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It was a particularly intense and productive year, and renewed competitiveness allowed us to return to profit.
Although full-year sales were stable at €603.9m, they rose in the second half. I am delighted to report that underlying operating profit rose almost fourfold, from €3m in 2005 to €11.6m in 2006, despite a sharp increase in energy and raw materials costs. We achieved a net profit of €10.3m, as opposed to a loss of €26.3m in 2005.
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François Vittoz, Chairman and CEO, Gascogne |
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 2006 was the year that Gascogne completed its recovery. |
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As a result, we are starting to see the benefits of our strategic efforts over the last two years, which have focused on improving our organisation, streamlining our production system and taking a fresh commercial approach:
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enhanced cost-saving programmes across all divisions (costs reduced by €39m relative to 2002),
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strengthened support functions (Finance, IT and Human Resources),
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increased inter-divisional synergies, allowing us to extend our international expansion (with a 27% rise in sales outside Europe), creation of a "Major customers" unit, introduction of a global product range and other cross-discipline developments and innovations.
In addition, Gascogne strengthened its group identity by adopting a brand architecture covering all of its businesses. This is raising Gascogne's profile in our markets and enhancing the image of our product range.
Together with these initial successes, our divisions made progress by taking a selective approach to their markets and customers and by raising prices almost across the board.
The Wood division underwent a major transformation in 2006:
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Four companies were merged to form Gascogne Wood.
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Forestière de Gascogne was turned into a profit centre.
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The MultiWood range went into production and was launched commercially.
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Business turnaround efforts were stepped up in terms of sales, IT and management.
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The Imberty group was acquired and successfully integrated.
The Paper division is again experiencing a virtuous circle of growth and profitability, despite a 23% increase in energy costs. Production performance improved, through greater reliability of equipment. Innovative high-value-added products were launched and there was a sharp increase in volumes and operating margins.
By focusing on developing synergies and continuing to expand in Europe, Gascogne Sack benefited from strong sales of its consumer and industrial sack products.
2006 was a busy year in the Laminates division, with the implementation of restructuring announced in late 2005. Two production plants were closed, four other sites were reorganised and sales and development teams were strengthened.
Finally, the Distribution division embarked on a major project to revamp its sales organisation and improve margins.
As a result, Gascogne's transformation is now almost complete. In 2006 we showed strong resilience and our ability to improve profitability against a tough economic background. For this, I would like to pay tribute to the support and total commitment of our staff, without whom this recovery would not have been possible.
In 2007, we should reap the full benefit of the strategy we have put in place in the last two years, and complete the group's successful transformation. Our objectives for each division are as follows:
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Wood division: develop potential and consolidate leadership in maritime pine lumber, making Gascogne Wood France's leading multi-species solid wood supplier
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Paper division: consolidate positive momentum and turn Gascogne Paper into a producer of high-margin speciality products.
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Sacks division: boost growth, making Gascogne Sack a leading player in consumer and industrial sacks.
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Laminates division: complete the restructuring process, making Gascogne Laminates the leading player in its speciality areas.
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Distribution division: give fresh momentum to the business, turning Cenpac into the leading multi-network distributor of packaging products in France.
" We still have room to raise debt,...
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... and our rigorous management, customer-focused commercial strategy and innovation policy has put us squarely on the path of sustained profitable growth. With our solid financial position, we will continue our policy of acquisitions and capital expenditure, aimed at making Gascogne a leading player at the European or global level in most of its business activities." |
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Chairman's message (2006 annual report) |
