Bic : First Quarter 2019 Results Press Release

BIC - PRESS RELEASE

CLICHY ‐ 25 APRIL 2019

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FIRST QUARTER 2019 RESULTS1

MAINTAINING OR GROWING SHARE IN SOFT MARKETS

BIC‐2022 INVENT THE FUTURE PLAN ON TRACK

∙Sales on a comparative basis declined 2.0%

∙Normalized IFO margin at 13.1%, down 3.6 points

oManufacturing costs negatively impacted by lower sales volumes, unfavorable forex and raw material price increase

oTargeted Brand Support investments

∙BIC 2022‐Invent the Future progress

oNew Commercial Organization with two new Centers of Expertise "e‐Retail and Digital" and "Commercial

Strategy & Analytics"

oNet Sales from e‐commerce increased 27% versus prior year o Global Strategic Procurement Organization up and running

"After a strong 2018 Fourth Quarter, and while the overall trading environment remains challenging, 2019 started with soft results impacted by Stationery in India and Lighters in the US. However, we maintained or grew market share in our three categories, and regained momentum in Shavers. With the headwinds of the first quarter expected to lessen over the year, I am confident in our ability to achieve our 2019 financial outlook which remains unchanged.

Across the globe, our teams continue to focus on improving day‐to‐day effectiveness and delivering quality products which meet the needs of our consumers. Our BIC 2022‐Invent the Future transformation plan is on track. An important milestone was achieved in the First Quarter with the roll‐out of our new Commercial Organization and our Global Strategic Procurement Organization. In the coming months, we expect these and other initiatives to continue to contribute to the delivery of long‐ term profitable growth as our transformation continues."

Gonzalve Bich, Chief Executive Officer

Q1 2019 KEY FIGURES2

	In million euros	Q1 2019
	Group Net Sales	415.4
	Change on a comparative basis3	(2.0)%
	Normalized Income From Operations	54.6
	Normalized IFO margin	13.1%
	Net Income Group Share	39.3
	EPS Group Share (in euros)	0.87
	Normalized EPS Group Share (in euros)	0.89
	Net Cash Position	135.0

2019 OUTLOOK

We expect 2019 Group Net Sales to grow slightly on a comparative basis3 and Normalized Income from Operations margin to be between 16.5% and 18%. In a continued challenging trading environment, overall sales performance may be subject to macro‐economic uncertainties and continued competitive pressure in Shavers in the U.S. Growth drivers include distribution gains and success with added‐value products.

Gross Profit will be impacted by increasing raw material costs, the impact of unfavorable foreign exchange trends and the potential impact of sales volumes on cost of production. Normalized Income from Operations will also be affected by additional Brand Support Investments.

1Unaudited figures

2See glossary page 10

3For 2019 Net Sales, on a comparative basis will exclude Full Year 2018 BIC Sport's Net Sales and 2019 Haco Industries Ltd incremental Net Sales..

BIC - Press Release - Page 1 of 10

KEY FIGURES (in million euros)	Q1 2018	Q1 2019	As	FX impact4	Change in	Argentina	Comparative
			reported	(in points)	Perimeter5	impact6	basis
					(in points)	(in points)
GROUP
Net Sales	415.4	415.4	0.0%	+2.6	(0.4)	(0.2)	(2.0)%
Gross Profit	223.5	211.3
Normalized Income From Operations	69.6	54.6
(IFO)
Normalized IFO margin	16.7%
		13.1%
Income From Operations	69.6
		54.6
IFO margin	16.7%	13.1%
Net Income Group Share	48.6	39.3
Normalized Earnings Per Share	1.06	0.89
Group Share (in euros)
Earnings Per Share Group Share	1.06	0.87
(in euros)
STATIONERY
Net Sales	151.8	148.3	(2.3)%	+1.9	+1.9	(0.3)	(5.8)%
Normalized IFO	9.6	1.8
Normalized IFO margin	6.3%	1.2%
IFO	9.6	1.8
IFO margin	6.3%	1.2%
LIGHTERS
Net Sales	152.7	149.7	(2.0)%	+3.6	+0.0	(0.1)	(5.5)%
Normalized IFO	54.5	46.6
Normalized IFO margin	35.7%	31.1%
IFO	54.5	46.6
IFO margin	35.7%	31.1%
SHAVERS
Net Sales	97.0	109.0	+12.4%	+2.6	+0.2	(0.4)	+10.0%
Normalized IFO	7.7
		7.7
Normalized IFO margin	7.9%	7.1%
IFO	7.7	7.7
IFO margin	7.9%	7.1%
OTHER PRODUCTS
Net Sales	13.8	8.3	(40.0)%	(0.2)	(34.4)	‐	(5.4)%
Normalized IFO	(2.2)	(1.6)
IFO	(2.2)
		(1.6)

