Société Bic — Interim / Quarterly Report 2013

Oct 23, 2013

BIC GROUP – 9 MONTHS 2013 RESULTS

• NET SALES UP 2.6% ON A COMPARATIVE BASIS AT 1,407.9 MILLION EUROS
• NORMALIZED IFO: 265.8 MILLION EUROS – NORMALIZED IFO MARGIN: 18.9%
• GROUP NET INCOME: -11.3% AT 186.6 MILLION EUROS
• EPS: -11.0% AT 3.96 EUROS

9 months 2013 Key operational figures

See glossary page 11	Net sales growth on a comparative basis	Normalized IFO margin
Group	+2.6 %	18.9 %
Consumer Business	+4.1 %	21.5%
 Stationery  Lighters  Shavers	+0.3 % +6.6 % +5.1 %	14.1 % 37.4% 17.4%
Advertising & Promotional Products	-6.2 %	1.3 %

Commenting on BIC Group results, Mario Guevara, Chief Executive Officer, said: "During the first 9 months, our three consumer businesses outperformed their markets thanks to distribution and market share gains. As expected, BIC APP sales performance is improving regularly quarter over quarter, in the US as well as in Europe.

Overall, in light of our year to date performance, we are confident we will achieve our full year 2013 objectives.

As we look towards the longer term, our majority stake in Cello Pens, combined with continued new product launches and disciplined investments in production capacities, will allow us to enhance our growth potential, especially in faster growing markets like the Middle-East, Africa and Asia."

Full Year 2013 Outlook (unchanged)

Consumer Business

For the full year, we expect net sales on a comparative basis to grow in line with our mid-term objectives of +2% to +4%. Normalized IFO margin should be in the higher end of our 15% to 20% mid-term objectives range.

Advertising and Promotional Products

BIC APP full year 2013 net sales could decline low to mid-single digit. Due to the sales decline, we will realize less favorable volume absorption and therefore normalized IFO margin could decline to a mid to low-single digit level.

Key figures

	THIRD QUARTER						9 MONTHS
In million euros See glossary page 11	2012	2013	Change as reported	Change at constant currencies	Change at comp. basis	2012	2013	Change as reported	Change at constant currencies	Change at comp. basis
				GROUP
Net Sales	488.8	470.4	-3.8%	+3.5%	+3.5%	1,434.6	1,407.9	-1.9%	+2.4%	+2.6%
Gross Profit	247.8	236.8	-4.5%			741.5	690.7	-6.9%
Normalized Income From Operations	96.1	95.8	-0.3%			294.7	265.8	-9.8%
Normalized IFO Margin		19.7% 20.4%				20.5%	18.9%
Income From Operations	99.0	96.4	-2.6%			297.7	264.8	-11.1%
IFO Margin		20.3% 20.5%				20.8%	18.8%
Group Net Income	69.5	68.5	-1.4%			210.4	186.6	-11.3%
Earnings per share (in euros)	1.47	1.45	-1.4%			4.45	3.96	-11.0%
				BY CATEGORY
Stationery
Net Sales	161.2	150.5	-6.6%	+0.3%	+0.3%	486.8	468.4	-3.8%	+0.3%	+0.3%
IFO	21.9	19.6				86.7	66.0
IFO margin		13.6% 13.0%				17.8%	14.1%
Normalized IFO margin		13.1% 13.0%				17.6%	14.1%
Lighters
Net Sales	135.5	136.1	+0.4%	+9.4%	+9.4%	407.2		413.1 +1.4%	+6.6%	+6.6%
IFO IFO margin	53.0	54.1 39.1% 39.7%				157.6 38.7%	154.5 37.4%
Normalized IFO margin		37.7% 39.7%				38.3%	37.4%
Shavers
Net Sales	102.5	98.6	-3.8%	+3.9%	+3.9%	288.1		288.6 +0.2%	+5.1%	+5.1%
IFO	23.2	20.8				54.9	50.4
IFO margin		22.6% 21.1%				19.0%	17.4%
Normalized IFO margin		21.9% 21.1%				18.8%	17.4%
Other Products
Net Sales	14.8	15.9	+7.2%	+10.8%	+10.8%	50.5		53.3 +5.6%	+7.4%	+15.2%
Total Consumer business
Net Sales	414.0	401.0	-3.1%	+4.5%	+4.5%	1,232.6	1,223.4	-0.7%	+3.8%	+4.1%
IFO	92.7	92.5				289.3	264.5
IFO Margin		22.4% 23.1%				23.5%	21.6%
Normalized IFO margin		21.7% 22.9%				23.2%	21.5%
BIC APP
Net Sales	74.8	69.4	-7.1%	-2.3%	-2.3%	202.0	184.5	-8.7%	-6.2%	-6.2%
IFO	6.3	3.8				8.4	0.3
IFO margin	8.4%	5.5%				4.2%	0.1%
Normalized IFO margin	8.4%	5.8%				4.3%	1.3%

