Société BIC SA ($BB)

Good day, and welcome to BIC's First Quarter 2026 Net Sales Conference Call. [Operator Instructions] And now I would like to hand the call to your host, Brice Paris, VP, Investor Relations.

Good morning, and welcome to BIC's First Quarter 2026 Net Sales Call. I'm Brice Paris, Vice President of Investor Relations. We are in Clichy today with Rod Versloot, our CEO; and Gregory Lambertie, our CFO. This call is being recorded, and a replay will be available on our website with the presentation and press release. We'll start with the usual results presentation, followed by a Q&A session. First, please take the time to read the disclaimer at the beginning of the presentation. With that, I give the floor to Rob.

Thank you, Brice. Good morning, and thank you for joining us today. I'd like to start by highlighting that Q1 unfolded in a still highly volatile environment, marked by geopolitical tensions in the Middle East and their broader consequences across markets. Against this backdrop, we delivered 1.6% organic net sales growth in the first quarter, in line with the trajectory we outlined in February. More importantly, we are executing with discipline and clarity. We are taking the right actions to reposition the group and build a stronger foundation to deliver sustainable performance. We have streamlined and strengthened our portfolio, exiting underperforming businesses that have weighed on our growth and profitability for too long. These actions were critical to simplify our portfolio and improve focus. Our new leadership team is fully in place and operational, working with focus and determination to shape and deliver our new strategy. We have reset our priorities with organic growth now firmly established as our leading KPI, guiding decisions and execution across the organization. Turning to our Q1 performance. There are 3 key takeaways to highlight. First, growth was broad-based across all categories and key regions with a clear improvement in North America, an important signal that our actions are gaining traction. Second, Tangle Teezer continues to be a strong growth engine, delivering double-digit growth in both the U.S. and Europe, driven by distribution gains and increasing brand momentum. Third, performance in Middle East and Africa was impacted by the ongoing conflict, which continues to weigh on the growth of the region as we speak. Let me now briefly walk you through our performance by geography. In the U.S., we saw a clear sequential improvement driven by stationery, while lighters returned to stable performance. Shavers remain challenging in a competitive environment, but we are seeing encouraging traction in value-added products in the men's segment, particularly with the Flex 5 Refillable shaver. Tangle Teezer again delivered very strong performance in the U.S. with double-digit growth fueled by further distribution gains and continued market share expansion. This enabled us to consolidate our #3 position in the U.S. hairbrush category. Brand visibility remained high, supported by strong cultural relevance from high-profile appearances such as Zendaya's polished look using a Tangle Teezer Chrome Brush at the 2026 Oscars to successful collaborations. These included the recent sellout partnership with Kim Kardashian's SKIMS brand, followed by the upcoming Devil Wears Prada limited edition collection. Looking at the rest of the world, performance in Q1 was more mixed. Europe and Latin America showed improving momentum, driven by Tangle Teezer in Europe and solid execution in lighters and shavers in Latin America. Innovation also contributed with promising early results from the new BIC Cristal Figurines in France. In Mexico, we are seeing early signs of stabilization, which is an important step given last year's weak performance. In Middle East and Africa, as mentioned, performance was negatively impacted by the ongoing conflict. At this stage, the financial exposure remains limited, the region accounting for less than 2% of group net sales, and we have not experienced major supply chain disruptions so far. However, the situation remains fluid, and we are closely monitoring developments with a disciplined and proactive approach. To conclude this first part, we delivered Q1 net sales in line with expectations. And more importantly, we are making tangible progress in reshaping the group. 2026 remains a transitional year, but the early signals we see today are encouraging and consistent with our road map. Our priority remains unchanged, building solid foundations to deliver sustainable, profitable growth. With that, I now hand it over to Gregory to walk you through the net sales performance in more detail.

