QUARTER MARKED BY
A TEMPORARY UNDER-PERFORMANCE IN ENTERPRISE DIGITAL
SOLUTIONS
MEDIUM-TERM AMBITIONS
UNCHANGED
Paris, December 4, 2017
Neopost, a global leader in
digital communications, shipping and mail solutions, today
announced €263 million in consolidated sales for the third quarter
of 2017 (period ended October 31, 2017), down -6.1% compared with
the same period in 2016. Excluding currency effects, the decline
came out at -2.9%. On an organic basis, sales were down -2.5%,
excluding the scope effects of the DMTI Spatial disposal. This
result reflects the temporary under-performance in the Enterprise
Digital Solutions (EDS) division, the continued double-digit growth
for Neopost Shipping, and the decline of Mail Solutions in the SME
Solutions division, which was within the expected range of -4 to
-6%. In total, Communication & Shipping Solutions accounted for
28% of Group sales in the third quarter of 2017, from 27% one year
earlier.
Sales for the first nine months of
2017 reached €821 million, a decline of -1.8% on the same period in
2016. Excluding currency and scope effects, sales declined by
-1.4%2 on an organic
basis. Communication & Shipping Solutions accounted for 28% of
total sales in the first nine months of 2017, from 25% in the prior
year.
Denis Thiery, Chairman and Chief
Executive Officer of Neopost, commented: "This quarter was marked by the temporary under-performance
in our EDS division, due to low growth in GMC Software and
difficulties for icon Systemhaus. However, measures introduced
during the quarter and the quality of GMC Software's portfolio
should allow the division to return to sound organic growth next
quarter.
Strong growth continued in the Shipping division, driven by
the roll-out of Packcity in Japan and the sale of CVP-500 automated
packing solutions.
In the SME Solutions division, the decline in revenue from
mail-related activities is within the expected range. We continue
to win new market share in the United States and to generate robust
growth in digital communication and logistics
solutions.
To sum up, our performance in the third quarter does not
compromise our growth targets for new business activities. We
remain in a strong position to achieve our medium-term
targets."
SALES BY DIVISION
€
million |
Q3 2017 |
Q3
2016 |
Change |
Change at
constant exchange rates |
Organic
change1 |
Enterprise Digital Solutions (EDS) |
33 |
35 |
-6.5% |
-3.5% |
+0.3% |
Neopost Shipping* |
14 |
13 |
+7.6% |
+11.0% |
+11.0% |
SME Solutions |
221 |
236 |
-6.5% |
-3.3% |
-3.3% |
Elimination |
(5) |
(5) |
- |
- |
- |
Group total |
263 |
279 |
-6.1% |
-2.9% |
-2.5% |
*including €1.9 million in sales generated by the
CVP-500 automated packing solution in Q3 2017 versus €1.4 million
a year earlier.
(Unaudited data)
€
million |
9M 2017 |
9M
2016 |
Change |
Change at
constant exchange rates |
Organic
change2 |
Enterprise Digital Solutions (EDS) |
102 |
94 |
+8.6% |
+9.3% |
+4.7% |
Neopost Shipping* |
41 |
37 |
+9.6% |
+11.4% |
+11.4% |
SME Solutions |
694 |
720 |
-3.6% |
-2.8% |
-2,8% |
Elimination |
(16) |
(15) |
- |
- |
- |
Group total |
821 |
836 |
-1.8% |
-0.9% |
-1.4% |
*including €4.5 million in sales generated by the
CVP-500 automated packing solution for 9M 2017 versus €2.9 million
a year earlier.
(Unaudited data)
Enterprise Digital Solutions
(EDS)
Enterprise
Digital Solutions (EDS) sales were down -6.5% to €33 million in
the third quarter of 2017. Restated for the
currency and scope effects of the disposal of DMTI, sales were
stable at +0.3%.
GMC Software sales saw modest
growth. The reorganization of the sales force, following the
opening of new vertical markets at the start of the year, continues
to impact license sales.
icon Systemhaus sales were down
due to absence of license sales in the quarter. Its integration
within Quadient, which comprises GMC Software, Satori and Human
Inference, will be accelerated, and it will be refocused on its
original core markets.
Enterprise Digital Solutions'
organic sales grew by +4.7% in the first nine
months of fiscal year 2017.
EDS is on track to return to
sustained growth from Q4 2017, building on the quality of GMC
Software's portfolio. Nevertheless, whatever the quality of the
growth generated in Q4, the initial target of double-digit growth
should not be reached for full-year 2017.