9M 2013 GROUP OPERATIONAL TRENDS

Net Sales

BIC Group 9 months 2013 net sales were 1,407.9 million euros, compared to 1,434.6 million euros for the first 9 months of 2012, down 1.9% as reported, up 2.4% at constant currencies and up 2.6% on a comparative basis. For the third quarter of 2013, net sales were 470.4 million euros, down 3.8% as reported and up 3.5% at constant currencies and on a comparative basis.

• The consumer business increased 4.1% on a comparative basis during the first 9 months of 2013 (+4.5% in the third quarter). Europe net sales increased 4.8% (+1.7% in Q3). North America showed good results, growing 3.8% (+6.1% in Q3). Developing markets grew 3.8% (+4.9% in Q3), notably driven by a continued good performance in Middle-East, Africa and Asia.
• The Advertising and Promotional Products business decreased 6.2% at constant currencies (-2.3% in the third quarter).

Gross Profit

BIC Group 9 months gross profit margin decreased 2.6 points to 49.1% of sales versus 51.7% for the same period last year. Production costs remained higher year-on-year due to unfavorable cost absorption and the impact of currency fluctuations that occurred during H1 2013. This was partially offset by the non-recurring 2012 Special Premium to employees¹ (+0.2 pts).

Third quarter gross profit margin decreased 0.4 points to 50.3% of sales versus 50.7% in 2012 as production costs were stable quarter-over-quarter.

Income From Operations (IFO)

In million euros	H1 2012	H1 2013	Q3 2012	Q3 2013	9M 2012	9M 2013
Income From Operations	198.8	168.4	99.0	96.4	297.7	264.8
As % of net sales	21.0%	18.0%	20.3%	20.5%	20.8%	18.8%
 Non-recurring items	-0.2	+1.6	-2.8	-0.6	-3.0	+1.0
- Of which restructuring costs	+1.3	+2.2	+1.1	+0.2	+2.4	+2.4
- Of which gain on disposal and real estate	-1.5	-0.6	-3.9	-0.8	-5.4	-1.4
Normalized IFO	198.6	170.0	96.1	95.8	294.7	265.8
As % of net sales	21.0%	18.1%	19.7%	20.4%	20.5%	18.9%

The decrease in Normalized IFO margin is due to:

In points (2013 vs. 2012)	H1	Q3	9M
 Change in gross profit margin	-4.4	-0.4	-3.0
 Positive impact of 2012 accruals relative to the Special Premium to Employees1 in gross profit margin	+0.6	-	+0.4
 Brand support	+0.4	-	+0.2
 OPEX	-0.5	+0.1	-0.2
 Favorable impact of foreign currency exchange rate which partially offset the negative impact in gross profit	+0.7	+1.0	+0.8
 Positive impact of 2012 accruals relative to the Special Premium to Employees1 in OPEX	+0.3	-	+0.2
Total impact	-2.9	+0.7	-1.6

1 In H1 2012, 8.8 million euros accruals were booked following the decision to pay a special premium to all BIC employees who have not been granted performance share plans in 2011. 11.1 million euros were accrued in Q1 2012, of which +2.2 million euros were reversed in Q2 2012.

Income before tax decreased 11.8% as reported to 268.8 million euros. Nine months 2013 finance revenue was +4.0 million euros compared to +7.1 million euros in 2012 due to lower interest income combined with less favorable monetary assets revaluation. Third quarter 2013 finance revenue was +2.5 million euros compared to +1.4 million euros in 2012. The improvement is due mainly to favorable monetary assets revaluation quarter-over-quarter.The tax rate was 31.5%.