Thank you, Rob, and good morning, everyone. Let's begin with an overview of the main drivers of our Q1 evolution. Q1 net sales stood at EUR 453 million, up 1.6% organically or EUR 8 million, driven by positive contributions from all categories, starting with stationery for EUR 4 million, lighters for EUR 3 million and Blade Excellence for EUR 1 million. Foreign exchange and perimeter had a significant negative impact this quarter of respectively, 5 points and 1.9 points on group net sales. Turning to Slide 7. Let me walk you through our first quarter performance by division, starting with Human Expression. Net sales were EUR 141 million, up 3% organically. In North America, BIC delivered solid organic growth, fueled by a strong performance in e-commerce and at specialized retailers in the U.S. Among the best-performing products during the quarter were correction tapes, ballpoint pens and mechanical pencils. In Europe, net sales were relatively flat. While we saw growth in key markets, thanks to strong commercial execution and distribution gains, this was offset by weaker performance in countries such as the U.K., Germany and the Netherlands. In Latin America, the strong performance in some markets was partially offset by muted performance in Brazil, back-to-school. Finally, in Middle East and Africa, organic net sales declined, impacted by the current situation in the Middle East alongside weaker performance in Nigeria and South Africa. Moving on to Flame for Life. Net sales were EUR 165 million, and BIC delivered 1.7% organic growth. In North America, organic growth was slightly positive. And following a challenging performance in '25, our lighter business in the U.S. improved significantly. This was primarily led by growth in the Pocket Lighter segment. In Q1, we saw an improvement in the convenience channel, driven by effective anti-counterfeit defense from BIC. In addition, the U.S. lighter trends improved in the measured market, growing 2.1% in value year-to-date. In Europe, organic growth was flat. Strong growth from the iconic BIC Maxi Lighter and solid execution in France and Central Eastern Europe were offset by softer performance in Germany and Netherlands. In Latin America, organic growth was solid in all major countries. In Brazil, performance was driven by strong execution in the Pocket Lighter segment, while in Mexico, growth was fueled by distribution gains in traditional channel. In EMEA, net sales grew organically, driven by strong performance in North America and Ivory Coast, partially offset by net sales declines in the Middle East. Turning on to the next slide on Blade Excellence. Net sales were EUR 139 million, up 0.6% organically. In North America, strong performance at Tangle Teezer was more than offset by declines in the core shaver business in the U.S. in a challenging competitive environment, particularly in the women's segment. However, value-added products such as BIC Flex 5 Refillable contributed positively to growth in the men's segment. In Europe, strong organic growth mainly came from Tangle Teezer and from our shavers business across Western and Eastern Europe. Product ranges such as the BIC Flex 5 Hybrid and Soleil Escape continued to deliver supported by strong commercial execution. In Latin America, organic growth was strong in both Brazil and Mexico, driven by the success of the Soleil and Flex ranges, illustrating the continued success of our trade-up strategy. Lastly, in Middle East and Africa, net sales were significantly down, mainly due to the ongoing situation in the Middle East, which resulted in shipment delays and reduced market activity. Finally, let's turn to Tangle Teezer on Slide 10. Building on its strong first year within BIC in '25, Tangle Teezer continued to deliver a very strong performance in the first quarter with net sales up 13% organically. Tangle Teezer grew double digits in both Europe and North America, mainly driven by e-commerce with additional strength in partnerships. Growth was fueled by products from the core and the premium detangling ranges, including our flagship Chrome and Matte collections. This concludes the review of our net sales performance for the first quarter. For the remainder of the year, we will be focusing on sharpening our execution in key regions to reach our objectives. We are fully committed to deliver a sound strategic transformation, reigniting the core values that made BIC a success. We will share BIC's new strategy to renew with profitable growth in September. With that, I give the floor back to Rob.