4Forex impact excluding Argentinian Peso (ARS)

5Haco Industries Ltd and BIC Sport

6 See glossary page 10

BIC - Press Release - Page 2 of 10

GROUP OPERATIONAL TRENDS

NET SALES

Q1 2019 Net Sales totaled 415.4 million euros, flat as reported and down 2.0% on a comparative basis. The favorable impact of currency fluctuations (+2.6%) was mainly due to the strong U.S. dollar against the euro7. On a comparative basis8, Europe Net Sales increased by 2.4% while in North America and Developing Markets Net Sales decreased respectively by 2.2% and by 5.8%.

INCOME FROM OPERATIONS AND NORMALIZED INCOME FROM OPERATIONS

Q1 2019 Gross Profit margin was 50.9%, compared to 53.8% in Q1 2018, due to unfavorable foreign exchange impact versus last year (mostly Brazilian Real and Mexican Pesos) and increase in raw material costs.

Q1 2019 Normalized IFO was 54.6 million euros (13.1% margin), compared to 69.6 million euros in Q1 2018 (16.7% margin). The decline in Normalized IFO margin was driven by lower gross profit margin and increase in Brand Support, mainly in Lighters.

KEY COMPONENTS OF THE CHANGE IN NORMALIZED IFO MARGIN	Q1	2018	Q1	2019
(in points)	vs. Q1	2017	vs. Q1	2018
o Change in Gross Profit (Cost of Production)		+1.0		(2.9)
o Brand Support		+0.4		(1.4)
o OPEX and other expenses		(1.8)		+0.7
Total change in Normalized IFO margin		(0.4)		(3.6)

NON‐RECURRING ITEMS	Q1 2018	Q1 2019
(in million euros)
Income From Operations	69.6	54.6
As % of Net Sales	16.7%
		13.1%
Normalized IFO	69.6	54.6
As % of Net Sales	16.7%	13.1%

NET INCOME AND EPS

Income before tax decreased to 55.4 million euros, compared to 67.6 million euros in Q1 2018. Net finance revenue was

0.8million euros compared to a negative 2.0 million euros in Q1 2018. Q1 2019 was positively impacted by fair value adjustments to financial assets denominated in USD when compared to December 2018 whereas it was the opposite in previous year.

Net income Group Share was 39.3 million euros, a 19.0% decrease as reported. The effective tax rate was 29.0%.

EPS Group share was 0.87 euros, compared to 1.06 in Q1 2018. Normalized EPS Group share decreased by 16.0% to 0.89 euros, compared to 1.06 euros in Q1 2018.

7this excludes the Argentinian peso.

8 excluding Argentina

BIC - Press Release - Page 3 of 10

NET CASH POSITION

At the end of March 2019, the Group's net cash position stood at 135.0 million euros.

