cxp analyst and investor meeting denver – 12-13 september 2007 12 th of september carl hoyer -...
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CXP Analyst and Investor Meeting Denver – 12-13 September 2007
12th of September
Carl Hoyer - Competition
2CXP Analyst and Investor Meeting Denver – 12-13 September 2007 2
“Safe Harbour” Statementunder the Private Securities Litigation Reform Act of 1995
Statements included in this press release, which are not historical facts are forward-looking
statements made pursuant to the safe harbour provisions of the Private Securities Litigation
Reform Act of 1995 and the Securities Exchange Act of 1934.
Such forward-looking statements are made based upon management’s expectations and
beliefs concerning future events impacting Corporate Express and therefore involve a
number of uncertainties and risks, including, but not limited to industry conditions,
changes in product supply, pricing and customer demand, competition, risks in integrating
new businesses, currency fluctuations, and the other risks described from time to time in the
Company’s filings with the US Securities and Exchange Commission, including the
Company’s Annual Report on Form 20-F filed with the Securities and Exchange Commission
on March 9, 2007. As a result, the actual results of operations or financial conditions of the
Company could differ materially from those expressed or implied in such forward-looking
statements. Shareholders and other readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date on which they are made.
The Company undertakes no obligation to update publicly or revise any forward-looking
statements.
3CXP Analyst and Investor Meeting Denver – 12-13 September 2007
Market Environment
DIRECT MAIL
Limited Offering
RETAIL
Physical PresenceLease obligation
Staples
Office Max
Office Depot
CONTRACTWide range / consumables
Next Day Delivery
4CXP Analyst and Investor Meeting Denver – 12-13 September 2007
Market Environment
Wide range / consumables
Next Day Delivery
CONTRACT DIRECT MAIL
Limited Offering
RETAIL
Physical PresenceLease obligation
Corporate Express
Lyreco
Local / regional players Local / regional players Supermarkets
Independent retailersWholesalers
5CXP Analyst and Investor Meeting Denver – 12-13 September 2007
Single Accountable Source for Business Needs
Single-source-supplier
Office Products
Furniture Doc & Print Management
CE Promotional Marketing
Facility Supplies
OP North America
OP Australia
OP Europe
√
√
√
√
no
√
√
√
√
√
√
√
√
√
√
√
√
√
Educational Supplies
Corporate Express
6CXP Analyst and Investor Meeting Denver – 12-13 September 2007
Single Accountable Source for Business Needs
Single-source-supplier
Office Products
Furniture Doc & Print Management
CE Promotional Marketing
Facility Supplies
Office Max
Staples
Office Depot
Local players
√
√
√
√
no
no
√
no
no
no
no
no
some
no
no
no
no
no
no
no
7CXP Analyst and Investor Meeting Denver – 12-13 September 2007
North AmericaCorporate Express
Office MaxOffice Depot
Staples
EuropeCorporate Express
Office DepotLyreco
Staples (solely mail order)
Australia & New ZealandCorporate Express
Office MaxLyreco
Southeast AsiaCorporate Express - AlliancesOffice Depot - China/S Korea
Staples - S-Korea/India
Global Office Products - Global Coverage
8CXP Analyst and Investor Meeting Denver – 12-13 September 2007
Office Max
8
2005 2006 Q2 2007
Sales 9,128 8,966 2,133
Gross contribution 2,188 2,309 536
% of sales 24.0% 25.8% 25.1%
Operating profit 42 280 56
% of sales 0.5% 3.1% 2.6%
DIRECT MAIL RETAIL
Sales: 53%
CONTRACT
47%
Gross contribution: 46%
Operating profit: 67%
54%
33%
9CXP Analyst and Investor Meeting Denver – 12-13 September 2007
S ales s plit
74%
14%12% L arge
S oHo
Medium
9
Office Max - Contract
US, Canada, Australia and New Zealand• International sales 24% of total Contract (US$ 1.15 bln in 2006)
SoHo (<20 ftes), Commercial (20-249), Large (>250)Reliable, mail order company, active in US• Sales Reliable not disclosed
Sales growth: • No recent acquisitions• A$, C$ and NZ$ moved substantially vs US$ last years• Nowadays do disclose organic growth
10CXP Analyst and Investor Meeting Denver – 12-13 September 2007
Office Depot
10
2005 2006 Q2 2007
Sales 14,278 15,011 3,632
Gross contribution 4,392 4,668 1,102
% of sales 30.8% 31.1% 30.3%
Operating profit 347 * 733 154
% of sales 2.4% 4.9% 4.3%
DIRECT MAIL RETAIL
Sales: 30%
CONTRACT
45%
Gross contribution: ? ? ?
