On November 10, 2011, Service Point Solutions issued (in a Spanish-language version only) a Press Release about its Q3 2011 Sales Results

Don't forget to read the "Joel's comments" section of this post!

Service Point’s Press Release indicates an increase in sales over prior comparable periods and an increase in EBIT and EBITDA.

Here’s the Spanish-language version of the Press Release. Skip below for an English-language version of this Press Release.)

Service Point logra incrementar un 7% las ventas en el tercer trimestre del año y un 5% durante 2011

• El EBITDA acumulado ha alcanzado los 10,7 millones de euros, lo que supone crecer un 38% frente al mismo periodo de 2010.

• Los elementos clave de este incremento han sido el comercio electrónico, que ya supone el 16% de las ventas de la compañía y el estricto control de los gastos.

• El grupo ha nombrado responsable global del canal online al director general de Service Point en Noruega, Christian Paulsen.

10 de noviembre de 2011 –

Service Point Solutions SA (ticker: SPS.MC), ha cerrado el tercer trimestre del año con unas ventas acumuladas que se han incrementado un 5% con respecto al mismo periodo del 2010, alcanzando los 162 millones de euros. En el tercer trimestre el incremento de las ventas ha sido de 7% respecto al mismo período en el 2010. Este aumento, unido al control de costes operativos llevados a cabo por la compañía, han logrado que el EBITDA se haya elevado hasta los 10,7 millones de euros, un 38% más que en el mismo período del año pasado. El EBIT alcanzó los 3,1 millones de euros, frente a las pérdidas de 0,7 millones de euros del mismo periodo del año anterior, lo que supone un incremento de 3,8 millones de euros.

El crecimiento de los ingresos se debe principalmente al aumento de la actividad comercial del grupo en los mercados escandinavos (Noruega y Suecia) y centroeuropeos (Países Bajos y Alemania) donde se han obtenido tasas de crecimiento de doble dígito en las actividades consideradas estratégicas: canal de impresión online, impresión bajo demanda, foto-álbumes y gestión documental para el sector financiero.

El comercio electrónico sigue siendo clave para el grupo y se actúa para reorientar los ingresos para que una parte más grande del negocio total derive de este canal. Para lograr el objetivo del grupo, que un 30% de las ventas totales en 2013 procedan del comercio electrónico, Service Point ha nombrado a Christian Paulsen responsable de Service Point en Noruega responsable del desarrollo de negocio y estrategia del canal online. A septiembre de 2011, el 16% de las ventas totales de Service Point procedían de este canal.

A pesar del entorno, la compañía espera una evolución positiva durante el cuarto trimestre en línea con su evolución anual y en términos relativos contra el mismo período de 2010 gracias a los proyectos en curso, la buena marcha del negocio de foto-albumes que presenta una estacionalidad positiva destacada en el cuarto trimestre y el continuo control de los gastos operativos con el objetivo de alcanzar ventas anualizadas totales de 220 a 223 millones de euros para 2011.

Here’s an English-language version of the Press Release, which I generated using Google Translate: (Please note: Google Translate does not produce perfect translations.)

Service Point achieved a 7% increase in sales in the third quarter and 5% in 2011

• The cumulative EBITDA reached 10.7 million euros, representing a 38% increase over the same period in 2010.

• Key elements of this increase have been e-commerce, which already accounts for 16% of company sales and tight cost control.

• The group has appointed global head of the online channel to the CEO of Service Point in Norway, Christian Paulsen.

November 10, 2011 –

Service Point Solutions SA (ticker: SPS.MC) has closed the third quarter with cumulative sales have increased by 5% over the same period in 2010, reaching 162 million euros . In the third quarter, sales growth was 7% over the same period in 2010. This increase, coupled with cost control operations carried out by the company, have achieved the EBITDA has risen to 10.7 million euros, up 38% over the same period last year. EBIT reached 3.1 million euros, compared to losses of 0.7 million euros in the same period last year, representing an increase of 3.8 million euros.

The revenue growth is primarily due to increased commercial activity of the group in the Scandinavian markets (Norway and Sweden) and Central (Netherlands and Germany) where rates have been achieved double-digit growth in activities considered strategic: channel online printing, print on demand, photo-albums and document management for the financial sector.

Electronic commerce is still key to the group and acts to redirect the revenue for a larger share of total business resulting from this channel. To achieve the goal of the group, that 30% of total sales in 2013 are from the e-commerce, Service Point has appointed Christian Paulsen responsible for Service Point in Norway responsible for business development and strategy of the online channel. In September 2011, 16% of total sales came from the Service Point channel.

Despite the environment, the company expects a positive trend during the fourth quarter in line with its annual progress report and in relative terms against the same period in 2010 due to ongoing projects, the smooth running of the business of photo-albums that has a prominent positive seasonality in the fourth quarter and the continued control of operating expenses in order to achieve total annual sales from 220 to 223 million euros for 2011.

- - - - - - - - - - - -

Joel’s comments:

[You may want to read the “note” paragraph (the one in blue type) below before you read the next three paragraphs.]

In a press release SP issued on May 9, 2011, SP had “the confidence to venture that revenue in 2011 will exceed €230 million”. SP pointed out that its acquisition of Holmberg (Sweden) would be one of the reasons why it felt confident that its 2011 revenue would exceed €230 million. Now, by November 2011, SP doesn’t appear to be as confident, as it was last May, that its 2011 revenues will reach the level previously hoped for.

In the November 10th press release, SP indicates that its EBITDA is €10.7 million through Q3 2011. In the May 9^th press release, SP “had the confidence to venture” that its full-year 2011 EBITDA would exceed €20 million. In order to achieve €20 million in EBITDA for 2011, SP will have to add an additional €9.7 million in EBITDA in Q4 2011, or, to say it in other words, SP’s EBITDA in Q4 2011 – the last 3 months of 2011 - will have to be nearly as much as SP’s EBITDA in the first 9 months of 2011. SP’s going to have to sell a lot of photo albums to achieve that number!

Most of Service Point Solutions’ revenues are generated by its UK and Western European operations. Apparently, SP’s business in Scandinavia (Norway and Sweden) has been healthy. But, if there is a slowdown in the economies of the UK and Western Europe, now and in months to come, what will that mean for SP’s outlook for 2012?

Service Point continues to point out that its e-commerce business is growing; reportedly now 16% of its total revenues. I find myself wondering (often) how much of SP's e-commerce business is "new, incremental" business vs. business being transferred from one bucket to another. In other words, if, prior to implementing my e-commerce business strategy, I was already doing $1 million annually in digital printing business with a large corporate customer, but, after I implemented my e-commerce business strategy, I converted this customer's business to "on-line ordering" and continued doing $1 million in digital printing business with this customer, I would not consider that to be "new, incremental" revenue .... the increase in my e-commerce business would be a "reclassification" of business I was already doing. Would it not?

Okay, let’s wish SP the best of luck in its quest to grow revenues and earn lots of money!

Note the following paragraph I pulled from the May 9, 2011 press release:

In the first quarter of 2011, Service Point’s revenue rose 4.7% year-on-year to €54.7 million, ahead of our guidance for topline growth of 3% for the quarter. The recent trends in business volumes, new customer wins and average customer orders, the growth in online sales and the consolidation of Holmbergs in Sweden from May give us the confidence to venture that revenue in 2011 will exceed €230 million, leaving EBITDA of more than €20 million.