Group net income for the first 9 months of 2013 was 186.6 million euros, a -11.3% decrease as reported. Net income included 2.5 million euros from income from associates (Cello Pens). Nine months earnings per share (EPS) reached 3.96 euros, compared to 4.45 euros in 2012, down 11.0%. Normalized EPS was down 9.8% at 3.97 euros compared to 4.40 euros in 2012.

Group financial situation

At the end of September 2013, the net cash position was 217.2 million euros, compared to 334.5 million euros as of December 31, 2012 and 266.8 million euros at the end of September 2012.

	9M 2012	9M 2013
Net Cash position (beginning of the period)	329.5	334.5
 Net cash from operating activities	+193.5	+235.2
Of which operating cash flow o	+290.6	+278.4
Of which change in working capital and others o	-97.1	-43.2
 CAPEX	-86.6	-79.0
 Increase in Cello investment	0	-79.6
 Dividend payment	-189.5	-120.8
 Share buy-back net of exercise of stock options and liquidity contract and others2	+22.4	-68.4
 Divestitures and real estate gain	+6.8	+2.0
 Others	-9.3	-6.7
Net Cash position (end of the period)	266.8	217.2

Evolution of 9 months net cash position (in million euros)

2 During the 9 months 2013, BIC Corporation bought 2,832 shares (0.2 million euros) to cover long term share performance plan in the U.S.

Consumer Categories

Stationery

Stationery net sales for the first 9 months of 2013 decreased 3.8% as reported and were up 0.3% at constant currencies. Third Quarter 2013 net sales were down 6.6% as reported and up 0.3% at constant currencies.

Developed markets

• In Europe, 9 months net sales grew mid-single digit. While the office products channel remained soft, the Retail Mass Market continued to register year-on-year growth. 2013 back-to-school sell-through (consumer purchases) was positive and BIC continued to gain market shares in most European markets, led by gains in France and Spain.

• In North America, 9 months BIC net sales decreased low-single digit. After a slow start of the year, third quarter turned positive with net sales up low-single digit. The back-to-school season started later this year, with August and September growth driving the total market to be slightly positive. At the end of August, BIC was maintaining market share in the US thanks to a good back-to-school sell-through and gains made with key retailers.

Developing markets

• 9 months net sales decreased low-single digit.

• In Latin America, net sales decreased mid-single digit, due to the continuing economic slowdown in Mexico and Brazil, resulting in customer inventory reduction and reduced consumer purchases. Meanwhile, BIC continued as a market leader in Argentina, where the company's performance remained strong.

• In the Middle-East, Africa and Asia, sales were strong as a result to our commitment to accelerate development of these regions.

Stationery 9 months 2013 normalized IFO margin was 14.1% compared to 17.6% in 2012. Excluding the positive impact of the Special Premium for employees in 2012 (+0.5 pts), the decrease is due to unfavorable fixed cost absorption and the impact of currency fluctuations on purchases, mainly in Latin America.

Third quarter 2013 Stationery normalized IFO margin was 13.0% compared to 13.1% in Q3 2012, primarily impacted by an increase in brand support.

Lighters

Lighter net sales during the first 9 months of 2013 increased 1.4% as reported and +6.6% at constant currencies. Third quarter net sales were up 0.4% as reported and +9.4% at constant currencies.

Developed markets

• In Europe, 9 months net sales grew low-single digit, driven by the good performance of Eastern Europe thanks to distribution gains (Russia, Romania and Turkey).

• In North America, 9 months net sales grew high-single digit. At the end of August 2013, BIC® products outperformed the pocket lighter market as we continued to benefit from the success of our category leading safety and quality positioning, our added-value sleeve designs and the 40th anniversary of BIC® pocket lighter "Flicktacular" campaign.

Developing markets

• Net Sales grew high-single digit during the first 9 months of 2013, with a solid performance in Asia where we improved in-store visibility and mid-single digit growth in Latin America where we continued to gain distribution in traditional shops and convenience stores.