Operating profit *: 34%
? ? ?
44%
* Includes sizeable restructuring charge
* 2006 - USD 300 mln of overhead costs not allocated to divisions and additional USD 58 mln of one-of costs
11CXP Analyst and Investor Meeting Denver – 12-13 September 2007 11
Office Depot- Contract
‘Business Service Group’: • Contract sales, Mail order (Office Depot), Internet sales• Do not disclose breakdown, Contract should be larger than Mail order
Sales growth: • Acquired Allied in May 2006 (then US$ 300 mln in sales) • Also in ‘International Division’ number of acquisitions• No currency effect• Do not disclose organic growth
No breakdown / disclosure on Gross contribution
12CXP Analyst and Investor Meeting Denver – 12-13 September 2007
Staples
12
2005 2006 Q2 2007
Sales 16,079 18,161 4,290
Gross contribution 4,583 5,194 1,210
% of sales 28.5% 28.6% 28.2%
Operating profit 1,235 1,463 281
% of sales 7.7% 8.1% 6.5%
DIRECT MAIL RETAIL
Sales: 33%
CONTRACT
54%
Gross contribution: ? ? ?
Operating profit *: 38%
? ? ?
59%
* 2006/07 - USD 169 mln stock option costs not allocated to divisions
13CXP Analyst and Investor Meeting Denver – 12-13 September 2007 13
Staples- Contract
‘North America Delivery’: • SoHo (1-19 fte’s); Mail order (Quill, MAP)(10-100 fte’s)• Middle/large - SBA (>20 fte’s), Contract - SNA (Fortune 500)Sales growth: • Number of smaller acquisitions, partly announced• Acquired American Identity, promotional marketing company • Modest currency effect due to C$No breakdown / disclosure on Gross contribution• Mail order highly profitable, MAP should be over 20% operating margin
14CXP Analyst and Investor Meeting Denver – 12-13 September 2007
United Stationers / SP Richards
14
United Stationers 2005 2006 Q2 2007
Sales 4,348 4,547 1,141
Gross contribution 643 754 170
% of sales 14.8% 16.6% 14.9%
Operating profit 169 241 47
% of sales 3.9% 5.3% 4.1%
SP Richards 2005 2006 Q2 2007
Sales 1,662 1,780 431
Gross contribution n.a. n.a. n.a.
% of sales n.a. n.a. n.a.
Operating profit 157 167 38
% of sales * 9.5% 9.4% 8.7%
* Genuine Parts total overhead around 0.5% of sales
15CXP Analyst and Investor Meeting Denver – 12-13 September 2007 15
United Stationers
Over 80% volume small / regional players- Close to 50,000 sku’s on stock, delivery overnight- From item ordering to full service
Sweet Paper acquired in Q2 2005- Specialised in Facility products- Local /regional office product players too small to direct source
16CXP Analyst and Investor Meeting Denver – 12-13 September 2007 16
EBIT-margins top-4 players North American market
0.0%
3.0%
6.0%
9.0%
12.0%
Q1 04 Q3 04 Q1 05 Q3 05 Q1 06 Q3 06 Q1 07
Corporate Express Office Max Office Depot ODP underlying Staples Staples underlying
OverheadCorporate Express EUR 7 mln per quarter (excludes pension income)Office Depot appr. USD 80 mln / quarterMethodology of overhead allocation was changed per Q1 05Office Max USD 10 mln in Q2 2007Staples No overhead, but USD 49 mln stock compensation
x
x
X – excludes special items ODP
17CXP Analyst and Investor Meeting Denver – 12-13 September 2007
-5%
0%
5%
10%
15%
20%
25%
Q4 04 Q2 05 Q4 05 Q2 06 Q4 06 Q2 07
CE NA Office Max Staples Office Depot
Organic growth top-4 US players
18CXP Analyst and Investor Meeting Denver – 12-13 September 2007 18
Closing remarks
Same industry, but• Different strategies
All channels vs single-source-supplier Global reach vs regional player
• Different customer mix
Disclosure• Best practice vs limited information
No divisional gross contribution No segment, customer and/or divisional breakdown No organic growth numbers No details acquired companies (e.g. sales)
Extrapolation• E.g. Office Depot - Sept 2004 profit warning on a.o. Hurricanes
Florida• E.g. Office Depot - Last Friday commenting on SME weakness• SME vs Large/strategic, blue-collar vs white-collar
CXP Analyst and Investor Meeting Denver – 12-13 September 2007
Productivity in your hands.