Neopost Shipping
Neopost
Shipping reported sales of €14 million in Q3
2017, up +11.0%, excluding currency effects. Growth was fueled
mainly by Packcity in Japan. Installation of the automated parcel
lockers accelerated to a monthly average of 300 sites installed. At
this pace, Neopost Shipping is on course to hit the target of 3,000
sites up and running by spring 2018. Growth in the division was
also boosted by the sale of two CVP-500 automated packaging
systems, one of which was in Japan.
Neopost Shipping posted organic
growth of +11.4% in the first nine months of
fiscal 2017.
SME Solutions
SME
Solutions' sales for the third quarter
2017 were down -3.3% to €221 million, excluding currency
effects.
Mail Solutions' sales were down
-5.0% year-on-year, excluding currency effects, on high prior-year
comparable. This business activity is within the Group's forecast
range. Neopost activities in North America were down slightly and
continued to outperform the market, while tougher market conditions
continued to weigh on Europe.
Communication & Shipping
Solutions' activities in the SME Solutions division grew +7.5%,
excluding currency effects. Excluding graphic activities, growth
generated by digital communication and shipping solutions was
+29.1% excluding currency effects.
SME Solutions' sales were down
-2.8% in the first nine months of fiscal year
2017, excluding currency effects. Mail Solutions' business is
down -4.1% since the start of the year and is within the annual
negative growth range expected by the Group (-4 to -6%). In the
same period, Communication & Shipping Solutions activities grew
+6.3%. Excluding graphic activities, digital communication and
logistics solutions generated a strong growth of +18.6% excluding
currency effects.
HIGHLIGHTS
Neopost acquired all the minority
shareholdings in Temando (Neopost Shipping division) during the
third quarter and now holds 100% of the company's capital.
GENERAL OVERVIEW OF FINANCIAL
POSITION
Savings plans
The Group is pursuing its cost
savings plan in SME Solutions. As announced, these structural
initiatives to optimize organization are expected to result in
annual cost savings of more than €50 million[4] from
2018.
Financial position
The Group's financial position is
healthy. Net debt is related solely to financing rental, leasing
and postage financing activities. The Group has no significant debt
refinancing due before 2021.
The Group also holds sufficient
cash flow to sustain its development, meet its dividend
distribution commitments and maintain a solid balance sheet
structure.
Dividend
The Board of Directors meeting on
November 24, 2017 set an interim dividend of €0.80 per share for
fiscal year 2017.
The interim dividend will be paid
in cash. The ex-dividend date is February 2, 2018 and payment will
be made on February 6, 2018. The 2017 dividend balance will be paid
in August 2018.
MEDIUM-TERM AMBITIONS
UNCHANGED
The transformation of Neopost
continues as follows:
-
in the Enterprise Digital Solutions division,
the Group continues to invest to firmly anchor its leadership
position and will benefit from icon Systemhaus's complementary
range of products. The Group is targeting growth in excess of 10%
per year and improved profit margins;
-
in the Neopost Shipping division, the Group's offer is now established and will be
rolled out to generate significant organic growth and improve
profitability;
-
in the SME Solutions division, the Group is
accelerating the roll-out of digital and shipping solutions to
offset the decline in sales of mail solutions. Meanwhile, Neopost
will pursue its plan to lower net costs by at least €50
million4 by January
31, 2018 to stabilize its operating margin around 22%;
-
in addition, the Group's investment in
innovation will stay on course, with an annual average budget of
€10 million.
This strategy is designed to
return Neopost to organic sales growth in the medium term. It will
also ensure the Group maintains a current operating margin, before
acquisition-related expense, above 18.0% throughout the period of
transformation, and return it to above 20.0%, before
acquisition-related expense, in the medium term.
CALENDAR
The
fourth-quarter sales press release and full-year 2017 results will
be published on March 27, 2018 after
the market close.
ABOUT NEOPOST
NEOPOST is a global leader in digital
communications, logistics and mail solutions. Its mission is to
help companies improve the way they manage interactions with their
clients and partners. Neopost provides the most advanced solutions
for physical mail processing (mailing and folder-inserter systems),
digital communication management (Customer Communications
Management and Data Quality applications), and supply chain and
e-commerce process optimization (from point of sale to delivery,
including associated tracking services).
With a direct presence in 29 countries and close to 6,000
employees, Neopost reported annual sales of €1.2 billion in 2016.
Its products and services are sold in more than 90
countries.
