Société BIC SA (BB) Earnings Call Transcript & Summary

Hello, and welcome to BIC's very first Capital Markets Day. Today, I will unveil our plan to deliver long-term sustainable growth. As you all know, we faced several continuing challenges in our industry, including sustainability and digital. To face up to these challenges and tap into new sources of growth for BIC, we plan to expand our addressable markets and to adapt our business model. By doing so, we will capture a larger share of our markets and improve our cash generation. My ambition is to transform BIC on 2 fronts. First, I plan to make BIC more efficient, more fit for purpose. Second, I intend to transform BIC from a manufacturing and distribution-enabled company into an organization obsessed with consumer needs. We must focus more on long-term consumer megatrends. We're moving from a product lens to a consumer lens. Our permanent goal should be to always meet current and future consumer expectations. This consumer-centric strategy has 3 main drivers, which we'll detail in our presentation today, sustainability, digital and a focus on key markets. To reach our goal of becoming more consumer-centric, we will reframe our 3 businesses from writing instruments to human expression from Lighters to Flame for Life. And from one-piece shaver to Blade Excellence. These shifts are underpinned by our excellence in quality and value for all our consumers. Before we reveal the road map of our transformation journey to deliver long-term sustainable growth. I'd like to take a moment to recall that BIC's transformation started 2 years ago when I took over as CEO. At that time, we launched a transformation plan called Invent the Future, or ITF, which started well before the pandemic and the current economic slowdown. For BIC, COVID has acted as a catalyst for change, a higher-level forcing mechanism, if you will, pushing us to make stark choices. What are these stark choices? Well, I see 3 of them. First, because we've always had multiple categories, we must continue to manage a portfolio of businesses without reservation. Our single-minded focus is to bring simplicity and joy to all consumers while maximizing long-term shareholder value. Second, when managing our portfolio of businesses, all options must always be on the table. Business optimization is a dynamic process; portfolio rotation, whether through acquisitions or divestitures is a natural component of efficient management. Lastly, efficient management means always striving to remove complexity in our businesses. For example, less inventory and less capital intensity. Throughout our presentations today, we will underscore what ITF has achieved so far and chart our road map to 2022. I'm pleased to announce that we are on track to meet our commitment to deliver annualized savings of EUR 50 million by 2022. These savings will be reinvested in top line growth initiatives. Here are a few examples of how ITF has made us more efficient. We will be decreasing our SKU count by 20%. We're reducing our inventory levels by EUR 15 million to EUR 30 million alone this year. In Stationery, the automation of one of our production lines for our Correction product is delivering 15% productivity gains. In Lighter, we're reengineering the value equation, shifting from a volume-driven model to a model that balances value and volume. In Latin America, in half of our markets, we've pivoted from a direct operation to third party management. We continue to optimize our manufacturing footprint with a focus on productivity and efficiency. We've, therefore, closed a factory in Ecuador this summer, and we'll be closing one of our plants in India. CapEx will be directed towards maintenance, asset maintenance and commercial growth initiatives. You will hear more details on our transformation successes throughout today's session. Let me now circle back to what I highlighted in my introduction about long-term challenges. We face at least 3 challenges due to evolving consumer megatrends. The first challenge is that of sustainability. Undoubtedly, consumers want more ECO-responsible products. And yes, as a mass manufacturer of plastic products, BIC has an important role to play. It's our responsibility to drive sustainability for all our stakeholders. We are ready, willing and able to embrace consumers' expectations by offering new products that are sustainably manufactured. We're taking our sustainable development ambition to the next level by transforming our approach to plastics. By 2030, we will use 50% non-virgin petroleum plastics in our products. And by 2025, we will have 100% recyclable, reusable or compostable packaging across our existing product lines. Second, the challenge of an increasingly digital world and increased focus on e-commerce. The digital revolution means more tablets and less pen and paper. To meet these shifts in consumer behavior, we will expand our core stationary business by addressing the larger digital writing segment. Our planned acquisition of Rocketbook, the U.S. leader in smart reusable notebooks is the first step of our expansion into this space. Our last challenge is focusing on key markets. We will tailor our efforts to reflect the maturity of the markets where we operate with a focus on countries that have a higher growth potential. We will focus on consolidating our leadership in select geographies. To do so, we will continue to make the necessary and stark choices in certain countries. So what are we doing to address these challenges? We will transform our 3 categories in 3 distinct ways. First, by reframing from writing instruments to human expression, we will quadruple the total addressable market, representing EUR 80 billion by 2025. The Arts and Crafts market alone is estimated to reach EUR 50 billion by 2025, with a growth rate of 6.5% on an annualized compound basis. We will leverage the well-loved BIC brand to branch -- launch new and innovative products in the Arts and Crafts segment. This expansion should enable us to capture more market share in this fast-growing segment. Digital Stationery is also a great opportunity for us. This segment is growing at almost 10% per year and forecasted to become a EUR 4 billion market in 2025. I believe we can capture a significant share of this market, thanks to a comprehensive offering, starting with smart notebooks today and expanding to more segments down the line. Second, we're reframing our Lighter business to address the broader market for all flame occasions. We're shifting from a volume to a value-driven business model. BIC Lighters are an essential part of everyday life around the world. Our Lighters are used for billions of very diverse lighting occasions. For example, many North American households use BIC Lighters to light candles and barbecues, while consumers in Latin America and Africa use them to light cookers and stoves. And lastly, we're reframing from one-piece shavers to Blade Excellence. Our research and development and manufacturing excellence underpins the success of BIC shavers. Our precision Blade Excellence is a real competitive advantage and asset. A great shaver is not just the ergonomic shape of the handle or the number of blades. The key to Shavers is the precision of the large-scale manufacturing to create the sharpest cutting-edge using nanotechnology. To expand beyond today's one-p shavers, we will capitalize on a combination of our R&D engine and innovation and manufacturing excellence. With these assets, we plan to build a selective new business enabling other brands to tap into our world-class Blade Excellence. Now let me hand over to my team to outline our new strategic plan called Horizon. Thomas Brette will talk about our new consumer-centric and open innovation mindset and processes. Peter Dalsberg will then explain our customer-driven global supply chain will generate more value and competitive advantage. Chester Twigg will talk about our commercial excellence and market strategies and how they'll drive growth and profitability. Sara Laporta will detail our horizon plan and our transformations from writing instruments to human expression and from shavers to Blade Excellence. Thomas will then present our breakthrough upcoming acquisition of Rocketbook. François Clément-Grandcourt will bring a fresh perspective of our Lighter business, which is a profit and cash generator for the group. Lastly, Chad Spooner will detail our financial targets, which I'd like to take a moment to highlight here in my introduction. We will accelerate revenue growth to a mid-single-digit trajectory. We will also maintain robust cash generation by ensuring strict discipline on CapEx and working capital. Chad will also take you through our capital allocation policy in the context of the expected increase in normalized EPS during our Horizon plan and beyond. To conclude, I'd like to reaffirm that we have a clear road map for accelerated growth. We will take a pragmatic approach to our business. I want us to build on our strengths. And continue to make the necessary choices for our success. We are well on our way, and I'm confident that we will adapt successfully to future consumer expectations and demands and to continue to deliver sustainable long-term growth for all our stakeholders.

Thank you very much, Gonzalve. So my name is [ Adrian Dearnell ]. I'm here in the studio in Paris, and it's my pleasure to be the facilitator and moderator for first ever Capital Markets Day of BIC. It is a digital event coming to you live. There will be lots of opportunities to interact through Q&A. But let me just begin by making a few logistical announcements about the proceedings today. So we have a dual studio event here between Clichy headquarters and Shelton headquarters in the United States. Half of the panel is here with me. And the other half of the panelists across the Atlantic with Gonzalve in the other studio in Connecticut. But overall, to present a big strategic road map, as you heard, we have Thomas, Peter, Chester, Sara, François and Chad, who are going to give you updates, and these updates have been prerecorded for insurance of best quality possible. Nevertheless, if you would like to know what's coming up next, please refer to the agenda tab to have the order of the presentations, and there will be ample opportunity to ask live questions with our guests here live in the 2 studios. So we'll have 2 question-and-answer sessions. You should use the question tab, which is featured to the right hand of your screen to ask questions at any time. I will receiving them on the iPad and serving them up to our participants today during the Q&A sessions. So that's what we're going to do about interactivity today. And if you have any questions about the platform, there is a help button beneath the platform. Okay. So without further ado, to kick start this Capital Markets Day of BIC. Let's hear from Thomas about innovation and consumer insights tool.

