27th August 1997
FIRST PACIFIC'S HAGEMEYER UNIT'S FIRST HALF PROFIT UP 27%;
TWO ACQUISITIONS ANNOUNCED
Hagemeyer N.V., First Pacific Company Limited's Dutch-listed subsidiary, announced today that consolidated profit after tax rose 26.9 per cent in the year's first six months to 141.2 million Dutch guilders (NLG), as good performances in most sectors were enhanced by the rationalization of its US consumer electronics operations and the effect of acquisitions.
The company also announced that it has reached agreement to buy Asea Skandia, the ABB Group's electrical-distribution materials business in Scandinavia, as well as First Pacific's computer-distribution subsidiary, Tech Pacific International Limited.
Hagemeyer's net profit including extraordinary items rose 29.2 per cent to NLG143.8 million, while operating profit increased 28.1 per cent to NLG229.3 million. Turnover expanded 25.8 per cent to NLG4,615 million, including organic growth of 7.2 per cent.
Primary earnings per share rose 15.0 per cent to NLG1.53. An interim dividend of NLG0.42 was declared, compared with NLG0.375 a year earlier, payable on 30th September 1997.
Hagemeyer's Consumer and Professional Products group significantly increased operating profit. Consumer electronics activities improved markedly, while its Latin American retail operation, Ceteco, experienced strong organic growth enhanced by acquisitions. The inclusion of the additional 50 per cent it did not already own of Hong Kong-based branded-goods distributor HCL, acquired in late 1996, had a significant positive impact on results, despite continued difficulties in its technology activities. Other group activities contributed satisfactorily.
The Electrical Distribution group's businesses continued to make further advances in their respective markets. Strong sales growth reflected good organic growth, especially in Germany, and the effect of acquisitions. This resulted in a further increase in operating profit.
The Automotive and Technical Products group recorded modest sales growth, influenced by difficult market conditions, particularly for automotive activities. Overall, satisfactory profit levels were maintained.
The Specialty Foods group showed restrained sales growth, reflecting the continuing rationalization program which commenced in mid-1996 and is expected have a positive effect on full-year results.
Hagemeyer's contribution from associated companies fell 29.0 per cent to NLG18.2, largely due to the sale of sporting goods activities in Korea in late-1996. Net financial expenses increased 22.3 per cent to NLG58.7 million, reflecting the continued growth of Ceteco, which has a substantial consumer-finance portfolio. Extraordinary items after tax amounted to NLG2.6 million, resulting from Ceteco's share issue and reorganization and rationalization expenses related primarily to the North American food companies.
Hagemeyer maintained its forecast of continued growth in earnings per share for the full year.
ASEA SKANDIA ACQUISITION
Hagemeyer has agreed to acquire Asea Skandia, the ABB Group's electrical wholesale and distribution business in Sweden, Norway and Finland. The combined turnover of the businesses, which include activities in Russia and the Baltic States, is approximately NLG1.4 billion. Each business is profitable, well managed and a leader in its market. In total, the businesses operate 90 branches and have 1,500 employees.
Asea Skandia's activities no longer form a part of the core business of the ABB Group, a Swedish-Swiss international electrical engineering company. They make an excellent fit with Hagemeyer's electrical distribution group, which is specialized in the wholesale distribution of electrical materials. Following the acquisition, Hagemeyer, already a market leader in the UK and Ireland, Germany, the Netherlands, Switzerland, Austria and the Czech Republic, will become northwest Europe's largest player in this sector, with turnover in excess of NLG5 billion.
Following the transaction, which reinforces the companies' business relationship, ABB will continue to be a major supplier and customer of Hagemeyer.
In connection with the acquisition, which is expected to be completed by mid-October, Hagemeyer will issue up to 7.5 million new shares by private placement, equivalent to up to an 8.2 per cent interest in the company.
The acquisition, which will be submitted to regulatory authorities in Brussels, will enhance Hagemeyer's earnings per share.
TECH PACIFIC ACQUISITION
Hagemeyer also announced that it has agreed to acquire Sydney-based Tech Pacific, a wholly owned subsidiary of First Pacific, for US$250 million, equivalent to approximately 13 times 1997 earnings. Tech Pacific, a leading distributor of computer hardware, software and telecommunications products in the Asia-Pacific region, recorded after tax profit of US$21.4 million last year on turnover US$966.5 million and has approximately 1,100 employees.
Hagemeyer, which currently has distribution activities in the areas of automation and telecommunications products, will use Tech Pacific to expand its distribution reach and logistics in the Asia-Pacific region. The acquisition furthers its policy of strengthening its diversification within the region. For First Pacific, the transaction will enable it to focus its pure distribution activities within Hagemeyer.
The acquisition will be financed by Hagemeyer issuing approximately 4.9 million new shares to First Pacific, representing a 5 per cent interest in the company. The transaction, expected to be finalized in October, will enhance earnings per share.
Following the two acquisitions, First Pacific will own approximately 40 per cent of Hagemeyer.
First Pacific is a Hong Kong-based, Asian-oriented conglomerate with activities in four core areas: Marketing & Distribution, Telecommunications, Property and Banking. As at 31st December 1996, it had turnover in excess of US$7 billion and more than 52,000 employees in 50 countries.
For further information, please contact:
| Andrew Land Chairman Hagemeyer N. V. |
Tel: (31) 35 6957676 |
| Robert Sherbin Group Vice President Corporate Communications First Pacific Company Limited |
Tel: (852) 2842 4380 |
| Paul Wallace Group Financial Controller First Pacific Company Limited |
Tel: (852) 2842 4225 |
Company information can also be accessed on:
Internet: irasia.com/listco/hk/firstpac
E-mail: info@firstpac.com.hk
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