Neopost is listed in compartment A of Euronext Paris and belongs to
the SBF 120 index. |
For more information, please
contact:
Gaële Le Men, Neopost |
FTI Consulting |
Gaële Le
Men
Financial & External Communications Director |
Arnaud de
Cheffontaines
Cosme Julien-Madoni |
Tel: +33
(0)1 45 36 31 39 |
Tel: +33
(0)1 47 03 68 19 |
Email: g.le-men@neopost.com |
Email: neopost@fticonsulting.com |
Or visit our website:
www.neopost.com
Appendices
Glossary
- Enterprise
Digital Solutions (EDS): division offering Customer
Communications Management (CCM) and Data Quality (DQ) solutions for
large companies. It includes the GMC Software, Human Inference and
Satori acquisitions, now consolidated in Quadient, as well as icon
Systemhaus.
- Neopost
Shipping: division offering management solutions for shipping
and delivery; tracking of goods and merchandise for players in
e-commerce, distribution and carriers. It includes the ProShip and
Temando acquisitions.
- SME
Solutions: division offering Mail Solutions products and
services for small and mid-sized enterprises, the Group's
long-standing customers. This division also delivers digital,
shipping and graphic solutions for the same customer base.
- Mail
Solutions: mailing systems, document management systems
(folder/inserters for offices and mailrooms; other mailroom
equipment) and related services.
- Communication
& Shipping Solutions (CSS): customer communications
management, data quality, logistics and graphics solutions.
Sales by activity
€
million |
Q3 2017 |
Q3
2016 |
Change |
Change at
constant exchange rates |
Organic
change1 |
|
Mail solutions |
188 |
204 |
-8.2% |
-5.0% |
-5.0% |
|
Communication & Shipping Solutions |
75 |
75 |
-0.3% |
+2.7% |
+4.6% |
|
Group total |
263 |
279 |
-6.1% |
-2.9% |
-2.5% |
|
(Unaudited data)
€
million |
9M 2017 |
9M
2016 |
Change |
Change at
constant exchange rates |
Organic
change2 |
|
Mail solutions |
594 |
625 |
-5.0% |
-4.1% |
-4.1% |
|
Communication & Shipping Solutions |
227 |
211 |
+7.9% |
+8.5% |
+6.5% |
|
Group total |
821 |
836 |
-1.8% |
-0.9% |
-1.4% |
|
(Unaudited data)
Sales by region
€
million |
Q3 2017 |
Q3
2016 |
Change |
Change at
constant exchange rates |
Organic
change1 |
|
North America |
116 |
127 |
-8.5% |
-2.9% |
-1.9% |
|
Europe |
123 |
131 |
-6.1% |
-5.4% |
-5.4% |
|
Asia-Pacific and others |
23 |
21 |
+8.2% |
+11.6% |
+11.6% |
|
Group total |
263 |
279 |
-6.1% |
-2.9% |
-2.5% |
|
(Unaudited data)
€
million |
9M 2017 |
9M
2016 |
Change |
Change at
constant exchange rates |
Organic
change2 |
|
North America |
367 |
374 |
-1.8% |
-1.1% |
-0.7% |
|
Europe |
386 |
399 |
-3.2% |
-1.9% |
-3.3% |
|
Asia-Pacific and others |
68 |
63 |
+7.4% |
+6.4% |
+6.4% |
|
Group total |
821 |
836 |
-1.8% |
-0.9% |
-1.4% |
|
(Unaudited data)
Sales by revenue type
€
million |
Q3 2017 |
Q3
2016 |
Change |
Change at
constant exchange rates |
Organic
change1 |
|
Equipment and license sales |
80 |
90 |
-12.5% |
-9.3% |
-8.3% |
|
Recurring revenue |
183 |
189 |
-3.0% |
+0.1% |
+0.3% |
|
Group total |
263 |
279 |
-6.1% |
-2.9% |
-2.5% |
|
(Unaudited data)
€
million |
9M 2017 |
9M
2016 |
Change |
Change at
constant exchange rates |
Organic
change2 |
|
Equipment and license sales |
256 |
265 |
-3.1% |
-2.2% |
-2.3% |
|
Recurring revenue |
565 |
571 |
-1.1% |
-0.4% |
-1.0% |
|
Group total |
821 |
836 |
-1.8% |
-0.9% |
-1.4% |
|
(Unaudited data)
[1] Q3 2017
sales are compared with Q3 2016 sales, minus €1.3 million for the
disposal of DMTI (3 months).
[2] 9M 2017
sales are compared with 9M 2016 sales, with the addition of €5.6
million in sales generated by icon Systemhaus (5 months) and minus
€1.5 million for the disposal of DMTI (3 months and 3 weeks).
[3] Before
acquisition-related expense
4 compared with the 2014 cost
structure
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information contained therein.
Source: NEOPOST via Globenewswire