Hello, everyone. I'm Thomas Brette. Glad to be with you today. As Gonzalve shared in his introduction, BIC is shifting gears from a product and manufacturing-led company to a consumer-led company. And I would add, to an innovative consumer-led company. The role of innovation is to support our Horizon strategy by creating unique growth opportunities and better meeting consumer needs through new and surprising technologies. My role as Officer of Insight and Innovation is to support this purpose, ensuring we have the most effective tools to capture and integrate consumer insight at every phase of the innovation process. From ideation to market release. But it doesn't end there. We are also innovating in our innovative approach. To do so, we are using the Internet of Things and Artificial Intelligence to capture in real-time how consumers are using our products, to make their life better. Studying when they use it, how they use it. And gather insight of how the product could better meet their needs. By doing so, we are not asking consumer what they think they do. We are observing them and analyzing what they actually do, with real facts, in real-time, in their real environment. And this is a whole concept beyond our Connected Shaver. I will come back to it later. We are also using AI and machine learning to identify and match consumer needs and trends with new technologies. This past June, we launched the data-driven Invention Lab that we co-developed with Iprova. With this tool, we can identify technologies that are just emerging in other industries, which could be relevant for us to meet the needs of our consumers uniquely. We are the first company in the world that have integrated this approach internally to enhance and accelerate the inventiveness and creativity of our scientists, engineers and designers. In the past, it would have taken years for those opportunities to be known and understood. But now in a matter of weeks, sometimes just days, we can identify and incorporate them into our playbook. Early insight on technologies and trends, coupled with rapid learning, is core to this new approach. This is how we can expect to launch early pilot of, say, EUR 5 million of revenue, which will then generate into bigger project of EUR 50 million. With the right condition, it's not unconceivable that 1 or 2 will take off and grow to EUR 500 million, annually. These are just few examples of the innovative tools we have put in place, but how will we use them to drive growth in our business. Let me share more specific on how we are doing more. One, adopting a consumer-centering approach; and two, being open and efficient. Everybody talks about consumer centricity. And let me reinsure you, I'm not giving you a conceptual definition of consumer centricity in the digital age. At BIC, we believe in walking the talk. We focus on bringing consumer insight to life in our day-to-day products. Let me share a couple of concrete examples. Let me come back to the Connected Shaver that I mentioned before. Today, Shaving at BIC has changed drastically. Yet the Shaver offered in this category today are very similar to what they were 20 years ago. Our mission is to offer a product that are more in tune with today's world. To help make this happen, earlier this year, we've set up a consumer panel of more than 500 individuals who provide data directly to our R&D team using a Connected Shaver. What is a Connected Shaver, you may ask? This is the first wet shaver to integrate IoT through sensors and AI technology. It captures data about the complete shaving experience. Including temperature, humidity, air density, shaving speed, number of strokes and time you spent shaving, et cetera. And sure enough, the data we gathered, had some very interesting insights. For instance, did you know that in average, men use more than 5 liters of water per shave and can sometimes choose over 35 liters. Men apply 10% more strokes on the right versus the left chick, men with a high-density of facial hair, typically require less blade than men with low hair density. So the more hair you have, the less blade you need. Consumers shave more on Monday than they do on Wednesday. And on Mondays, people spend twice as much time trying to rinse the shaver than they do on the other days. At BIC, we've been able to translate those informations into insights and then solutions. As a result, we have developed a technology that shave long hair without clogging the cartridge, which reduce water consumption and therefore, improve the shaving experience. This isn't a dream, it's a reality. The technology is there. We are testing the solution with consumer as we speak, and it will be on the market in the next 18 months. Another example is a BIC Creative Community. As I've mentioned, observing consumer is a great source of insight, even better, however, is co-creating with consumer. And the BIC Creative Community allow us to do that. This is a creation of a firm of interaction with consumer that allow them to be active in the creation process. They are 200 creative consumers or so-called early adopters that includes a wide diversity of age, gender and background. What this group has in common is that they are engaged and passionate when it comes to sharing their ideas. And we engage the community through weekly challenges. This is how it normally works. On day 1, we briefed the community on a topic that we believe is interesting for them and for us. For example, hygiene at school in the age of COVID. On day 2, we hold a live brainstorming session about what the solution may be, both in and out of school. On day 4, we present some ideas and solution, and we ask them to react, to create, to modify, to tell us what is important, what is not. And to explain what they like and what they would tweak. And on day 5, we ask them to decide, which is the solution they prefer and whether they would launch it. One of the product that we have launched this year, BIC PrevaGuard was developed because of this process. And is already on the shelf in the U.S. This product contains built-in protection to stop bacteria growth on the pen itself regardless of where it's being used either at home, school or in the office. And we are now working to expand the range further. So look out for more news on this very soon as we help to protect consumer in this ever-changing environment. It's a great example of how we walk the talk of consumer centricity. Let me turn now to share with you a little about our open and efficient innovation. I mentioned before, creating a data-driven innovation, DDI lab, which is about finding technology at a very early stage and integrating them into our innovation pipeline. The next step, when we have identified the technology is to test it and see if any of those concepts could meet our needs. Rapid prototyping is at the core of this focus and key to launching pilot test that we hope will germinate and then flourish to become commercially successful. The open innovation ecosystem aspect of our approach allow us together ideas quicker and accelerate the process using a pool of partner that we can interact with, including companies, university, labs. So they can convert those ideas into a complete solution that we can then test directly with our consumers. I cannot share too much detail for obvious reasons. But I can tell you that this community represent the very best-in-class and even includes a noble price winner on one of our projects, specifically. A great illustration of this process would be the design of the sustainable development, hybrid shaver range product that we are launching next year, known internally as Project Leaf. This innovation will offer the consumer a shaver made of recycled material, fully and easily refillable with packaging that is also recyclable. This product is proven and ready to launch in 2021, offering consumers a revolutionary disposable shaver. Naturally, a disposable shaver is more sustainable when you can refill it with blades. And when it includes recycled material in its handle. It was the use of the ecosystem of open innovation that help us to source those materials because they need to meet the very specific criteria we have for production. So we are very excited about this new range, but it doesn't stop there. We are already working on the next generation of material we want to include. To be even more sustainable, including recycled rubber. So much more to come. Taking our open innovation ecosystem a step further, we have announced that we are signing a partnership with Plug and Play. This is one of the largest, if not the largest start-up incubator in the world. And our partnership will give us access to a wide diversity of startups and talents that can work on our priorities and other interesting topic that could bring us new business opportunities. The journey is starting with a focus on sustainability. Plug and Play is part of the End Plastic Waste Alliance, and as a wide network of start-ups working on this. And this is just the first chapter in our journey with them. So as you can see, we are growing our ecosystem to discover and integrate technology internally and externally. And we are moving quickly to ensure that consumers are always involved along the way. These are the 2 key pillars to -- for accelerated innovation at BIC. And naturally, the point of our innovation is to drive sustainable and profitable growth. Our ambition is to double the contribution of innovation in our growth journey. Today, 10% of our net sales are coming from innovation introduced in the last 3 years. And by 2025, we expect to reach 20%. To make sure we achieve this, we have put thresholds in place. Thresholds that we'll follow very strictly. When deciding whether it is efficient to take an idea further or not. These thresholds are linked to consumer acceptance and benefits, to financial performance, to customer value creation and sustainability. All of those tools I have spoken about, all the interaction we are creating with our environments and with our consumers, all follow and support our strategic direction. Sustainable development is a priority for us. It is embedded in our approach and in our mindset at every step of the way. Sara will elaborate further on this in her presentation. To conclude, we are nurturing an open and efficient ecosystem, fully aligned with our Horizon strategy. We are devoted to our consumer to bringing them joy and simplicity, nourishing the BIC brand equity by delivering consumer satisfaction and preference. Thank you.

Thank you, Thomas. And really, it's excellent to hear how innovation is driving future growth at BIC. I would invite you, our audience members today to send your questions as you hear the presentations, and we can address them during Q&A, but please don't hesitate to fire them off as they come to you as you watch today's program. Next up is Peter, talking about the new supply chain organization with -- within BIC and which is also helping to drive growth and transformation of the company. Let's hear that next.

