including through mergers and acquisitions) and intensified reinvestments will lead to improved net sales growth and profitability” which “combined with regular share repurchases, will enable growth in earnings per share of 5% between 2024 and 2027″, the bank also judged.
Julien Marion – ©2023 BFM Bourse
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