Cutting edge Bic keeps to the point

HOW MANY Bic products have you used today? A razor when you got up? A ballpoint or two at work? A lighter for the cigarette you sneaked at lunchtime? Well, you were not alone. In the past 24 hours, Bic Corporation has sold 21 million pens and markers, 9.5 million razors and four million lighters.

That is a pretty amazing achievement for a company founded 57 years ago in a shed on the outskirts of Paris by one Marcel Bich, a former production manager in an ink-making plant.

In fact, there are few better adverts for the family firm as a business model than Bic, a company that half a century on is still controlled by the Bich family and that is the world leader in its three main product areas. Investors who have recognised its merits have done nicely: for 15 years the shares have outperformed the index of the 40 biggest French quoted companies.

With executive chairman Bruno Bich, son of the founder, forecasting sales growth of 5% this year, and more on the profit side, there is no reason to suppose the outperformance will not continue.

Bic's take-off began with the ballpoint pen, invented by Hungarian Ladislao Biro. Baron (Marcel) Bich and his partner Edouard Buffard acquired manufacturing rights, and launched their first ballpoint in 1950, under the brand Bic, a shortened form of the family name.

Over the next decade, the energetic Baron Bich produced innovatory models and expanded worldwide. He snapped up Britain's BIRO Swan in 1957, bought Waterman Pen Company in the US the next year, and began selling his pens in Japan in 1965. Floating on the Paris stock exchange in 1972 helped provide the capital to branch out into cigarette lighters and disposable razors the next year.

The group has built itself number one positions in each of these product areas, gaining the efficiency of enormous production volumes, and the ability to set prices in its markets.

Clearly there is a clever logic underlying this success-Each product is made in highly-automated plants, which involve precisionmoulding plastic items with metal components. The products are sold relatively cheaply in huge volume. And the logo has not changed in half a century.

The formula makes money. Last year, the group achieved operating profits of e257 million (£157 million) on sales of e1.53 billion, an operating margin of 16.8%. Its sales of stationery products were e800 million, more than half the total, and yielded an operating margin of 15%.

Lighter sales totalled e378 million, with a 25% margin, and shaving products brought in e302 million, with a 16% margin.

Last year was not spectacular for the group. With refreshing frankness, Bic declared that sales were 'flat', though they actually inched ahead e5 million. Net profits fell 6% to e118 million. While pens and razors edged ahead, lighter sales slipped 6%. But that was mainly because of the currency slump in Latin America and the flood of counterfeiters attracted by Bic's fat margins.

One-off charges rose e24 million as Bich, having pared his plants from 46 to 26 in three years, began a fresh economy drive in the stationery business.

Bich and his family topped up their holding this year, and now own a 37% stake in the business worth e814 million. So Bich takes good care to ensure it stays lean, and virtually unborrowed. He even managed to unload the company's loss-making Guy Laroche fashion house last year at a e7 million profit.

Only one other oddity remains: the windsurfing business BicSport, launched two decades ago by Bich's father, a keen sailor and sponsor of France's America's Cup contenders.

But then, it is profitable, and if investors are to grant Bich one indulgence, at least windsurfing is a healthy, outdoor family pursuit.