Hello. I am Peter Dalsberg, Group Supply Chain Officer. I'm pleased to present a critical element of our Horizon strategy, namely our new end-to-end global supply chain, which will generate additional business value and deliver a competitive advantage for BIC. One of our key goals is to generate cash for the organization that can be reinvested in growth. As you have heard today, we are in the midst of a transformation at BIC. We are moving from a manufacturing-driven company to our customer and consumer-driven company. We are shifting from a regionally led organization to a truly global one. Our newly designed supply chain organization is the engine that enables this transformation. This engine is powered by our reliability, responsiveness and reduction in costs, or what we would like to call the 3 Rs. But before presenting our 3 Rs, I would like to talk about what drives our global supply chain, and that is our people, our processes and our technology. Let's start with our people. The majority of our workforce sits in supply chain. Our current transformation is a unique opportunity to further develop our talent by creating a learning while doing environment where we pair our team members with internal expert to teach them new capabilities. Through this approach, we are significantly improving the skills of our teams. When we don't have the right capabilities in house, we bring in top talent from the outside to fill in the gaps. We have spent a lot of time evaluating where we need to be more effective, and we have developed capability building models to teach and reinforce these skills. For instance, in procurement, we created a comprehensive e-learning program. Through targeted programs like these, coupled with a focus on hiring quality talent, we are well on our way to creating a best-in-class workforce. From a process standpoint, we drive agility by practicing lean processes. A key example of this is our integrated S&OP, sales and operations planning process. Our S&OP process help us maintain focus and stay synchronized. The outcome is an aligned demand forecast and an optimized supply chain plan for factories including expected inventory levels and financial impact. This process is the steering wheel for our supply chain. It enables us to evaluate and balance needs between the triangle of customer service, capacity utilization and working capital. The third driver is technology. It goes without saying that to transform successfully, we need to have efficient tools that support connectivity, collaboration and efficiency. This technology improves our day-to-day operations, making them more digital and automated. For instance, we are upgrading our enterprise resource planning system with the implementation of Anaplan. Anaplan software allows us to use complex scenario planning to help us smartly forecast the bigger picture, empowering us to make decisions faster. These upgrades are a game changer for the way we operate. Now that I have explained how we are taking our people, processes and technology to the next level, I want to go back to where I started this presentation; how our supply chain organization will drive additional business value. We will do this through what I call the 3 Rs: one, reliability as a business partner; two, responding fast to a changing world; and three, reducing cost. I will start with reliability. We are reliable because we deliver right quality on time. This commitment is part of our DNA, it is the result of ongoing improvements, including sharing knowledge across the organization to better reach our targets. We are also reliable because we maintain our capacity to produce and deliver. We keep strengthening our business continuity planning, through footprint management, and regular contingency analysis. A great example of this is when faced with current COVID-19 pandemic, we quickly implemented a business continuity plan with our #1 priority, keeping our people safe while keeping production up and running. We even established our own production of mask and gel, not only to cover the needs of our employees, but for the local communities as well. We implemented extensive safety measures early on, and our plants only closed in locations where it was required by local regulation. Also key to our reliability is our capacity to establish close relationships with our strategic suppliers and to leverage our original equipment manufacturers called OEMs. Over the last year, we streamlined our number of suppliers, reducing the number by 1,000, equal to a 10% reduction. We also identified 300 strategic suppliers who we work closely with to ensure the most secure, innovative, efficient and cost-effective sourcing. These suppliers are part of our responsible procurement 2025 commitment, a program, including a due diligence process and a risk mitigation plan. This allows us to monitor and reduce mono sourcing. Second, we updated and extended our procurement policy to capture the full value of our spending. We created a new supplier code of conduct, and we built up on our procurement capabilities to ensure we exceed in this area. I want to emphasize the strategic role of our OEMs. We are developing an ecosystem of OEMs to ensure we deliver a flexible product portfolio. This ecosystem enables us to source new finished products, design and quality control by BIC with low capital investment, low volumes, high production flexibility and high-speed to market capability. The production can be in-sourced when it makes sense from an industrial perspective, especially in terms of volume. Being reliable is absolutely essential to our business. But today, this is not enough. Today, we also need to respond quicker to all the market changes we are going through. So this brings me to the second way we are creating additional business value, by responding quickly in a fast-changing environment. We do this through: one, portfolio management and segmentation; two, solid governance and processes to monitor portfolio efficiency. For example, today, we have more than 13,000 SKUs in our portfolio. We will reduce this by net 20 percentage by the end of 2022. So that we can maintain the right level of range and value for our customers while creating space for new and innovative SKUs. Another way we respond is through a solid operating model that is managed by a new project management office, PMO. The PMO supports innovation by partnering internally and integrating activities to develop, qualify and successfully launch new products and packaging. This is followed by a monthly stage-gate approval process, whereas steering committee assesses the criteria and the risk involved to make the right decisions. This process allows us to get products out to the market faster than ever before. Before I move on to the third R, reducing cost. I want to highlight how quickly we are responding to the sustainability challenge. BIC has always been a responsible company. We have an exceptional safety track record, having reduced employee accidents by 25 percentage, 2 years in a row. And we are on the right path to deliver our commitment of 0 accidents by 2025. We are also driving sustainability across our operations. A recent example of this is our new packaging commitment, which Sara Laporta will cover in more detail. Lastly, I would like to talk about reducing cost. As I mentioned, our goal is to generate cash that can be reinvested in initiatives that will fuel the growth. Supply chain will contribute to more than 60% of the company's total savings target of EUR 50 million by 2022. We already achieved EUR 10 million in direct cost savings. As an example, in plastics, we optimized the supplier mix for Shavers and Stationery products through competitive tendering, and we managed to achieve an 8% reduction on our plastics annual spending. In Shavers for blisters, we harmonized the film's grades, achieving a 17 percentage reduction on films annual spending. We also saved approximately EUR 2 million in indirect procurement cost, including a 17 percentage reduction in transportation and a 19 percentage reduction in electricity. Then there are the manufacturing efficiencies we are achieving through continuous improvement process and product optimization. In Shavers, we reduced the thickness of our blades, cutting the amount of steel by 27 percentage per blade, while retaining excellent quality. And in Stationery, we automated the assembly line for the Mini Pocket Mouse, reducing the workforce needed, improving productivity by 15 percentage all while increasing product quality. We have also reduced cost in inventory. We expect to go beyond our target range of EUR 15 million to EUR 30 million in 2020 by using S&OP to better project inventory levels, decreasing our stock of raw materials and reducing slow and obsolete inventory. And we plan to continue the inventory reductions in 2021 and 2022 as well. We are also optimizing our footprint. Our objective is to produce closer to our customers, to shorten lead times, to respond quicker to new market demands and to minimize our environmental impact, all while reducing cost. We have already seen some outstanding progress in this area. In Ecuador, we closed our Stationary factory to improve our manufacturing efficiency in Latin America. In France, we plan to move our technology factory in Clichy to our larger Stationary factory in Marne-La-Vallee. By doing this, we will gain economies of scale by combining the molding, machine building and assembly activities under one roof. Last example is in India, where we identified 1 Cello factory to be closed. This is a typical example on how we are adapting to our changing environment as our strategy is evolving from volume-driven growth to value-driven growth. These are just a few of the ways we are operating smarter than ever before. In conclusion, thanks to our ongoing investment in people, processes and technology. Our global supply chain is more cost effective, more reliable and more responsive in line with our Horizon strategy. Our growing agility is creating a clear competitive advantage for BIC, adding significant value to our stakeholders and eventually freeing up cash to fuel our growth. Thank you.

Thank you so much, Peter, for these interesting highlights of the new supply chain organization, and its contribution to BIC's transformation. And thank you to our audience who has been sending us lots of questions so far. So keep it up, and we'll have a very exciting Q&A session at the first Q&A break coming soon. But before that, let's take a look at commercial excellence, as we heard Gonzalve say that the group is embarking on a consumer-centric approach that will drive growth. So that presentation on commercial excellence is coming up next with Chester Twigg.

