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Océ draws comfort from US acquisition
Océ,
the Dutch printer and copier company, said on Monday that 2006 had been
“a year of ups and downs” in which its core printer division
disappointed, but a US acquisition proved vital in lifting otherwise
flat revenues.Noting it would be “crucial for profitability” to sell
more printers in 2007, Rokus van Iperen, chief executive, drew comfort
from a fourth-quarter recovery, which lifted underlying group operating
profit 38 per cent in that period, from €35.4m to €48.7m.Shares rose
nearly 3 per cent to €13.01 as Mr van Iperen sketched a strategy to
sell more of other manufacturers’ machines under the Océ brand, while
continuing with a programme of relocating manufacturing to cheaper
labour areas and expanding its presence in Asia.He gave no full-year
outlook but established two financial objectives: average annual
organic revenue growth of at least 5 per cent from 2007-2010, and a
return on capital employed (RoCE) of 13 per cent by the end of that
period. It is now at “just under half” the latter target.Referring to
the organic sales growth goal as both “satisfactory and appropriate”,
Mr van Iperen conceded that Digital Document Systems, its core printer
unit, had considerable ground to make up. He did not specify sales
goals, saying only that the number of printers sold must “rise
dramatically”.Imagistics, the US copier and printer distributor Océ
bought for $685m in 2005, is delivering 6-8 per cent growth annually
from printer sales, he noted.Océ revenue rose 16 per cent in 2006 to
€3.1bn, but by just 0.3 per cent excluding currency effects and
Imagistics. Sales at DDS, without Imagistics, fell 4.5 per cent.Océ
warned in September it was suffering a shortage of parts and price
pressure at the unit, which comprises corporate and commercial
printing, and in December announced the resignation of Michel Frequin,
DDS executive vice-president, following a “difference of opinion on
policy issues”.Mr van Iperen said supplier problems had been resolved
and there was no indication that pricing pressure had worsened from the
third to the fourth-quarter. He declined to elaborate on the
resignation of Mr Frequin.The strategy to increase third-party sales is
modelled on the approach of Imagistics in the US and UK. Océ will
market machines made by companies including Toshiba, Sharp and
Konica-Minolta under its own brand and retain responsibility for
lucrative service contracts. That revenue stream accounts for 70 per
cent of group turnover.With sales in Asia growing 10 per cent in 2006,
to almost €100m, the company is close to completing a business plan to
boost sales teams and agree local distribution contracts to promote its
high volume printers. Its latest, the VP6250, prints colour copies on
both sides of a sheet of paper simultaneously and retails for $200,000.
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