Thank you, Gregory. I'd like to conclude by reaffirming that 2026 is a key transitional year for BIC and my first as CEO. After a period of underperformance, we are taking decisive actions to reset the business on a stronger, more sustainable footing. While we will present our full strategy in September, our immediate focus is clear, delivering on our commitments. And our Q1 performance was fully aligned with this objective and with our full year plan shared in February. As a result, our 2026 outlook remains unchanged. We continue to anticipate under current assumptions, improving organic net sales trends, a slight expansion in adjusted EBIT margin and stable free cash flow year-on-year. At the same time, we remain mindful of the highly volatile environment, particularly the evolving situation in the Middle East. While our direct exposure is limited and no major operational disruptions have been observed to date, we are actively managing potential risks and maintaining flexibility in our execution. What matters is that we are moving forward with focus, discipline and increasing momentum. The new leadership team is in place, fully mobilized and already shaping the organization to support our future operating model and restore sustainable, profitable growth. I look forward to coming back in July for our first half results and in September to share with you our new strategy and the next phase of BIC's transformation. Thank you. We will now take your questions.

[Operator Instructions] The first question comes from Andrei Condrea with UBS.

Two from me, please. Firstly, on the Middle East, could you please quantify the impact you've seen in Q1 from the conflict when it comes to group organic sales? And I appreciate it's still early days, but could a prolonged conflict put at risk your FY '26 outlook in terms of improving your OSG trends versus '25? And tied to that, because we're looking at potentially higher input costs from the conflict, particularly in oil, how confident are you in your ability to take pricing in what is now a very different market from 2020? And what tools and levers do you have at your disposal to mitigate these risks? And secondly, on Tangle Teezer, obviously, Q1, very strong on the back of a very strong full year '25. Should we expect 2026 to be similar to the growth you've seen in '25? And what options do you have at your disposal to sustain or even better accelerate this growth this year and over the medium term?

Thank you, Andre. I'll take the first question. This is Gregory speaking. So on Middle East, as you saw, Middle East and Africa have a net sales decline of minus 4.9%, which is effectively driven by significant deterioration in the Middle East following the conflict in the region. Obviously, we're monitoring the situation closely and its global consequence. If you think about specifically the overall impact on our Q1, it's 0.5 percentage point on the Q1 growth. So we would have been at 2.1% without the Middle East impact. If the conflict lasts, we anticipate negative impact on growth and disruptive impact on global supply chains, freight and raw material costs. Obviously, variation in oil prices impact, plastics, chemicals and this could start hitting our P&L in H2 '26 and continue in '27 if we were to have a prolonged conflict. The levers that we're using are obviously a strong cost discipline. We are taking some cost actions. And we're also closely monitoring our ability to hedge further our exposure. Should the conflict be prolonged and oil prices remain at a significantly high price, we would be back to you in H1 results. So that's that for Middle East conflict and let me...

Yes. Hello, Andrei, Rob speaking. I'd like to take your second question concerning Tangle Teezer. Looking back on Q1, we are proud of the very strong performance of Tangle Teezer in Q1 with a remarkable organic growth of plus 13%. Tangle Teezer is contributing about 0.5 percentage point to the group growth. And looking forward, because you were asking us what are your expectations for Tangle Teezer in '26? We're confident that Tangle Teezer will continue to grow strongly and be accretive to the group's margin with continued momentum, both in the U.S. and Europe. And our confidence is supported by continued market share and distribution gains, solid e-commerce contribution and brand and marketing investments. So we're looking forward to a good year with Tangle Teezer.

The next question comes from Christophe Chaput with ODDO.

Christophe Chaput speaking from ODDO. Two questions for me, please. The first one is on the current trading. The Q2 will be probably much more difficult in terms of basis of comparison. So what should we, let's say, expect in terms of organic, even if I fully understand that the context is volatile and we are at the very beginning of the Q2. But what are -- yes, the current trading? And the second question is that in the 1.6% organic you print in Q1, is there a specific price effect? And what category, let's say, it could impact during the quarter?

Thank you for your question. I'm going to take your first question concerning expectations for the second quarter. Very simple, we expect to continue to be in line with our full year plan and the trajectory that we have outlined in February. Of course, we have to remain cautious given the volatile environment in the Middle East, and we are closely monitoring this. And as you just heard from Gregory, the Middle East, Africa region was negative in Q1. If that conflict will last longer, we do anticipate some negative impact on growth and certainly also a disruptive impact on global supply chain, freight and raw material costs.