Hello. I'm Chester Twigg, Global Chief Commercial Officer of BIC. Today, I'm going to share with you how our new Horizon strategy, built on a strengthened, agile and fundamentals based commercial operation will raise the bar of commercial excellence to drive BIC's growth and profitability. Indeed, we are building commercial capabilities that drive profitable growth for the company, underpinned by consumer centricity, and executional excellence. Executional excellence that delivers for the consumers, the end users of our products, for our customers, retailers who sell our products to those consumers, and for BIC. For BIC, this means strong mid-single-digit net sales growth and delivering the company's profit margin and cash flow objectives, which Chad will take you through later. It is a strategy that will focus on accelerating and winning in the growing segments, channels and markets where consumers spend their time and money. It is a strategy that intends to win their hearts, minds and their wallets. So how are we going to do this? I am going to elaborate on 3 key components of our commercial strategy that will drive BIC's transformation plan to deliver our twin objectives of growth and profitability. First, our omnichannel management winning where consumers shop, including and especially, e-commerce. Secondly, RGM or revenue growth management, driving value growth, leveraging analytics to build value on top of the volume growth the company has at its base. Thirdly, taking a portfolio management approach to allocate resources to the markets in which we operate. Let us start with our new omnichannel strategy to drive growth. Today, BIC consumers are buying our products, both offline and online. As we increasingly move to that no-line intersection, where consumers have a seamless shopping experience. We need to deliver to them executional excellence and frictionless shopping. Tomorrow's consumers and especially digital natives, do not really differentiate in their mind between online and offline shopping. We are on track to drive online growth and sustain our market share leadership in e-commerce while delivering executional excellence. Thanks to our focus on the fundamentals of the e-commerce business, search, content, assortment, price, ratings and reviews, et cetera, we have gained market share in this critical channel, and we are still accelerating. We are very confident that we will exceed our e-commerce net sales target of 10% of our business ahead of our 2022 commitment. I'm proud to say that today, we already hold leading positions online in all 3 categories: Stationery, Lighters and one-piece Shaver. The investments we have made in e-commerce since late 2019, has resulted in an almost doubling of our business this year, with our key pure-play customers like Amazon, both 1P and 3P marketplaces as well as with key omnichannel customers. We have supported these efforts with a pivot to digital media to target our audience even more precisely. Today, we have over 80% of our media investments in digital media, which makes BIC best-in-class versus our competitors and even the industry. Our own direct-to-consumer efforts with launches like Design My BIC lighter, and our Made For You Shaver, the very first unisex shaver in the industry, exclusively available on Amazon, are revolutionizing this space; and inspiring a new generation of consumers. On our DTC platform, like bic.com, we have more than doubled our sales conversion. And in France and the U.K., shopper traffic has quadrupled. Moving on to our revenue growth management strategy. This is clearly a core part of our transformation journey. We are working on strategic pricing, assortment, and trade promotion decisions and investments to provide value creation for our consumers, our customers and BIC. On pricing, we are moving away from the blunt instrument approach we deployed in the past to a thoughtful, data-based analytical approach. This enables us to leverage pricing elasticity to offer the consumer the right price pack architecture and trade in, trade up and trade across options just right for them. For example, in the U.S. Pocket Lighter segment, we increased prices mid-single digits in select channels, which is paying off and will continue to impact our net sales positively into next year. We also took action to improve our Lighter promotional efficiency. We removed inefficient promotional spending, leading to a higher average selling price and increasing product gross profit while actually increasing sales momentum. Another great example in the U.S. is the utility Lighter segment where we have grown by 35% since the beginning of the year and are outpacing the category. Our recent launch of EZ Reach Lighters combines the accessibility of Pocket Lighters with the functional benefits of the multipurpose Lighter. This innovation demonstrates our ability to grow value through category expansion as we address new flame occasions. We have already sold over 3.5 million units across our 4,000-plus points of distribution, and it is already a top 5 SKU for the category. Personalized Lighters allow us to offer real value to consumers at a significant price premium that they are very willing to pay for. Our recent acquisition of Djeep allows us to further scale personalization through the terrific decor capabilities that Djeep offers. Djeep Lighters are, on average, 50% higher in value than our equivalent BIC Lighters. The launch of PrevaGuard in antimicrobial pen is another great example of being on trend, the consumer obsession with germs and offering relevant value while also driving higher-value realization. It is a tribute to the teams that we were able to get this from concept to shelf in less than 5 months. PrevaGuard in the U.S. and BGUARD in Europe, are sold at price premiums of 140 to 200 index to our flagship ranges. We are also working on reducing the internal complexity of too many SKUs in our portfolio. This has 3 benefits: number one, it solves the paradox of choice for the consumer. Less is actually more to facilitate selection through deselection. Number two, it improves space utilization at our customers on shelf, at their warehouses and in transit. And of course, it reduces our own manufacturing, warehousing and shipping complexity and cost. Our view is that complexity is like cholesterol, there is good complexity that we need, like the SKUs that fulfill a unique consumer or customer need. But there's also bad complexity that clogs up the system that we can and must eliminate to drive efficiency for all. A good example is what we have already done in Brazil. This year alone, we reduced the number of SKUs by around 25%, saving 10% of costs. Finally, I would like to talk about our portfolio approach to market management. This is a big change for us, as we move from a plant the flag approach to a thoughtful portfolio management approach, for the markets we operate in. As a central part of this new approach, we conducted a robust and well-considered external, internal assessment and diagnostic of our past performance and future potential in each of our markets. We base this both on the macroeconomic growth potential of each market and our ability to win, based largely on our sales and profitability track record. Now each of our 70 markets clusters has a clear role in supporting our transformation and profitability growth agenda. First, we will focus on several invest to grow geographies, where we believe the ingredients of both external and internal advantages are synchronized to help us deliver disproportionate growth in our categories. We are supporting these markets with incremental advertising and brand support to drive brand awareness and conversion, leveraging our strong brand equity. We are also investing in distribution and go-to-market drivers to ensure that the mental availability of our brands is reinforced by physical availability. A good example of such a market is Russia, where despite the negative impacts from COVID lockdown measures, we continue to grow and gain share ahead of our competitors. In some of these markets, we will also support these investments with new launches and innovation to further capitalize on the opportunities. For instance, we launched our Intensity stationery range in Germany this year, and we are seeing great traction with consumers. Our invest to grow markets in Europe, for example, are growing well ahead of the overall region, with around 6% net sales growth versus last year, delivering the payout we had planned for despite the COVID-19 context. At the opposite end of the spectrum, we have already identified and will continue to identify markets where we either need to exit completely or need to change the business model to a narrower reach, markets where, for instance, profitability has been a challenge for many years, even decades. We will reallocate these resources towards invest to grow countries. We have, for example, already announced exits from certain markets to a new indirect model, for example, Colombia in Latin America and South Korea in Asia. These are markets where we feel a better approach is to work with indirect partners to complement our brand. We will have exited 11 markets by the end of this year, all representing approximately 2% of global sales. We have also defined several countries as opportunities for profitable growth, for example, the U.S., our biggest market, where we need to and will invest for growth, while ensuring profitability momentum. Finally, we also have mature markets where profitability will be our primary focus. A great example of this is Japan, where our commercial teams have done a tremendous job of reevaluating and rationalizing product ranges and customer accounts to be more efficient in our commercial operations. It is important to reinforce that in order to implement our commercial strategy, omnichannel, RGM and market portfolio, we are putting in place an aggressive talent agenda. So as to execute with excellence. We have implemented new centers of expertise in late 2019. And since their creation, we have added 30-plus roles to drive digital e-commerce, RGM and commercial excellence efforts. We are leveraging both experienced talent from within BIC and from across the industry, to drive and deliver the commercial algorithm of sales and profit growth at the global, regional and local market level. The commercial team at BIC is ready, willing and able to raise the bar of commercial excellence to drive industry-leading growth and profitability for our brands, our team members and our shareholders. We will deliver our mid-single-digit net sales growth ambition, while ensuring profitability and cash flow improvement to reinvest in future growth. Thank you very much.

All right. As I announced earlier, we'll take a first midway point session of Q&A based on the questions that were asked that pertain to the first presentations. And if some questions we received already pertain to some of the upcoming presentations, we'll put those at the end in our final Q&A session. So right now, concerning things that we've received and that are relevant to the presentations we already saw, first question up is what are your thresholds on return on investment and gross profit for new products and innovation?

That's an absolutely great question. I'm going to ask Thomas to go through the thresholds. But I think one of the things we need to all remember is the consumer acceptance, desire of use and delight and joy somewhere in the using of the products is really that first KPI that we're driving for on innovation to change consumer habits. But Thomas, maybe you can give us a little bit more from a financial perspective.

Yes, definitely. This is directly integrated into the 4 KPIs, or group of KPIs that I told you about in my presentation, which are related to consumer acceptance; to value creation for the retailer; to sustainability; and to financial performance. So on financial performance, working with Chad, we are guaranteeing that our portfolio is of innovation, is delivering better return than the existing product line. So in -- our target is to deliver a better than the average weight of cost of capital. So that's our ambition. The other element which is important is that it is integrated, and it's not something that we do alone, it's something that we do with Chester, Peter and Sara in a gate process that we have set up, so that we are reviewing together those KPIs and deciding to launch an innovation or not. So we are being choiceful using those KPIs.

Thank you, Thomas. Okay. Next question. Here's one. Could you elaborate more on your strategy to reduce complexity in manufacturing?

It's all about simplicity. It's why it's in our vision, it's one of our core values. I'm going to ask Peter to elaborate from a manufacturing perspective, but I'd like to reiterate what I said in my introduction, which is really -- it's across the organization. So Chester talked about simplicity in commercial operations. You heard Thomas talk about it in an innovation perspective. And later, you'll hear Sara talk about it in strategy. But Peter, maybe if you could elaborate a little bit more on reduction of complexity in manufacturing.

Absolutely. And I think it's important to say that this is not a manufacturing exercise in itself because we are working very closely together with Chester and his commercial team. And we are basing the analysis on the discussions that we're having with our customers and also the in-depth understanding of our consumers. So we will challenge all nonvaluable complexity. Today, we have 13,000 SKUs, and we believe that at the end of 2022, we can reduce net 20%. We are doing this in order to create space for innovation and also to get efficiency gains.

Okay. Thank you very much, Peter. We have a question here. It's phrased this way. Is e-commerce dilutive to gross profit?

Well, e-commerce is a significant and important growth engine as part of our Horizon plan. I'll let Chester talk about its impacts to gross profit. But it's very important that we continue to accelerate our e-commerce growth in the years to come because that's how consumers are shopping. We've seen it this year in COVID, and I think we're going to see it only accelerate in the years to come.

Absolutely. And we are indeed investing in e-commerce, but at the same time, it is not necessarily dilutive. There are many country category combinations where it's accretive. There are a few where it's -- it is dilutive. But it is a planned dilution because we want to grow the business first and foremost. So it really depends on the country category combination. And most importantly, we want to make sure we are accelerating e-commerce as Gonzalve said.

Okay. Moving on to the next question. What will the 2025 school kit look like? How many BIC products and what type of products?

Well, that's a great question because it's all about reframing our category from writing instruments to human expression. And so I hope, and we are all very focused on making sure that there's more than today, no matter what the geography is, they could potentially be different products. But maybe, Thomas, you could talk about how innovation plays into that and what your aspiration is?

Well, the first thing I can say is that there will be a lot of these BIC products, definitely. And we do have 45% market share, and that will continue, and we intend to grow it. What I can tell you is that consumer by 2025 will continue, and specifically the students, they will continue to write, to erase, to color and to do those creative activities that they are doing for their suit or their personality. What will be different by 2025 is that those products will be more sustainable, and they will be more versatile. Versatile in the sense that they will allow for sharing and connecting. So they will be more digital. And actually, I hope that by 2025, the majority of the students will have a Rocketbook in their bag to write on.

All right. I'm sure we'll come back to Rocketbook a bit later, very exciting development. Next question. What is your strategy in direct-to-consumer? How do you plan to grow your sales?

So we're going to come back to Rocketbook right now with that question because it's a key part of direct-to-consumer. But Chester, maybe if you could be more broad on our DTC in the U.S., Western Europe and other key geographies?

Certainly. So first of all, we are working across all of the e-commerce opportunities. So with Amazon and Pure-Play marketplaces, with omnichannel customers in their e-commerce plans and with our own direct-to-consumer. We actually had a bit of a head start with direct-to-consumer with the BIC SHAVE CLUB, which we introduced some years ago. We continue to learn and invent new ways of driving direct-to-consumer. Rocketbook will definitely help us to accelerate that learning, as we exchange notes on what they do better and what we do better that can actually drive synergies together. But DTC is definitely part of our e-commerce agenda, and we are making great strides in that area, along with the other areas of e-commerce, like marketplaces, like pure-play and like omnichannel customers. It's an overall strategy. In e-commerce, we have to win wherever the consumer is going online.

