Acco shares jump on fourth-quarter results

By Yi Gu

ACCO Brands Corp. shares climbed after the company, helped by a rebound in its U.S. market, released a better-than-expected fourth quarter earnings results on Wednesday.

In the latest quarter, the Lake Zurich, Illinois-based office products supplier’s net income dropped 28 percent to $31.4 million, or 29 cents a diluted share, from $43.9 million, or 38 cents per share in the year-ago quarter.

Sales decreased 10 percent to $412.1 million from $459.9 million in the year-ago quarter.

Excluding one-time items, ACCO said, “adjusted earnings” were 30 cents a share, comparing with 36 cents in the year-ago quarter. The latest quarter’s per-share results landed two pennies above the 28 cents analysts surveyed by Yahoo Finance had been expecting.

In Nasdaq trading Wednesday, ACCO shares closed up 84 cents, or 14 percent at $6.70.

“I’m pleased with our overall operational performance in the fourth quarter, and especially pleased that we grew sales in the U.S.,” Boris Elisman, ACCO’s president and Chief Executive Officer, said in a press release.

“For the year, we grew market share in the mass and e-tail channels, increased our operating margins, grew underlying EPS before currency,” Elisman added.

According to Elisman, U.S. sales in the fourth quarter “grew year-on-year for the first time in five quarters.”

However, ACCO’s business was weak in Latin America, especially in Brazil. “We expect overall business conditions in our international markets to remain challenging in 2016,” Elisman said during a conference call.

Analyst said that mass and e-tail channels help ACCO’s growth in the U.S., but sales in North America were down due to significant drag from consumer exchange in Canada. And the strong drag is likely to cause the decline for international market in 2016.

ACCO Brands expects that in 2016, currency will continue to be a headwind given that 40 percent of their sales come from outside the U.S.

“We do hedge our inventory purchases in order to allow time to adjust our selling prices in international markets to largely offset the currency impact on margins, but we cannot hedge against the translation effect on our results,” Neil Fenwick, ACCO’s Chief Financial Officer and Executive Vice President, said in the conference call.

“While we do not provide quarterly guidance, I would like to point out that we expect a similar seasonal pattern to last year where our first quarter will have negative earnings,” Fenwick added.

In 2015, ACCO Brands reported net income of $85.9 million, or 78 cents a diluted share, a 6 percent decline from $91.6 million, or 79 cents per share the previous year. Sales decreased 11 percent to $1.51 billion from $1.7 billion.

Photo at top: ACCO Brands products on sale in a Chicago Walgreens. (Yi Gu/MEDILL)