Business stationery supplier Corporate Express says interim net profit fell 4.4%, but says it’s on track to achieve its full year earnings targets.
The company, who’s Dutch parent was takeover in the half by an American group, Staples for $US2.65 billion reported half year net profit of $32.809 million, compared with the $34.333 million earned in the first half of 2007.
Earnings before income tax, depreciation and amortisation rose 2.7%, to $61.849 million from $60.22 million, and a steady interim dividend of 13.5 cents per share, fully franked, will be paid.
Corporate Express chief executive officer Grant Harrod said in a statement that the fall in net profit had been in line with forecast, due to increased borrowing charges and one-off expenses associated with the relocation of corporate offices and warehouse facilities in NSW.
Mr Harrod said the company was "on track to achieve earnings for 2008, broadly consistent with analysts consensus forecasts that were updated following our quarter one results release.
"This is a range of $61.7 million to $66.1 million for FY2008 net profit after tax after allowing for one off costs."
This was based on changing business conditions and allowing for one-off project costs of $6.5 million, Mr Harrod said.
Mr Harrod first half revenue for the first half to June 30, 2008, grew slightly from $641.1 million to $648.1 million while gross profit was up 4% at $180.5 million.
"The Gross Profit improvement for the period was driven by further expansion of our exclusive brand program, continued mid size market sales focus and our direct import strategy," he said.
"The consolidation of our Sydney warehouses to a single purpose built facility at Erskine Park is on track.
"Our ITS, Promotional Marketing, Liquor and Furniture orders are now being delivered from Erskine Park.
"We have also completed the relocation of our Sydney office and data centre" – a project "intended to bolster the back end of the business".
Citing other "major transformation projects", Mr Harrod said it was "prudent to be streamlining the business, thereby ensuring we stay ahead of the game.
"These long-term investments today will provide a more efficient back end, improving competitive advantage by lowering operating costs and providing increased capacity throughout our network."
Mr Harrod said "Corporate Express was firmly focused on growing its share of wallet across all its single source business lines and expanding its mid customer business.
"Corporate Express is well positioned to consolidate its markets. To that end, negotiations with potential acquisition targets continue," he said in the statement accompanying the profit announcement.
The shares eased a cent to $5.59, in yesterday’s up tempo market.