Taking the next question, what does optimizing the footprint mean in action?

So I'll let Peter go into some detail, but what's jumping to my mind in that question is matching supply and demand. And it's been one of the key challenges that I think we at BIC and all businesses have really had to focus on this year through COVID, making sure that we have uninterrupted supply chains, and we are -- have products the right place, the right time for consumers to buy. But Peter, maybe you could share a little bit more.

It's an important part of our competitiveness. And therefore, we are ongoing -- challenging and finding the optimum between as Gonzalve is saying the demand and supply evolution. And outcome of this analysis could be a factory closure. It could also be a different allocation of the products in between the factories. It could be optimization of the individual factories because when we have those discussions with the capable people, a lot of good ideas for further potential coming on the table, and we want to harvest those ideas and of course, it can be a combination of those three. As I said, yesterday, we announced a factory closure in India. And at this stage, we don't have other plans for factory closures.

Thank you, Peter. One more question here. Have you changed the way commercial teams are incentivized?

Super important, especially in these challenging times for all of our field salespeople who demonstrated great resilience. And I think we're all very proud of the way that all our team members, whether field sales, office-based sales or all our manufacturing team members around the world have worked through COVID. I'm really proud of that. Chester, maybe if you could give the broad thinking around our incentives?

Yes. Certainly, it's an important linkage to our key performance indicators that we are as a company changing. And so certainly, our commercial teams, the way they are being incentivized is also changing. I would say, maybe broadly, the biggest change will be the move from more gross sales to net sales and incentivizing the real deliverables to the business. So that's ongoing, and we are certainly looking forward to having a better linkage between our commercial teams and the rest of the company in terms of what really drives total shareholder return and value for our shareholders.

Thank you, Chester. Well, this brings us to the end of our first session of Q&A at the midway point. We'll now return to the strategic presentations. And in particular, one presentation, I'm sure we've all been waiting for its Sara's presentation to present BIC's Horizon strategy. Let's look at that right now.

Hello, everyone. I'm Sara LaPorta, Chief Strategy and Business Development Officer here at BIC. I hope you've recognized the common thread running through the presentation today: growth, sustainable and accelerating growth. That's our mantra. I'm going to walk you through our new strategy, actually named the Horizon plan. We're using our strong foundation built over many decades to proactively reshape the business in the face of shifting market realities, to drive sustainable growth and profitability into the future, into a new horizon for BIC. There are 3 main focus areas to the Horizon plan: one, expanding our functional capabilities to drive profitable growth; two, reframing how we think about our categories by adopting a consumer-driven orientation to turn category headwinds into tailwinds; and three, doubling down on our sustainable development strategy to future-proof our business. You've already heard from our leaders that the best way to expand our growth horizons is to shift our perspective. So we are bringing a fresh growth mindset to unlock new opportunities. Job 1 is for our functions to make bold moves to build new capabilities that will deliver profitable growth, our ultimate objective. For example, Thomas explained how, in innovation, we're using consumer insights and open ecosystems to mine for growth opportunities. Combining the best of both artificial intelligence and human creativity, our data-driven innovation lab and the plug-and-play partnership he mentioned are great examples of how we will make it happen. Chester talked about how we're raising the bar for commercial excellence with a value-driven mindset, enabled by revenue growth management disciplines, strong omnichannel capabilities and an e-commerce focus. This is all consistent with Gonzalve's vision, by focusing on consumers and their needs, we open up our aperture to explore new adjacent markets and broaden our horizons. In addition, with a profitable growth mindset, we are optimizing our business model and footprint to be more efficient and more selective about where we invest our resources. Peter, with his three Rs: reliability, responsiveness and reduction in costs, described how our consumer-driven global supply chain is generating efficiencies to reinvest in growth. By letting go of our historic one-size-fits-all approach to the market, we recognize that different countries have different roles to play, and we're allocating resources accordingly. We're making stark choices like exiting from certain countries while investing in others. We're also adopting a more purposeful financial control process and enforcing a new capital allocation discipline across the business. As you will hear from Chad later, we're adding a cash conversion lens to the traditional revenue and cost control measures we have historically used to manage the business. Job number two is reframing our categories for accelerated growth. Let's start with Stationery, which has been part of BIC's DNA since our founding in 1945. In Stationery, we have been anchored in pens and other writing instruments. And now we're building on the strength in Stationery and pivoting our viewpoint from a product-anchored mindset to that of the consumer. If you ask consumers, what do you use the pen for? They'll tell you they use a pen to unleash their ideas, their creativity, express and organize their thoughts and ideas. So it's not about the pen itself to the consumer, it's actually about human expression, the need to express yourself and your thoughts. So we're broadening our focus from stationery to human expression, which will open up adjacent markets, such as the fast-growing creative expression and digital writing market spaces. We're taking a similar approach to broaden our view in our other categories. In Lighters, we're expanding from Lighters to Flame for Life to sustain profitability and grow the business. Flame for Life is our name for the entire ecosystem of flame occasions, again, approaching lighters now from a consumer viewpoint. So not just smoking, but activities like cooking, grilling, candle lighting, and the tools for other outdoor occasions. In the Flame For Life strategy, we're also shifting to a -- from a volume-driven to a value-driven mindset in our mature developed markets, recognizing market volume challenges and turning our focus increasingly to revenue realization. And in Shavers, we're expanding from shavers to blade excellence to capitalize on our assets, our advanced R&D and our world-class manufacturing capabilities. In summary, our Horizon strategy aims to unlock category growth by: firstly, expanding our total addressable market; secondly, shifting to a revenue realization mindset in mature developed markets; and thirdly, capitalizing on our core assets and know-how to open up new opportunities. Let me bring this to life, perhaps starting with Stationery. Today, the addressable market for writing instruments, the Stationary segment in which we play, is about EUR 19 billion. Pivoting towards human expression opens up adjacent opportunities in arts and crafts, body art and digital writing. Together, these make up an addressable total market that would reach EUR 80 billion by 2025. For example, arts and crafts is a large adjacent market with 6% annual growth and expected to reach EUR 50 billion in 2025. The popularity of arts and crafts continues to grow as a perfect antidote to an increasingly digitized world. Coloring goes beyond kids. In fact, 75% of teens and 60% of adults regularly use coloring products. Our research tells us that despite their interest, many consumers are overwhelmed by the technical choices and options as they explore new creative arts. They feel intimidated and not knowing quite where to start. Armed with these insights, we're going to make it easier for these consumers. To do this, we are repositioning our Intensity brand to offer simplicity for adults looking to explore creative outlets. Our repositioned Intensity platform will be launched in 2021, with the restaging of existing products with a new harmonized visual identity. Our aim is then to fuel the range over time with innovations for many creative uses. Skin creative or body art, as you might know it better, is another segment of the human expression and one which has seen continued growth for the last 5,000 years. The tattooing market is growing mid-single digits per year and is expected to reach EUR 5 billion by 2025. BIC's temporary tattoo marker BodyMark, brings our value proposition of simplicity, quality and reliability to consumers. We will continue to update our BodyMark range of stencils and markers to appeal to more and more consumers and add new exciting innovations along the way. BodyMark was launched in the U.S. in 2019 and is growing more than 23% year-to-date. Our recent consumer research has found tremendous satisfaction amongst BodyMark buyers, with over 95% of people surveyed willing to make a repeat purchase. And this year, we launched in Beauty [ Ales ] in Europe and initial results are also promising. At the other end of the spectrum from body art and its long history is digital expression, a new emerging writing and human expression category. This medium is still relatively nascent but set for fast growth. Forecast predicted total market for digital stationary of over EUR 4 billion by 2025. We believe this market will be subsegmented into a range of different offers and price points. In line with BIC's vision and mission, it's important for us to look for opportunities within the segment that offer the consumers simple, elegant solutions for their everyday needs. By pivoting our writing instrument business to the broader human expression category, we're targeting a mid-single net sales growth run rate with improved profitability driven by the shift of our portfolio towards higher-margin profile products and solutions. Finally, let's move to Shavers. The challenges in the one-piece Shaver category are no secret, nor is the channel disruption that has shaken up the entire Wet Shave market in the last several years. So as I said earlier, we are leveraging our competitive advantage to broaden our focus to blade excellence. With this strategy, we will reinforce our core Shaver business by: firstly, delivering consumer-driven innovation, as you heard from Thomas; secondly, leaning in on sustainability. A good example of this is the new sustainable development hybrid shavers, which we'll be launching next year with an eye towards a comprehensive range of both male and female hybrid razors with environmental benefits; thirdly, we're targeting markets where we can grow, like Brazil and Russia, where we've had outstanding results. In Brazil, for example, the ongoing success of our 3-blade offering led us to reach a historic record of a 22.7% market share. Our Blade Excellence strategy is also designed to capitalize on our Shaver strengths, our excellence in R&D, innovation and manufacturing. We have the capabilities and the quality that punches well above our weight in this category. Our intention is to build a selective new business by enabling other brands, established and emerging, to have access to world-class performance powered by our R&D and technology. By focusing on a selective approach, we can secure accretive margins for BIC and achieve a higher return for our IP and our Shaver expertise and investments. We are also multiplying our addressable market 5x from the EUR 4 billion disposable markets in 2019 towards a market of more than EUR 20 billion in 2025. François is going to talk to you about our plans for lighter. Meanwhile, I want to cover our commitment to sustainability. We are addressing the sustainable development challenge head on, by adopting a stewardship mindset and not just as a compliant player. BIC has been at the forefront of sustainability for more than 15 years. We were one of the first companies to launch a sustainable development program in 2003. And then in 2018, we launched Writing the Future Together, a comprehensive sustainable development program, addressing environmental, social and societal sustainability issues. Continuing in this vein, BIC's biggest opportunity to impact climate change, natural resource depletion and pollution is to reduce our use of virgin plastic. This is why we're announcing today 2 major commitments that will reduce our carbon footprint: first, we plan to use 100% reusable, recyclable or compostable packaging by 2025; and second, we aim to use 50% non-virgin petroleum plastic in our products by 2030, with an intermediate target of 20% by 2025. We will make these changes within our long-standing philosophy of creating reduced, recycled, refillable and recyclable products and solutions while addressing the full life cycle of our products and there part in the circular economy. I hope you have a clear picture of how we'll expand our horizons to drive mid-single-digit net sales growth and sustained profitability and cash generation. We're developing new capabilities. We're reframing our category lens to broaden our addressable markets, and we're committing to do more in the realm of sustainability to be part of the solution and future-proof our business. Our Horizon plan is designed to take BIC into a new and exciting direction, one that makes the best use of our assets and our strengths, while tapping new businesses, markets and revenue streams. This is how we will propel ourselves to our next horizon. Thank you.

