In its preliminary results to 30 April 2004 Spicers has reported sales up by 1% to £498.8 million. Operating profit before amortisation of intangibles increased by 34% to £21.7 million and operating margin before amortisation of intangibles increased from 3.3% to 4.4%.
Chief executive Bill Armstrong, says it has been another year of solid progress across Europe. "The good recovery in UK profitability over the last two years underpins the development of Spicers in Continental Europe. We now have in place strong management teams in all countries and it is their hard work which has produced the good result and which will enable Spicers to strengthen further its position as Europe’s leading office product wholesaler in the coming year."
The substantial advance in profit was achieved against a background of continuing soft demand for traditional office products across Europe, with consumers being more inclined to buy lower specification, or own brand products. There is growing evidence, in most markets, of confidence recovering and consumption stabilising. Demand for electronic office supplies (EOS) continues to grow but the low margins on the highest volume EOS products have deteriorated further.
Spicers’ improvement in profitability was principally attributable to further strong progress in the UK as a result of the programme of operational initiatives started in 2002. Service levels to customers were further raised and significant cost reductions achieved. The regional distribution centre (RDC) network was restructured with the closure of the Nottingham RDC.
High sales in Germany and Spain have been partly offset by declines elsewhere in Europe. In France, market conditions proved particularly challenging but Spicers’ business improved its profitability by cutting costs and managing its margins better. Spicers Germany grew steadily throughout the year.
The Spanish business, launched in 2002, achieved strong sales growth in the year and the new Italian business will be launched in November 2004. The purpose-built head office and first RDC at Castel San Giovanni, just south of Milan, is now occupied and intense preparation is underway to ensure a successful start-up.
24-Jun-2004