For the first 9 months of 2013 Lighters normalized IFO margin was 37.4% compared to 38.3% in 2012. Excluding the positive impact of the Special Premium for Employee in 2012 (+0.4 pts), the benefit of increasing net sales was offset by unfavorable fixed cost absorption and an increase in raw materials (compensated by price increases).

Third quarter 2013 Lighters normalized IFO margin was 39.7% compared to 37.7% in Q3 2012 driven by net sales growth in North America and developing markets.

Shavers

Shaver net sales for the first 9 months of 2013 increased 0.2% as reported and +5.1% at constant currencies. Third quarter net sales were down 3.8% as reported and up 3.9% at constant currencies.

Developed markets

• In Europe, 9 months net sales grew mid-single digit, as we continued to benefit from the success of our triple blades products such as the BIC® Flex 3 and BIC® Miss Soleil® .

• In North America, 9 months net sales grew low-single digit. Despite a continuous aggressive and competitive environment, we maintained market shares in both men's and women's segments thanks to our best value/quality positioning across our core and added value lines including BIC® Soleil® , BIC® Flex 3, BIC® Flex 4, and Hybrid Advance 3® .

Developing markets

• Net Sales for the first 9 months of 2013 grew high-single digit, driven by a good performance in the Middle-East and Africa, notably in South Africa. Latin America continued to perform well (highsingle digit growth) thanks to our triple blade one-piece products (BIC® 3 Action). The new BIC® Flex 4 refillable continues to be well received, performing in-line with our expectations.

Nine months 2013 Shaver normalized IFO margin was 17.4% compared to 18.8% in 2012. Excluding the positive impact of the Special Premium for Employees in 2012 (+0.7 pts), the decrease is notably due to unfavorable fixed cost absorption and the impact of currency fluctuations on purchases on Gross Profit.

Third quarter 2013 Shaver normalized IFO margin was 21.1% compared to 21.9% in Q3 2012, impacted by an increase in brand support which offset favorable fixed cost absorption in the quarter.

Other consumer products

Other consumer products net sales for the first 9 months of 2013 increased 5.6% as reported, +7.4% at constant currencies and +15.2% on a comparative basis. Third quarter net sales were up 7.2% as reported, +10.8% at constant currencies and on a comparative basis, driven by the good performance of BIC Sport (+17.1% increase on a comparative basis).

Other consumer products 9 months 2013 IFO was -6.3 million euros, including 7.6 million euros (compared to -9.0 million euros in 2012) of expenses related to the portable Fuel Cell project.

Advertising and Promotional Products

Advertising and Promotional Products net sales for the first 9 months of 2013 decreased 8.7% as reported and -6.2% at constant currencies. Third quarter 2013 net sales were down 7.1% as reported, and -2.3% at constant currencies.

• In Europe, the "Hard Goods" segment remained under pressure notably in Southern countries while Stationery products are showing improvement. Performance was good in France.
• In the U.S., 9 months BIC net sales continued to be weak. However, the third quarter showed some recovery as we are back to providing best-in-class industry service level. Our new products, especially Brite-Pix imprinted technology products, have been well received by customers, performing in line with our expectations.

For the first 9 months of 2013, BIC APP normalized IFO margin was 1.3% compared to 4.3% in 2012. Excluding the positive impact of the Special Premium for Employees in 2012 (+1.5 pts), the decrease in Normalized IFO margin is due to the decrease in net sales.

Third quarter 2013 BIC APP normalized IFO margin was 5.8% compared to 8.4% in Q3 2012.

CELLO

Second Quarter 2013

On 03 May 2013, BIC Group and Cello Group jointly filed an agreement with the Bombay High Court to allow BIC Group to acquire the remaining 40% of the last (7th) stationery entity of Cello Group. After reviewing the filling, the Court had rendered the agreement enforceable. The agreement provided for closing before the end of 2013, based on the original term and conditions.

Third Quarter 2013

• On 17 September 2013, BIC Group announced that it had closed the acquisition of 40% of the last (7th) stationery entity of Cello Group for a total amount of 3.7 bn INR (43.3 million euros3 ).
• On 27 September 2013, BIC Group announced that it had completed the purchase of shares pursuant to the call option, exercised in September 17, to increase its stake from 40% to 55% in Cello Pens 7 entities for 2.9 bn INR (35.2 million euros4 ). Cello Pens financial statements will be consolidated within the BIC Group from 1 October 2013.