We've heard several times today, in the course of these presentation, how important the theme of sustainability is to BIC going forward just now at the end of Sara's presentation as well. So it's time for us to take a closer look at BIC sustainability commitments with a short video now. [Presentation]

We heard in Gonzalve's introduction about the challenges of sustainability, and we've just seen a video about BIC's sustainability commitments. But another challenge was raised, which is the challenge of digital. And I'm sure you've all seen the recent acquisition of Rocketbook, which is one step in the direction of digital writing for BIC. And it's time to take a closer look at that as well. And for this and look at the Rocketbook acquisition, the rationale for the deal and this very exciting product. We're going back to a presentation by Thomas.

At BIC, we are pivoting from stationary to human expression. And within human expression, one of the key new markets for BIC to conquer is digital writing, an emerging segment, which we expect to become very large because, indeed, forecast predict the total market for digital stationery to expand over EUR 4 billion by 2025. In this context, I would like to first elaborate a bit more on our strategic intent in the fast-growing segment of digital writing. And then second, share with you our first success in this journey, the acquisition of Rocketbook. Back in the days, I mean, our grandparents days, writing was messy with ink flowing all over the place. BIC's ballpen encapsulated high-performance technology into an affordable accessible product. The invention of the BIC Cristal was a revolution. Today, thanks to BIC's high-quality products, analog writing is neither messy or expensive anymore. But digital writing is messy and expensive. Analog written notes are not easily stored and shared. Consumers do have access to a wide variety of digital writing tools, but all of those so-called solutions are complex, segmenting, not universal and worse, they are expensive. There is a clear consumer need not met by the market, a need for a simple, affordable product giving the best of technology to all consumers. There has to be a better way for digital writing, and this is a perfect mission for BIC. As we did our strategic analysis, of the digital rating category, we identified smart notebooks as the most relevant entry point because smart notebook are accessible to many consumers, thanks to a competitive price point and the lack of battery life issues. And so as we were wondering how to develop our own smart notebook, we realized that we didn't have to. A small company founded in Boston has already come up with a great product, the Rocketbook fusion. The Rocketbook fusion is a great example of the product we love to develop at BIC. What is it exactly? It is two things: First, a notebook that is reusable. The beauty of this notebook is that you will never lose what you erased because it is also a super easy and convenient digitalization device. Thanks to the user-friendly app of Rocketbook, the page of the notebook can be digitalized very easily. Open the app, take a picture and the app will do the rest. Store the information on your own filing system, such as Dropbox, Google Drive or OneNote, or sent it to whoever you want via e-mail, SMS or WhatsApp messenger. This product is beautifully positioned as a middle ground in the mess of digital writing. No batteries, no piece of expensive notebook, no complicated pen, no heavy tablets. It gives the best of both analog and digital world, the pleasure and freedom of handwriting with the power of digital. The Rocketbook Fusion truly is BIC [indiscernible] product. It has a cultural fit. Rocketbook is a highly successful and profitable company, with double-digit net sales growth in 2020, mostly in the U.S. But Rocketbook as a company clearly lack industrial muscle, omnichannel capabilities, mass consumer reach to scale the product and exploit its full potential. And this is exactly what BIC brings to the table. We bring what we do best. We develop high quality, safe, affordable, essential product trusted by everyone, and we produce and distribute such products efficiently at scale. The acquisition of Rocketbook by BIC is a match made in heaven. To conclude, we at BIC have convinced consumers should not have to choose between the ease and comfort of pen and paper and the efficiency and connectivity of digital. The acquisition of Rocketbook is not just about adding exciting contemporary brand to our portfolio, although Rocketbook is indeed a fascinating brand and the Rocketbook Fusion is a fantastic product, Rocketbook is the ideal stepping stone for BIC into the emerging and fast-growing digital writing segment. And we intend to develop the Rocketbook and other digital writing product consistent with our vision. This is just the beginning of our journey in digital writing. And it's a pleasure for me to introduce you to the 2 founders of Rocketbook, Joe and Jake. Thank you. [Presentation]

And of course, thank you, Thomas, for those explanations about the digital transformation of BIC towards digital writing. But Stationery is not the only category that is currently transforming lighters as well. And now we move on to the transformation of lighters to Flame for Life, and that is with François Clément-Grandcourt.