CHANGE IN NET CASH POSITION		2018	2019
(in million euros)
NET CASH POSITION (BEGINNING OF THE PERIOD - DECEMBER)		204.9	161.5
∙ Net cash from operating activities		+37.0	30.2
	o Of which operating cash flow	+75.2	+62.9
	o Of which change in working capital and others	(38.2)	(32.7)
∙	CAPEX	(27.4)	(20.1)
∙	Share buy‐back program	(21.2)	(33.1)
∙ Haco Industries Ltd acquisition		‐	(1.8)
∙	Other items9	(8.7)	(1.7)
NET CASH POSITION (END OF THE PERIOD ‐ MARCH)		184.6	135.0

Net cash from operating activities was 30.2 million euros, with 62.9 million euros in operating cash flow. The negative

32.7million euros change in working capital was mainly driven by inventory increases. Net cash was also impacted by investments in CAPEX as well as share buybacks.

SHAREHOLDERS' REMUNERATION

∙Ordinary dividend of 3.45 euros per share proposed at the Annual Shareholders' Meeting on May 22, 201910.

∙33.1 million euros in share buy‐backs at the end of March 2019 (398,796 shares purchased at an average price of 82.98 euros).

9Including Net cash from the liquidity contract 10 Dividend payable from June 5, 2019

BIC - Press Release - Page 4 of 10

OPERATIONAL TRENDS BY CATEGORY

STATIONERY

Q1 2019 Stationery Net Sales decreased by 2.3% as reported, by 1.8% on a constant currency basis, and by 5.8% on a comparative basis.

∙In Europe, Net Sales grew slightly. BIC outperformed a declining market and delivered strong e‐commerce growth. In France, we gained 1.6 points value share11 thanks to solid performance of our new product the Gelocity Full Grip.

∙In North America, Net Sales increased low‐single digit. In a flat market, our performance was driven by continued growth in the gel segment and in e‐commerce.

∙In Latin America, Net Sales decreased high single‐digit. Brazil and Mexico Net Sales grew mid‐single digit. In Brazil, we outperformed the declining market during the Back‐to‐School season, while in Mexico we performed well thanks to growth in Marking and Coloring segments. Net Sales were negatively impacted by Pimaco (our manufacturer and distributor of adhesive labels) as well as by weak performance in Ecuador due to increased competitive environment.

∙In Middle‐East and Africa, we have begun to see the benefits from the transfer of Haco Industries' manufacturing facilities and distribution activities in Kenya, in line with our proximity strategy to grow further in Africa.

∙In India, Cello Pens Domestic Net Sales decreased double‐digit on a comparative basis. Performance was negatively impacted by our initiative in Q1 2019 to reduce shipments to superstockists to support our change in route‐to‐ market.

Q1 2019 Normalized IFO margin for Stationery was 1.2% compared to 6.3% in Q1 2018, mainly driven by Raw Material cost increases and higher Brand Support investments.

LIGHTERS

Q1 2019 Net Sales of Lighters decreased by 2.0% as reported, by 4.7% on a constant currency basis, and by 5.5% on a comparative basis.

∙In Europe, Net Sales were flat. Following pre‐buys from retailers in Q4 last year ahead of the 2019 price increase, Q1 performance was soft.

∙In North America Net Sales decreased approximately 10%. While Q1 18 benefited from a pre‐buy impact prior to the April 2018 price increase, Q1 2019 sell‐in was negatively impacted by wholesaler's inventory adjustments in a declining market (down 3.2% in value12).

∙In Latin America, Net Sales increased low‐single digit. In Brazil, after a strong fourth quarter sell‐out, our sell‐in was solid; in addition, volumes increased ahead of the upcoming April price increase.

Q1 2019 Normalized IFO margin for Lighters was 31.1% compared to 35.7% in Q1 2018. The decrease was mainly driven by unfavorable fixed costs absorption, unfavorable FX and by Brand Support investments with the lighter advertising campaign in Europe.

11GFK - Year to date February 2019, in value

12IRI - Year to date March 2019, in value

BIC - Press Release - Page 5 of 10