LIGHTERS

On 15 October 2013, BIC Group has acquired land for the construction of a lighter facility in China. With this new facility, the Group will be better positioned to supply the fast growing Asian lighter market and particularly China. The factory will be located in Nantong (130 km North of Shanghai). The total investment is estimated to be around 14 million euros over the next two years. The factory will be operational by the end of 2015. Asia is the largest and most dynamic pocket lighter market worldwide (69% of total market in volumes and 38% in value5 ).

³ 84.53 INR = 1 euro (13-SEP-2013 ; ECB Reference rate)

⁴ 83.80 INR = 1 euro (26-SEP-2013 ; ECB Reference rate)

⁵ 2011 total pocket lighter market in volumes : 11.5 billion units – BIC estimates

APPENDIX

BIC Group net sales change by geography

In million euros See glossary page 11	Q3 2012	Q3 2013	Change	9M 2012	9M 2013	Change
Total net sales	488.8	470.4		1,434.6	1,407.9
As reported			-3.8%			-1.9%
At constant currencies			+3.5%			+2.4%
On a comparative basis			+3.5%			+2.6%
1 – Europe	120.9	119.9		376.0	383.6
As reported			-0.8%			+2.0%
At constant currencies			+1.0%			+2.8%
On a comparative basis			+1.0%			+3.7%
2 – North America	224.8	219.9		619.1	607.0
As reported			-2.2%			-2.0%
At constant currencies			+3.9%			+1.2%
3 – Developing Markets	143.1	130.6		439.4	417.3
As reported			-8.7%			-5.0%
At constant currencies			+4.9%			+3.8%

Impact of change in perimeter and currency fluctuations

in %	Q3 2012	Q3 2013	9M 2012	9M 2013
Perimeter	-2.2	-	-2.3	-0.2
Currencies Of which USD Of which BRL Of which ARS	+6.4 +5.6 -1.1 -	-7.3 -2.6 -1.9 -0.4	+4.2 +4.2 -0.8 -	-4.3 -1.3 -1.3 -0.5

IFO and Normalized IFO by category

			Income From Operations				Normalized Income From Operations
In million euros See glossary Page 11	Q3 2012	Q3 2013	9M 2012	9M 2013	Q3 2012	Q3 2013	9M 2012	9M 2013
Group	99.0	96.4	297.7	264.8	96.1	95.8	294.7	265.8
Consumer	92.7	92.5	289.3	264.5	89.8	91.8	285.9	263.4
Stationery	21.9	19.6	86.7	66.0	21.1	19.6	85.7	65.8
Lighters	53.0	54.1	157.6	154.5	51.1	54.1	156.1	154.5
Shavers	23.2	20.8	54.9	50.4	22.5	20.8	54.2	50.2
Other	-5.4	-1.8	-9.8	-6.3	-4.9	-2.6	-10.1	-7.1
APP	6.3	3.8	8.4	0.3	6.3	4.0	8.8	2.4

Condensed Profit and Loss Account

In million euros See glossary page 11	Q3 2012	Q3 2013	Change as reported	Change at constant currencies	Change on a comp. basis	9M 2012	9M 2013	Change as reported	Change at constant currencies	Change on a comp. basis
NET SALES	488.8	470.4	-3.8%	+3.5%	+3.5%	1,434.6	1,407.9	-1.9%	+2.4%	+2.6%
Cost of Goods	240.9	233.6	-3.0%			693.1	717.3	+3.5%
GROSS PROFIT	247.8	236.8	-4.5%			741.5	690.7	-6.9%
Administrative & other operating expenses	148.8	140.4				443.8	425.9
INCOME FROM OPERATIONS (IFO)	99.0	96.4	-2.6%			297.7	264.8	-11.1%
Finance revenue	1.4	2.5				7.1	4.0
INCOME BEFORE TAX	100.4	98.9				304.8	268.8
Income tax expense	32.1	31.2				97.4	84.7
Income from associates	1.1	0.7				3.0	2.5
GROUP NET INCOME	69.5	68.5	-1.4%			210.4	186.6	-11.3%
EARNINGS PER SHARE (EPS) (in euros)	1.47	1.45	-1.4%			4.45	3.96	-11.0%
Total weighted number of shares outstanding adjusted for treasury shares	47,305,808	47,125,653				47,305,808	47,125,653

