Société BIC SA (BB) Earnings Call Transcript & Summary

Good day, and welcome to BIC's Third Quarter 2026 Net Sales Conference Call. This call is being recorded, and the replay will be available on BIC's website. Before we start, please take the time to read the disclaimer at the beginning of the presentation. [Operator Instructions] And now I will hand it over to your host, Rob Versloot, CEO of BIC.

Thank you. Good morning and good afternoon, everyone. I'm very pleased to be with you today for our third quarter net sales call. Joining me is Gregory Lambertie, our CFO. And together, we will walk you through our quarterly performance before taking your questions. Let me start with a few key takeaways for today's call. Overall, Q3 was slightly down and in line with the softer trends we had anticipated going into the second half of the year. Organic sales were down 0.6%, which brings our year-to-date organic growth to plus 1.0%. Performance varied across categories and across geographies. We saw strong momentum in Brushes and continued improvement in Shavers, while Stationery remained softer and lighters faced a more challenging quarter, notably impacted by some temporary headwinds. Despite those mixed dynamics, we're maintaining a disciplined approach to execution and are confirming our 2026 outlook. At the same time, we're moving forward with our transformation program. The work behind our BIC to the Future strategy that we unveiled to you in September is well underway, and our focus is now on delivering results. Let me now walk you through our Q3 performance across the different regions. In Europe, our Shavers business was a clear highlight in the quarter, delivering high single-digit growth. Performance was driven by distribution gains, continued e-commerce momentum, and strong consumer response to our premium and refillable offerings. BIC Soleil Escape performed particularly well following its rollout across several markets, while our 5-blade refillable ranges delivered double-digit growth. In Stationery, we saw a very promising response to our latest innovations. The new Vibbies collection was a star performer during its first back-to-school season, while the Mini Pocket Mouse Pastel also stood out, demonstrating the strong consumer appeal and desirability of these products. Tangle Teezer delivered another quarter of double-digit growth, supported by its second collaboration with SKIMS and the strong start of the new Complete Care Brush range, which is already exceeding expectations and receiving strong consumer feedback and ratings. The Middle East and Africa region also delivered another solid quarter, continuing to grow at a high single-digit pace, driven mainly by the Stationery and the Shavers businesses. In North America, performance was soft in Q3, mainly reflecting ongoing challenges in Shavers, shipment phasing effects in Stationery and some unfavorable comparison effect in Lighters. These headwinds were partly offset by another strong quarter from Tangle Teezer. Looking ahead to Q4, we expect North America to improve helped by stronger performance in Shavers as we benefit from additional distribution gains and the initial shipments of our new refillable shavers. Lastly, Latin America delivered a weak performance in Q3. This reflects a challenging consumer and competitive environment as well our deliberate actions to establish healthier, lighter inventory levels at our retailers and position the business for 2027. To conclude this first part, organic growth was slightly down despite contrasting regional trends. More importantly, we continue to make progress on our transformation. While 2026 remains a transition year, our performance is encouraging, and we remain focused on delivering our road map for 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. Good morning and good afternoon, everyone. Let's begin with an overview of the main drivers of our Q3 sales evolution. Q3 net sales stood at EUR 516 million, broadly stable driven by negative contributions from Lighters for EUR 8 million and Stationery for EUR 2 million, partially offset by the positive contribution from Shavers and Brushes for EUR 5 million, driven mainly by Brushes. This quarter, perimeter had a negative impact on group net sales for 1.9 percentage points and FX a positive impact of 2 points. Now let's have a look at the main drivers of the 9-month evolution. Net sales stood at EUR 1.556 billion, up 1% organically, driven mainly by the EUR 14 million positive contribution from Shavers and Brushes. Since the beginning of the year, FX and perimeter had a negative impact of respectively, 0.9 points and 2.6 points on group net sales. Turning to Slide 8, let me walk you through our third quarter performance by division, starting with Stationery. Net sales were EUR 183 million, down 1.1% organically. In Europe, net sales increased slightly, reflecting a mixed back-to-school performance across markets. Our countries such as Belgium and the Netherlands delivered strong growth. This was partly offset by a decline in other markets such as Italy and Germany. As Rob mentioned, our recently launched Vibbies range had strong momentum for its first back-to-school season. In Middle East and Africa, net sales grew mid-single digits, boosted by a strong back-to-school performance across channels in key African countries. In North America, BIC's moderate decline was due to some back-to-school order phasing with certain orders shipped in Q2 rather than Q3. At the same time, the continued weakness in ball pen was partially offset by solid performance in other segments like correction or mechanical pencils. Finally, in Latin America, the challenging trading environment continued to win performance, leading to organic net sales decline in both Brazil and Mexico. Moving on to the performance of the Lighters division. Net sales were EUR 170 million, down 4.6% organically. The quarter was impacted by several temporary headwinds that are expected to ease over the coming quarters. First off, in North America, net sales were slightly down, but broadly in line with Q2 in absolute terms as we continued to stabilize performance following a challenging 2025. Performance was impacted by the unfavorable year-over-year comparison base, reflecting retailer prebuys ahead of the September 2025 price increase. At the same time, we continue to see positive momentum in the convenience channel, supported by our anti-counterfeit initiatives. In Latin America, performance was impacted by temporary factors as we continue to position the business for 2027 and establish healthy inventory levels at retailers across channels. We also faced ongoing competitive pressure, especially in Brazil. And in Europe, performance was adversely affected by softer sales in the discount channel across key markets, France and Germany in particular. Turning on to the next slide on Shavers and Brushes. Net sales were EUR 155 million. up 3.9% organically. Our Shavers business delivered slight organic growth in the third quarter. In Europe, we posted a very strong performance, underpinned by distribution gains across the region and also benefiting from the success of premium products like Soleil Escape and Flex 5 refillable. We grew double-digit in Middle East and Africa fueled by robust commercial execution across key African markets. However, our overall Shavers performance was negatively impacted by continued declines in North America, where we faced ongoing competition and market share losses despite some products performing well, like the Flex range. Lastly, in Latin America, net sales also declined driven by softness in both Brazil and Mexico. In Brazil, we were more negatively impacted by declines in the 1 to 2-blade disposable shavers. However, our premium Flex and Soleil ranges continued to show momentum supported by key marketing campaigns. Finally, a word on Tangle Teezer's record high performance. It was once again the main growth driver of the division, delivering a remarkable third quarter performance. Growth was driven by double-digit increase in both Europe and North America, supported by the continued success of our flagship collection and the recently launched Complete Care Brush range. This leads us to a 29% growth for our Brushes division. This concludes my review of our third quarter performance. As we look to the remainder of the year, our focus remains on disciplined execution, delivering against our transformation initiatives, and laying the foundations for our new strategic plan beyond 2026. With that, I give the floor back to Rob.

