Australian business increases Q3 sales despite lockdowns.

 

Office supplies and consumer products group ACCO Brands has posted a strong third-quarter sales result, driven by improving demand across its worldwide markets.

 

Globally, ACCO Brands’ Q3 net sales increased 18.6 per cent to US$526.7 million from US$444.1 million in 2020 primarily due to US$56.8 million from gaming products group PowerA, solid organic growth, and favourable foreign exchange.

 

Comparable sales were US$463.3 million, up 4.3 per cent as a result of improving consumer demand, more schools and offices reopening, and higher pricing.

 

The company’s gross profit rose as a result of higher volume and cost savings.

 

Q3 sales up in Australia

 

Despite the negative impact of lockdowns, local division ACCO Brands (Australia) reported an increase in sales during the third-quarter.

 

The result was highlighted in the US-based company’s third-quarter results presentation.

 

In a conference call, Neil Fenwick, ACCO Brands chief financial officer, said: “Our business in Australia was negatively impacted by return to lockdowns. In New South Wales, which has the largest population and it's where most of our sales occur, lockdowns impacted the entire third quarter. Despite that, sales in Australia were up mid-single digits in the quarter. 

 

“The lockdowns are now over and the vaccination rates have improved markedly. So we are expecting Australia to have a relatively good fourth quarter,” he said.

 

Global supply chain problems to continue

 

During the conference call, Boris Elisman, global CEO of  ACCO Brands.commented on the global supply chain problem and rising freight costs:

 

“Every business is facing supply chain delays and disruptions, whether it's ports congestion, factory closures, truck driver shortages, rail chassis shortages and shipping containers in the wrong places,” he said.

 

“Logistics and commodity costs have increased rapidly over the past year, and are still very high. While it is hard to predict, we don't see the situation improving until perhaps the second half of 2022.

 

“Our employees have been managing this difficult situation very well. We are carrying more inventory where possible because of elongated supply chain lead times. It also helps that we manufacture approximately 40 per cent of our products in our local markets.

 

“We've taken several price increases across all of our businesses globally to help offset the higher cost and we will announce additional price increases for 2022. We expect price increases to substantially mitigate the effects of inflation in 2021, but they won't fully offset them until next year because our pricing generally lags cost increases.

 

“In summary, we believe that current recovery in demand will lead to continued organic sales growth and improved profitability in our business. For the full year, we continue to expect record sales and a strong profit performance.

 

Overall, we continue to focus on executing our long-term strategy of improving sales growth and profitability by shifting our business toward more consumer-centric products and faster-growing channels.

 

“Our growth will come from acquisitions such as PowerA, as well as organic sales from demand recovery, innovative new products, and market share gains. We are aggressively pursuing and investing in the long-term opportunities we think will grow most rapidly such as video gaming accessories, computer accessories, and work, learn or play from home products,” he said.