Condensed Balance Sheet

In million euros
ASSETS	Sept. 2012	Sept. 2013
Non-current assets	918.9	999.8
Current assets	1,209.9	1,144.9
Of which Cash & Cash Equivalents	236.4	195.6
TOTAL ASSETS	2,128.8	2,144.7
LIABILITIES & SHAREHOLDERS' EQUITY	Sept. 2012	Sept. 2013
Shareholders' equity	1,481.4	1,470.8
Non-current liabilities	331.6	317.3
Current liabilities	315.8	356.7
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY	2,128.8	2,144.7

Share buy-back program

	Number of shares bought	Average weighted price in €	Amount in M€
January 2013	-	-	-
February 2013	341,432	87.89	30.0
March 2013	126,612	89.28	11.3
April 2013	-	-	-
May 2013	99,454	82.35	8.2
June 2013	298,195	79.94	23.8
July 2013	90,599	75.93	6.9
August 2013	-	-	-
September 2013	-	-	-
Total 9M 2013	956,292	83.89	80.2

Capital as of 30 September 2013

As of 30 September 2013, the total number of issued shares of SOCIÉTÉ BIC is 48,538,002 shares. Total treasury shares at the end of September 2013 is 1,738,872.

Glossary

• At constant currencies: Constant currency figures are calculated by translating the current year figures at prior year monthly average exchange rates. All net sales category comments are made at constant currencies or comparative basis.
• Comparative basis: at constant currencies and constant perimeter. Figures at constant perimeter exclude the impacts of acquisitions and/or disposals that occurred during the current year and/or during the previous year, until their anniversary date.
• Normalized IFO: normalized means excluding restructuring, BIC APP integration plan expenses, gain on the disposal of the phone cards distribution business in France (in 2012) and real estate gains.

* SOCIÉTÉ BIC condensed financial statements as of 30 September 2013 were closed by the Board of Directors on 22 October 2013. A presentation related to this announcement is available on BIC's web site, headline Finance.

* *

This document contains forward-looking statements. Although BIC believes its expectations are based on reasonable assumptions, these statements are subject to numerous risks and uncertainties. A description of the risks borne by BIC appears in the section, "Risk factors" in BIC's 2012 Registration Document filed with the French financial markets authority (AMF) on 27 March 2013.

Contacts

Investor Relations: +33 1 45 19 52 26	Press: +33 1 53 70 74 21
Sophie Palliez-Capian sophie.palliez@bicworld.com	Priscille Reneaume preneaume@image7.fr
Katy Bettach-Montecatine katy.bettach@bicworld.com	Isabelle de Segonzac isegonzac@image7.fr

For more information, please consult the corporate web site: www.bicworld.com

	2013 – 2014 Agenda (all dates to be confirmed)
--	------------------------------------------------

FY 2013 results	12 February 2014	Meeting –BIC Headquarters
1st Quarter 2014 results	24 April 2014	Conference call
2013 AGM	14 May 2014	Meeting – BIC Headquarters
2nd Quarter and 1st Half 2014 results	31 July 2014	Conference call
3rd Quarter 2014 results	22 October 2014	Conference call

About BIC

BIC is a world leader in stationery, lighters, shavers and promotional products. For more than 60 years, BIC has honored the tradition of providing high-quality, affordable products to consumers everywhere. Through this unwavering dedication, BIC has become one of the most recognized brands in the world. BIC products are sold in more than 160 countries around the world. In 2012, BIC recorded net sales of 1,898.7 million euros. The Company is listed on "Euronext Paris" and is part of the SBF120 and CAC Mid 60 indexes. BIC is also part of the following SRI indexes: FTSE4Good Europe, Euronext Vigeo Europe 120, Euronext Vigeo France 20, Ethibel Excellence Europe, Gaia Index and Stoxx Global ESG Index.