And Christophe, I'll take your second question on the split of our growth for Q1. So if you look at things, it's very, very simple, minus 1% for volume. And so the volume continued to decline slightly. And on the price/mix front, we're seeing positive signs on all our markets. So it's a pretty good quarter from that perspective.

The next question comes from Marie-Line Fort of Bernstein.

I've got 3 questions on my side. Could you remind us what percentage accounts -- plastics accounts in your input costs? That's my first question. And you mentioned that you don't expect any impact before H2 2026. So we can suspect that you've got enough inventories at some point to manage your production for the first half? The second question is about Tangle Teezer. You mentioned in the call at the end of 2025 that you start some production integration, if I remember, in Mexico, was a test. Could you come back on this test? And at what reason do you expect to produce -- to pass to a real production for Tangle Teezer? And the last question is about shavers. The division seems to be under pressure. There is a lot of competitive pressure that we can see in Europe as well on the women segment. What is your strategy there to regain momentum in face of very high competitive pressure?

Hello, Marie-Line, good morning. So in terms of the raw material, the plastics account for 40% of our raw material costs. As you rightly point out, this will be a delayed impact given the 6-month inventory that we effectively hold. So that's the time lag to be reflected in our P&L. However, we will be taking on impact on our free cash flow since we will be buying as of now. So the free cash flow impact will be felt earlier. So that's on the sort of impact and timing for raw material. Obviously, as mentioned to Andrei earlier, we are taking cost actions already, and we'll be back to you with an update on margins in H1.

Hi, Marie-Line, I will take your question concerning Tangle Teezer and your other question concerning shavers in the U.S. So your question concerning the in-sourcing of Tangle Teezer, I'll give you an update on that. We have started to build capacity in our Mexican plant in Saltillo. And we expect towards the end of the year to deliver those products to the market, so to really commercialize that. That is well on track, and we look forward to that. Your question concerning strategy, U.S. shavers or maybe broadly more than the strategy in shavers here, I would like to pause and inform you once we have our strategic plan. We are very busy at the moment defining our category growth strategy. So if you allow me, I'll come back on that one in [ September ].

[Operator Instructions] The next question comes from Alessandro Cuglietta of Kepler.

I have 2. First is on the consumer and distributor behavior. What are you seeing with the current macro environment in terms of consumer and distributor behavior? Are they more cautious or are still things very volatile? And the second question is regarding U.S. tariffs, especially the reciprocals. Just wondering if you filed any reimbursement claim if they were accepting and how this new environment could change your outlook? Is it mostly positive or neutral?

Hi, Alessandro, this is Rob speaking. I would like to answer your first question concerning consumer and distributor behavior. Obviously, it's a tough environment. I think especially in the U.S., lots of inflation in the past, consumers are under pressure. And of course, the conflict in the Middle East is also concerning and might lead to further pressure on consumers. However, I think within this context, we have managed to deliver growth. And as mentioned earlier, we expect also our performance to be in line with the plan that we outlined in February.

Okay. Hi, good morning Alessandro. And on your second question on U.S. tariffs, as you know, and as we all saw, the tariff landscape changed recently with last year's tariffs no longer in place. The U.S. administration pivoted to a 10% to 15% global tariff framework, and we're currently assessing the impact on our business and the way we will respond. In the meantime, we've also applied to the refund. It's still uncertain outcome as of today, but that should be a positive on cash flow. The question is when, '26 or '27. And overall, given the comparison we make between the old and the new framework is probably a net positive for our P&L this year. So net positive for the P&L this year. We had expected to have EUR 31 million in total, EUR 13 million of which we took last year and EUR 18 million was expected to be taken this year. I would say that we -- compared to that older environment, we're probably better off by around about EUR 5 million.

So this concludes our question-and-answer session. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.