OCE DRAWS COMFORT FROM U.S. ACQUISITION

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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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January 24, 2007 at 2:54 PM