If I show you this, you might tell me that you know this product all too well. It has a single purpose to provide a flame, apparently pretty simple. You might even think it a little outdated. Well, let me tell you what I see. I see life, I see the flame that spark an infinite number of memorable moments in our everyday lives. We use them for cooking, to share a meal, to light candles when the electricity fails to bring us out of the darkness, we light candles on birthday cakes, we use flame to ignite the barbecue with friends on a sunny afternoon in the garden. And we like fireworks and marvel at what we see in the sky. The list goes on. Flames ignite so many special moments in our lives. Our figures even show that 89% of adults will use a flame year in, year out. Hello, my name is François Clément-Grandcourt, General Manager of BIC's Group Lighter. As you know, the Lighter category has been BIC's profit engine for a long time. It's the major contributor to the group's profitability, and it will be the key contributor to the Horizon plan operating cash flow generation. Today, I will demonstrate how we intend to move lighters from a single purpose product to a product for all consumer lighting occasions, a strategy we call Flame for Life. This strategy can be summarized in 3 pillars: first, to focus on all consumer lighting occasions through innovation; second, to shift from a volume to a value-driven model, to drive incremental growth and maintain profitability in core markets; third, to build a competitive advantage for long-term growth throughout sustainability. At BIC, we believe a lighter is an essential item because its primary purpose is to produce a flame, and the flame is a central part of our lives. Lighter use may be known primarily for smoking in developed markets where BIC has a leading position. However, lighter has extensive usage among many different types of consumer activities. And research tell us that nearly 50% of flame usage is not smoking related. And we know that a flame is a prominent cultural symbol since the beginning of time. In fact, sociological study show the symbolic nature of flames are deeply ingrained today in the human mind and behavior all over the world denoting, sharing, caring, joy, pleasure, celebration, spirituality, relaxation, purification. In addition, a lighter is only one flame ignition tool. Lighters account for 60% of the total flame market already. Switching consumers from other flame devices, such as matches to lighters, has been a key driver of BIC lighter business growth throughout our history. We know from our long experience that when consumers switch to lighters, they never go back. So let's see in more detail how we plan to leverage the flame market and grow our Lighters business. First, we are expanding our horizons by focusing on the enormous growth potential of all consumer lighting occasions inside and out. There is an enormous growth potential for BIC to lead this market by continuing to find lighting occasions that are not smoking related, which represents 50% of the current flame market, as I mentioned already. According to 2019, U.S. data by Hannover Research, usage of pocket lighter by consumers is much broader than one may think. It is true, both in developed markets and in developing markets. This includes candles, outdoor activities, birthdays, incense, firewoods, stove and more. At BIC, we have the ability to grow the Lighter market by leveraging each of these usages. This is part of our journey to become more consumer-centric and efficient. There are many ways in which we plan to capitalize on new opportunities. For example, accelerating our pipeline of innovation and leveraging our production capabilities to develop a specified offer for each consumption occasion, placed in appropriate store locations, like seasonal barbecues, candle section, just to name 2. A good example of innovation meeting new consumer needs for flame is our EZ Reach product. It was created to provide a way to light the very last end of candle without burning your fingers and as a more sustainable alternative to the larger multipurpose lighter and at a lower price point. As Chester mentioned, launched during the summer, EZ Reach is already among our top 5 SKUs in the U.S. Now moving to the second pillar I mentioned, shifting from a volume to a value-driven model in our core market through trading up and RGM. Our approach through trading up allows us to capture value by taking into account consumer's inclination to pay for the quality and the safety of a BIC lighter. In other words, we choose to gain market value. Part of our trading up strategy is working on brand strength and personalization. In addition to strengthening our brand, we continue to roll out our safety program with retailers worldwide. Our new personalization offer, Design My BIC, which gives consumers a way to design the decor of their lighters is offered through our direct-to-consumer channel and is a real success since its launch. This offer builds on the success of our sleeve design business, which we presented more than 26% of lighter's net sales in 2019 and more than 36% in the U.S. only. Now let's look into RGM and its contribution to our value growth objective. Earlier on, Chester presented our RGM strategy in details. I just want to mention our recent acquisition of Djeep in July. This is an entry point to the semi luxury of Lighter segment. This is a great example of our RGM trade investment with a new shape and superior decor capabilities. This fresh integration into the BIC lineup enables increased profit margin and revenue realization. The third core pillar of our accelerated growth strategy is reinforcing our commitment to sustainability, underpinning all of our initiatives and providing a strong competitive advantage, driving long-term growth and profitability. As you know, BIC has always had a strong reputation as a responsible manufacturer and a leader on product quality. Long-lasting lighters are a key lever towards sustainability. Our reinforced commitment to sustainability began with an extensive 5-year scientific research program, initiated 2 years ago. World-class academic laboratories, along with BIC lighter R&D, are now allowing us to make science-based decisions. This allows us step-by-step to firmly define the root for lighters towards sustainability. We are collecting facts, modeling degradation, understanding how to reduce the impact of lighters on land, rivers and sea, in case they are not properly disposed off. As we have been optimizing heavily our lighters for safety since the '90s, we want to optimize our lighters throughout their full life cycle. Each future launch will help to progress step-by-step toward further sustainability, alternative concepts and designs, alternative raw materials, alternative sourcing, when suppliers do not share our views by streamlining production, alternative business models as well. And always with a scientific based approach. Today, in packaging, almost all our packaging comes from recycled sources. This month, we are going a step further starting production of a full cardboard and celluloses packaging with an environmental impact reduced by 1/3. In product, we are launching EZ Reach Utility Lighter with an environmental impact reduced by 2/3 versus our U140 Utility Lighter. Next year, we will launch our first Pocket Lighter with an environmental impact reduced by 10%. The BIC Maxi Ecolution, this new BIC Maxi looks like a standard BIC Lighter, but actually, a lot has changed. For example, in plastics, Body & Base are made of bio-sourced POM. Pusher is made of 100% recycled POM. Having 1 single plastic allow us to simplify considerably recycling and reuse. No colorant will be added. In metals Fork & Cheeks are made of 100% recycled Zamak and much more, as you can see. Our aspiration is to pioneer the circular economy for Lighters. To achieve this, we will test several models for circular system. World-class academic researches in consumer behaviors, along with BIC Lighter market research team are working to find a way toward consumer product acceptance and active support for collection. Collecting means recycling and after 5 years of research and development, our very first Lighter recycling line is up and running, sorting out all raw materials at a purity up to 100%. On sustainability, there is a lot to be done. But the scientists and environmentalist we are working with are struck by how serious and committed we are to put sustainability at the core of our business model. In conclusion, to get back to my original proposition to you. What do you see when you look at the Lighter? The answer is no. A lighter is not an outdated tool. It is quite the opposite. Yes, at BIC, we are convinced that the future for lighters is promising. And that lighters will continue to be a major contributor to the group's net sales and profitability going forward. The consumer need for Flame is essential and universal. The world population will increase from EUR 7.8 billion today to EUR 8.5 billion in 2030. And EUR 9.7 billion in 2050. The total Flame market size is directly related to demographic growth. And yes, long term, we expect the Flame market to grow and the Lighter market consequently. Our Flame for Life strategy will help ensure that lighters secure a role in all aspects of our lives from Rio to Beijing, Los Angeles, Paris or Johannesburg. In Railways, Megacities or Favela's. As the historical leader in lighters, we will advance with an innovative mindset and with confidence into all new flame occasions. By strengthening and expanding our market share sustainably, we will continue to be a key contributor to BIC Horizon Plan.

Thank you. Thank you, François. And thanks to our audience for your continuing questions. So we're sure to have a very rich an exciting Q&A session in a moment. Just after the next presentation will be our final Q&A. So coming right up the session you've all been waiting for, I'm sure, the financial presentation, commenced by Chad Spooner on financial performance, outlook, guidance, financial KPIs in the context of the Horizon Plan. That's coming right up now.

