26 February 1996

First Pacific Company’s Dutch-based associate Hagemeyer N.V. announced Wednesday that its net profit rose 47.5 per cent in 1996 to Dutch Guilders 285.2 million from the previous year’s NLG193.3 million, helped by acquisitions and the organic growth of a number of its traditional businesses.

Sales at Hagemeyer, an international marketing and distribution company, rose 43.6 per cent to NLG8,216 million from 1995’s NLG5,722 million, while operating profit grew 41.1 per cent to NLG447.6 million from NLG317.2 million in 1995.

Earnings per share increased 13.9 per cent to NLG6.72 in 1996 from NLG5.90, despite a 28 per cent increase in the average number of shares outstanding. A final dividend of NLG1.53 was proposed which, following the interim dividend of NLG0.75, results in a full-year payout of NLG2.28 per share. The final dividend may be taken in the form of a stock dividend, with the exchange ratio to be announced in the second week of April 1997. In addition, a 2-for-1 share split has been proposed.

The year saw a significant increase in sales and profits, mainly reflecting the full year consolidation of Borsumij Wehry, a Dutch trading company that was acquired in 1995. In addition, a number of smaller complementary acquisitions were successfully completed. The restructuring, repositioning and disposal of non-core activities, announced in 1995, was virtually completed at a cost within the provisions established at that time.

Sales increased significantly in the Consumer & Professional products division, helped by the full year consolidation of Ceteco (which operates in Latin America), Pollyconcept (which operates largely in Western Europe) and the Outdoor group (which operates largely in Europe), as well as the consolidation as of 1st October 1996 of the 50 per cent interest it did not already hold in HCL Ltd., a Hong Kong based trading group. The Electrical Distribution division maintained its upward trend of past years and strengthened its position through a number of complementary acquisitions. For the Automotive and Technical Products group the benefits of integration of the A.R.M. and Stokvis operations became evident in 1996. The North American Specialty Foods group strengthened its market position and made further investments in infrastructure. Significant sales growth was achieved, partly through acquisitions.

The Company said: "In general, operational results met our standards. Gross margins were higher than the prior year, as were cost levels. This reflects an overall increase in the value-added of our operations, as well as investments in systems and warehousing. Operating profit as a percentage of sales at 5.4 per cent was similar to prior year; despite 1995 including only the most profitable fourth quarter contribution from the Borsumij acquisition.

"The substantial increase in the share in results of associates from NLG12.6 million to NLG45.0 million reflects acquisitions and higher contributions from the underlying investments. The full year consolidation of companies acquired, in particular Ceteco’s consumer financing costs, was the main reason for the increase in net financial expense from NLG54.3 million to NLG106.2 million. At certain companies steps have been taken to improve working capital utilisation," it stated.

Profit before taxes increased 40.3 per cent to NLG386.5 million from NLG275.5 million. The effective tax rate was 21.0 per cent, compared to 22.4 per cent in 1995. As in the previous year, this rate reflects utilization of available tax losses.

The Company concluded: "Hagemeyer is well positioned to benefit from positive developments in its markets in 1997. Organic growth, together with the effect of recent acquisitions and repositionings, should contribute to a further increase in profits. Overall, the Board of Management expects continued improvement in earnings per share in 1997."

Hagemeyer is 38 per cent held by First Pacific, an Asian-oriented conglomerate with more than 45,000 employee in 40 countries and core business in the areas of Marketing & Distribution, Telecommunications, Property and Banking.