Thank you, Gregory. To conclude our third quarter performance was in line with the expectations we set entering the second half. Based on our year-to-date performance, we reaffirm our guidance and continue to anticipate modest organic growth in 2026 and adjusted EBIT margin slightly above 14% as well as stable free cash flow year-on-year. We remain confident in our ability to deliver our full year 2026 outlook and are staying focused on disciplined execution for the remainder of the year. Looking ahead, we remain firmly focused on shaping BIC's future. Our transformation is progressing well, laying the groundwork for more sustainable growth and long-term value creation. This quarter's strategic update marked a key milestone, setting out a clear ambition for BIC as we unveiled our BIC to the Future plan. In 2026, we have already done a significant amount of work to put the right foundations in place. And as we move closer to 2027, our focus remains on executing the plan and advancing our transformation. With that, we conclude the review of our third quarter. We are now happy to take your questions.

[Operator Instructions] The first question is from Marie Fort, Bernstein.

The first one is about the outlook you mentioned on the U.S. in Q4, mentioning that momentum should improve over the next quarter. I would be curious to know in which division you are a bit more constructive for the end of the year. Also in Latin America, sorry. the decline is quite significant over Q3. I would be curious also to have a bit some color about Q4 as you're entering in the back-to-school season, do you think you could also benefit from a better prospect and also after having a clean inventories for the Lighters business? And finally, on Tangle Teezer, you still printed a very strong performance in Q3. Is it something that we could extrapolate over the year? Or is there some stock effect? I don't know, just to know if it's representative from your midterm outlook for this band.

Marie-Line, this is Rob speaking. So let me answer the 3 questions that you asked, starting your first question was related to the U.S. and more concretely about our expectations for Q4. So for Q4 in the U.S., we expect an overall improvement in the U.S. driven mostly by Shavers as we will materialize additional distribution gains, which we recently welcomed, and we will also start shipping our new refillable shavers. So there will be some selling in some pipeline which we will have in Q4. So that would be the reasons for why we are expecting some improvement in the U.S. in Q4. Moving on to Latin America, we expect for Q4 Latin America organic growth to continue to be soft in the regions as the actions we're taking in Lighters will continue, but we see this as a remain as a temporary factor as we are positioning the business for growth in 2027. And then lastly, you were inquiring about Tangle Teezer. We indeed had a record performance in the third quarter with almost 30% of growth. We expect less for Q4, but overall performance of Tangle Teezer should remain in strong double digits territory as we will continue to benefit from the Complete Care Brush launch, which we just launched now in September.

[Operator Instructions] The next question is from Andrei Condrea.

Two questions from me, please. First of all, when we think about -- I know it's a bit early, it's still Q3. So thinking a bit into 2027, we've seen this season -- selling season more and more companies start giving some inkling as to how this thinking cost inflation is shaping up. The only real question is relative to 2026, how are you thinking about input cost inflation going into next year? Should we expect a relatively similar increase in percentage terms? Or could it accelerate further given how persistently strong oil has been?

Andrei, I think it's a clear question. As you can imagine, we monitor raw material pretty consistently. We've taken some proactive action, including selective hedging to mitigate the input cost pressures. For example, we executed some hedging on aluminum to secure some of the '27 volume. But overall, in 2026, the raw material impact is flat to slightly negative, whereas in '27, we expect inflationary pressure to intensify with higher input costs. And we will aim to offset that through targeted pricing actions.