Good morning, and good afternoon, everyone. My name is Chad Spooner, and I'm the new CFO at BIC. I joined the company at the beginning of July, and I'm excited to have the opportunity to talk to you today about the financial strength of our company and the direction the company has taken going forward. You've heard from my colleagues Thomas, Peter, Chester, Sara and François on how we intend to foster innovation, increase efficiency and accelerate growth with a clear road map for our 3 categories. My objective today is to give you more specifics on the impact that these initiatives will have on our financials. First, we'll take a look at our 5-year performance to give a bit of background in the business. Then move to an update on our Invent to Future transformation journey. After that, I'll give you a roundup of our Horizon Plan by category and talk about how all this translates into financial results. Then I will share our financial targets for the course of this plan. And lastly, I'll take you through our capital allocation strategy. Hopefully, this will give you a numbers perspective on what transformation means for our company and where we stand today. So let's get started with a historical view of our performance. And as we look at our historical net sales growth, you'll see a slowing of organic growth. We had a 2.3 average growth rate over the past 5 years, but that trend is slowing. We had strong growth between 2015 and 2016. And then we encountered headwinds over the last 3 years from 2017 to 2019. But even during this drop in business, the company has maintained very strong margin rates. This is an area that BIC has shown exceptional strength. We've done a great job of taking costs out in order to keep our margins strong. Later, we'll show you how this has been key for 2020 and how we use our transformation plan going forward to maintain those margins and help fund growth in the future. So that leads us into how we've used our cash historically. And to begin that discussion, here's our CapEx spending for the last 5 years. To have a full appreciation of our CapEx spend in the past few years, we need to go back before 2015, where our average CapEx spend was low for the company's position at the time. In 2015, we were hit by a shift in our category growth outlook, which coincided with a catch-up phase investment. Especially in our Lighter and Shaver categories. The upside of this is that the investments we made, especially in Shavers, are poised to pay out now as we move into our Blade Excellence strategy. At this point, we're all caught up. And our CapEx is back down to close to historic levels, and we're targeting 1.0 to 1.2x CapEx to DNA ratio as our landing point. It may be lower, and we may have some peaks at times. But those peaks will be from a growth perspective with our core business investments staying low. Now looking at working capital management. We're taking a new approach to working capital. We have a strong balance sheet, and there are elements of our working capital that we can improve upon so we can extract more cash. We see opportunities in accounts receivable improvements, inventory reduction and payables management. So strong working capital management will be a large playing field for us going forward. Whereas our EBITDA has historically been very strong. We haven't taken advantage of working capital opportunities to the extent we could have. Moving forward, we're going to be working very hard to optimize working capital performance as another component of increasing our free cash flow. Next, let's look at the company's cash flow. What you see is that the company has historically performed extremely well in regards to cash flow generation, with strong net cash flow from operating activities, which have averaged nearly EUR 350 million over the last 5 years. Cash conversion historically has been strong, slightly above 75% on average. So it's clear that the company continues to deliver strong cash flow conversion from operations. Now let's move on to sources and uses of funding. Cash use has been very limited from an acquisition standpoint. And free cash flow before acquisitions has historically gone to funding dividends and share buybacks. From this graph, you get a sense of how we use our cash. And for our investors, we provided solid returns. Now let's dive into that for a moment and look at total shareholder remuneration over the last 5 years. You can see the company has historically paid out significant dividends, including exceptional dividends. We've returned on average over 50% of our earnings to our shareholders through normal dividends and then even more when you include exceptional dividends and share buybacks. In fact, we've returned about EUR 2 billion over the past 10 years, $1.5 billion in dividends and roughly $500 million in share buybacks, on average, EUR 200 million per year. Of course, as we think about our capital allocation going forward, our focus will remain on creating long-term value for our shareholders while focusing on profitable growth of the company. Now I'd like to give you an update on our Invent the Future, ITF, as we like to call it, transformation progress. We set the foundation for this program in 2019. As you've heard from my colleagues, we focused on consumer-centric innovation, working on global supply chain and Omni-channel go-to-market, while putting in place a new organization to support these efforts. Our goal is to get new or enhanced capabilities in place throughout 2020 and 2021. And I'm excited to say we're on track to achieve this. We're now in the rollout phase, and we're going to start seeing the benefits as we strengthen our market position. We're expanding e-commerce, speeding up product launches and working to reinforce and consolidate our overall efficiency. You heard from Peter about how supply chain is having an impact in areas like procurement, but the benefits we're seeing from ITF go beyond this. We're also seeing an impact through our commercial efforts with our digital and country strategies. We're driving efficient support functions with initiatives such as our shared service center, which brings in finance as well as customer service. So as you can see, we're looking at the entire company to really drive efficiencies. And at the end of the day, working capital improvement is also another key element since we'll be driving inventory levels down to improve our cash flow. So far, we've delivered on our commitments that we've made to date, and we're highly confident that we'll reach our EUR 50 million run rate impact with 80% of these total savings achieved by the end of 2021. 2022 and beyond is really where we'll see the full impact of the operational effectiveness, engagement with our customers. Really pushing our top line and helping us accelerate growth. I recognize this is the same road map we shared before. And in the meantime, we've had COVID, but we're still on track and it's still relevant. And this speaks to how powerful the framework really is and how resilient our company is with the ability to persevere even in such challenging times. In fact, COVID is another factor that is pushing us to drive more cost optimization, and we have adapted quickly to the challenge. In May, we announced that we were taking additional actions to reduce our spending by EUR 15 million to EUR 20 million by the end of this year. And in fact, we're on track to deliver more than 20 million by the end of this year. This is because we are already on a journey to become leaner, which put us in a solid position to shift quickly and respond to the crisis. To wrap up the discussion of ITF, I believe it drove us to optimize our operations. And think about creative ways to drive growth through new and innovative ways of doing business. But ITF isn't an end to it in itself. The point of holding our efficiency is to fund growth in our categories. So I'd like to turn to those next. Let me start with Stationary and Writing Instruments. This is a picture of the market situation today. The market we play in is highly fragmented with the complex product offering and growth has been slowing for the past few years. We're the #2 player in this market. And the good news is that we're continuing to gain share despite the slow environment, but we're doing more. As Sara walked you through, we're reframing the way we think about this category and pivoting to human expression. This is a way of thinking about Stationery from the point of view of the consumer and how the consumers use these products. This is fundamentally a different way of thinking about the business, and it helps us focus on growth vectors within the market to move in new areas such as digital writing and creative expression. We can do this because we have tremendous credibility with our consumers today. Consumers trust our brand. As we pivot in human expression, we'll be looking at pockets of growth with mid- single-digit growth rates. That are higher-margin and that can really get our business back to more profitable levels. We expect to do this by improving our business efficiency, reducing complexity, decreasing raw material inventories and reducing slow and obsolete inventory while executing product trade ups and expanding in the solid margin businesses. While we continue to strengthen our core, what we call, our Invest To Grow markets, as Chester presented. Next, let's move to our letter category. This is a concentrated industry, where there's been little growth over the past few years. That being said, this is a market where we have very strong position, notably in the U.S. and Latin America. This gives us the ability to sustain margins, particularly in mature markets like the U.S. as we move from a Lighter business, to a Flame for Life player. We're expanding our portfolio. This includes premiumization, which was one of the reasons behind our recent acquisition of Djeep. We're also expanding our multipurpose Lighter product line with products like EZ Reach. We've seen exceptional growth in this category in the U.S., especially during COVID, where people are staying home and appreciating the different uses for these lighters, whether for lighting barbecues, lighting candles or other at home flame occasions. As we're moving towards a value-driven model, growth in lighters will be driven by revenue growth management, our trade up strategy and personalization of our products, which will support sustained profitability and cash generation. And now let's move to Shavers. The shaver market is a large market where we have a relatively small presence, but we have a solid position in the 1 piece segment of the market. The overall category maintained a flat to slightly increasing growth rate over the last few years. But the good news is that we continue to gain share where we play. Looking at the bigger picture, we realize the need to expand our addressable market. So we're looking to leverage what BIC does really well. And that's what Blade Excellence is all about. We're moving from a disposable Shavers model exclusively to a model where we capitalize upon our advanced R&D and world-class manufacturing capabilities to expand our addressable market to a total wet shave and precision blade enabled market. By entering this business, we're leveraging the manufacturing capabilities built with the CapEx I was talking about earlier. What these category pivots all have in common is the way they open up new markets by thinking differently about what BIC already does well today. And for each category, there's a clear plan for how to pay for the necessary investments in growth. As we turn to the group targets, we're focusing on accelerated growth, and we're aiming for sustained mid-single-digit growth trajectory. We're building a rhythm to drive growth, not just for 2020 to 2022 but for the next 5 to 10 years as part of our legacy DNA, driving initiatives like ITF, RGM, country strategy and end-to-end supply chain management have become the way we work and are integral parts to the way we do business today. And to support all these initiatives, we've accelerated cash flow generation. A little earlier, we looked at our free cash flow generation track record. We're looking to push up the run rate. And our target will be over EUR 200 million annually. We'll also continue to have strong cash conversion from our operations at a higher rate of conversion with sustained margins and improved working capital as a result of the work that we expect to be doing on inventory, receivables and payables. Now let's move to an important topic for all investors. Our capital allocation policy. So we've come full circle. Back to what we talked about at the beginning, to sustain the company long term, we need to grow the company and to grow the company, we need to fund that growth, which is where we come to capital allocation going forward to 2022. Our goal is accelerated profitable growth that enables reliable shareholder returns. Besides day-to-day operations, we also have to fund accretive adjacent acquisitions, such as Djeep, which are instrumental in giving the company new capabilities to drive profitable growth. Acquisitions of similar size to Djeep will come from cash. We also have ordinary dividends. Historically, over the last decade, the payout ratio has ranged from 41% to 59%. Looking ahead, we're looking to set the range to 40% to 50% as we expect to increase normalized EPS during the course of our plan and beyond. We see share buybacks as a potential lever within our overall shareholder return strategy. But it is, of course, on our priority list after investing the business through Capex, M&A and ordinary dividends. I hope I've illustrated for you today, not only the strength we have financially, but all the ways we're working to shift the company to build upon these strengths. Our transformation is well underway. And I'm confident that our new direction and our new operating model will drive growth and returns. Ultimately, what we're always trying to do is drive long-term value for our investors. We're on that path and we'll focus on accelerating our profitable growth and reinforcing cash generation. We believe our capital allocation policy has a balance of long-term value for all our stakeholders. While promoting the long-term growth of the company. Thank you for your time and attention today.

Thank you for that, Chad. And now we come to our final Q&A session, and there are lots of questions. So this is going to be great, and we're just going to try to get through as many questions as possible to try to answer each and every one of you. So I guess if we can keep the answers on the shorter side that will allow us to get through all of these numerous questions. So let's jump right in with the first question, you are targeting a mid- single-digit growth trajectory, what role does M&A play in that?

So as part of our growth trajectory and achieving that mid-single-digit trajectory that we're talking about, first is reframing our categories. And why that's so important is we seek to unlock the growth in segments that we may not have been involved in, skin creative in human expression for one or arts crafts, as I talked about earlier. In recent years, M&A has played a more important part of our growth story. First, in Africa, where we did an acquisition in Kenya and then another in Nigeria. Both businesses in high-growth markets, 1 with the big brand, the other with a new brand that we're empowering. More recently, this summer, we did Djeep where we unlocked part of a better or more wide product portfolio that will get us to higher price points and also premiumization and other benefits from an internal perspective. And finally, Rocketbook, direct-to-consumer, digital writing, new opportunities and avenues of growth for us. But M&A is not only about acquiring businesses or growth, it can be about acquiring technology, capabilities or other assets that make the whole mix stronger. All that is what forms our M&A philosophy as part of our growth trajectory.

Next question. Now what are the financial implications linked to your sustainability objectives, i.e., 100% of BICs plastic reusable, recyclable and compostable?

I think Thomas is best place to talk about those, but what I'd like to add is I think that it's important for us as a stakeholder of our planet and society to be part of this. So it's not a -- is it possible, it's -- we must and we'll unlock new ways of doing it as we go through this journey. But Thomas, maybe you can touch on the financial parts.

So a great example of what I was telling you a bit earlier, the fact that we are getting very disciplined in our innovation approach and the return on investment. So yes, we've done the financial evaluation. Of what would be the consequences in partnership with Peter's team in the factory? So we know that, as we know today, it will cost about EUR 30 million over the next 5 years to do this conversion. But it doesn't stop there. What we are also doing with Peter is to find better solution in an open innovation ecosystem or the procurement team, all the teams are working to find even less expensive or less CapEx incentive solution. So that we can reduce this impact. And last, most important, the team's, commercial team as well as the branding team are now embracing the challenge to leverage those assets that we will put in their ends to make it a competitive advantage that resonate and create value for the retailers and resonate with the needs of the consumer. So we know the cost, but we are working on transferring that cost into a competitive advantage and growth for the company.

Thank you. Next question. Which subsegment within human expression, do you plan to address in the coming years?

I'll let Sara talk about specific subsegments. But I think one of the things to retain is also that we haven't waited to today to start. 2 years ago, we launched BodyMark as part of the skin creative subsegment of human expression. And Rocketbook is an important also growth trajectory as part of human expression. But Sara, maybe a little bit more from you?

Yes. No, absolutely. What I really like about the idea of having gone from a fairly narrow writing instruments category into this broader definition we have of human expression is it allows us actually to look across a lot of different subsegments. So first up, as you were saying, is really about adult and teen creative. And in that subsegment, we're repositioning our intensity brand to come out of the gate next year. But also to have as a platform for further innovation in this arts and creative area for adults and teens. I think I also mentioned that we'll be looking at kids creative also within the arts and crafts area. And as you said, Gonzalve, skin creative is one of those areas that I think is really interesting for BIC and has a long runway. There's -- we address BIC the consumer pain point into the [indiscernible], which is that issue of regret and it allows experimentation with no regrets whatsoever. So I think we've got a long runway there. And as you said, obviously, we've not waited to start thinking about digital writing and digital expression as we move into smart notebooks with our planned activities together with Joe and Jake that you saw earlier. So those are definitely where we're headed, certainly in the near term, and those will act as platforms for us to continue our growth in this broader segment going forward.