Stand-alone Corporate Express best way forward to create shareholder value
HIGHLIGHTS
Strategic Review outcome: having considered all options, stand-alone position as global player best way forward
Peter Ventress appointed as CEO, effective immediately, to lead transformation into a more operationally focussed and sales driven organisation
Frank Meysman taking over as Chairman of the Supervisory Board
Sales focus reflected in key strategic priorities:
- Increase share of wallet of large customers and grow market share
- Improve category offering
- Grow mid-market presence in US and Europe
- Strengthen geographic footprint
Creation of one global management team to improve operational execution significantly
For Global Office Products: average annual organic sales growth of over 6% for 2008-2010 targeted; business model supporting EBITDA-margin of at least 7%
Amsterdam, the Netherlands, 1 October 2007 - A stand-alone position as the global B2B player in the office supplies market is the best way forward for Corporate Express. It provides an excellent opportunity to create growth and shareholder value. In order to unlock this potential fully, increased focus and significantly improved execution are necessary. These are the most important outcomes of the strategic review that Corporate Express commenced in March with the assistance of external advisors, including Deutsche Bank, JPMorgan and strategic consultants.
A wide range of strategic options has been considered, including sale, break-up and merger scenarios. The conclusion is that the stand-alone scenario is in the best interest of our shareholders and other stakeholders.
Based on the strategic review’s conclusions, Corporate Express today announces a series of strategic initiatives and organisational changes designed to transform the company into a more operationally focussed and sales driven organisation.
“FOCUS. EXECUTE. DELIVER.”
Peter Ventress, the new CEO: “The conclusions of our strategic review are very clear: the strategy to focus and build on our position as a global B2B player in the office supplies market is the best way forward. It provides the greatest opportunity for value creation and growth. We operate in an attractive market, in which we have a leading position. We are convinced Corporate Express is well positioned to outperform the market, due to its great eCommerce and logistics system, scale, B2B market leading position and people. However, we will have to improve drastically our operational execution and performance in order to be able to capitalise on this position. It is all about Focus. Execute. Deliver.”
PETER VENTRESS NAMED NEW CEO TO LEAD TRANSFORMATION
To lead the transformation into a more operationally focussed and sales driven organisation Peter Ventress, until today President of Corporate Express Europe, has been appointed Chief Executive Officer with immediate effect. “In our search for a successor for Frans Koffrie as CEO, we unanimously concluded: Peter is the best man for the job. He has a strong track record in delivering results both in Europe and Canada, he knows our industry and he knows our company. That enables him to hit the ground running in making the changes we announce today,” says Frank Meysman, the new Chairman of the Supervisory Board.
Frans Koffrie has stepped down with immediate effect as member of the Executive Board. George Dean will retire as planned after the AGM in April 2008. As of then, the Executive Board will consist of Peter Ventress (CEO) and Floris Waller (CFO).
Paul van den Hoek has decided to step down as Chairman of the Supervisory Board at the end of today. He will be succeeded by Frank Meysman, who joined the Supervisory Board in April 2006. Mr. Meysman’s previous position was chairman of the board of Sara Lee/DE and board member of Sara Lee Corporation.
Paul van den Hoek says: “I feel the company is positioned very well to deliver and I am completely supportive of the chosen direction, strategy and changes. In order to allow the new management to fully focus on the future, I decided to step down today rather than as scheduled at the AGM in April 2008.”
Frank Meysman says: “We respect Frans’ decision to step down and would like to thank Frans sincerely for the many contributions he has made to our company over the years. He has been the architect of Corporate Express’ transformation from a diversified holding company into a focussed office supplier with strong market positions. At this time, we would like to thank Paul for all the contributions he has made over many years in not only supervising, but also in helping to shape the company as it is today.”
KEY STRATEGIC PRIORITIES
Corporate Express has identified four key strategic priorities that will deliver profitable growth.
- Increase share of wallet with large clients. The review identified that Corporate Express has an opportunity to increase the share of wallet of its largest corporate customers as well as to grow its share in this market.
- Improve category offering: There is room to better coordinate the product offering across Corporate Express, to fully leverage its Private Brands programme and to rationalise the product range. New methods to manage categories are being introduced, all with the goal to deliver the right products to our customers in the most cost-efficient way.
- Grow mid-market share: Currently only 20% of Corporate Express’ sales originate from the mid-market segment. Given the above average gross margins and the growth in this market, the company believes it is necessary and attractive to reinvigorate its mid-market approach. Initiatives have been launched in the US and Europe to increase the number of accounts and sales in this market, while at the same time reducing service costs.
- Strengthen geographic footprint. There is opportunity to attain leading positions across Europe. Looking into the future there are also viable options in high growth emerging markets.
ONE GLOBAL MANAGEMENT TEAM
To deliver on the four strategic priorities and further transition from a holding company to a truly global operating company, a newly formed Executive Management Group (EMG), will lead the company operationally. Next to the Executive Board members, it consists of senior geographical and functional leaders.
“We have to transform radically our management structure and our ability to execute. Quite simply; we have to be better at the basics. Our decentralised structure is no longer appropriate. Now, our organisation has to mirror our unique position as a global pure-play B2B office supplies company, and ensure we achieve our strategic priorities,” says CEO Peter Ventress.
“There will be changes in our management structure, which will allow us to be closer to the business and make us much more operationally focussed. It will also enable us to share best practices and improve the cost efficiency of our business. We are confident that the changes we are announcing today will deliver higher growth and higher margin and are for the benefit of shareholders, customers and employees.”
The new operational management is already in a process of reassigning roles in management of sales and operations and centralising key support functions. Corporate Express will refocus its activity and resources towards sales. Marketing efforts will be targeted to optimise the number of contacts with customers and to deliver strong sales support across all segments of the market. The EMG will introduce clear and specific targets and key performance indicators that drive a strongly performance-oriented culture which will be applied throughout the company.
The EMG consists out of the Executive Board members Peter Ventress (CEO) and Floris Waller (CF)) and George Dean (until his retirement). Furthermore, those are Jay Mutschler (President CE US) and Peter Damman (President CE Europe), who joined Corporate Express today. In addition, Tim Beauchamp (Logistics), Ron Lalla (Merchandising) and Dick Dijkstra (IT) complete the EMG, with the People & Organisation role not yet filled.
FINANCIAL TARGETS
These measures will all drive operational execution to improve significantly. As a distribution company, sales growth in combination with cost control measures will result in a clear improvement in operating profit.
Corporate Express is confident that the announced changes and initiatives will result in average annual organic sales growth of at least 6% for Global Office Products for the period 2008-2010. Our Australian and European businesses are already showing sound growth profiles. Our US management has stabilised operations and is improving on its organic growth, as evidenced by estimated third quarter organic sales growth as reported today.
Peter Ventress: “Given our business model as a focussed global B2B player and the sales growth targets we have set ourselves, I am confident Corporate Express can generate EBITDA-margins of at least 7% for our Global Office Products business, including overhead costs. Today, about a quarter of our business already generates EBITDA-margins of at least 7%, including Australia, the Nordics and Canada.”