Head of Acme United Europe Georg Bettin Explains Record Financials

In the fourth quarter of 2020, Acme United’s (US: ACU – $40.20) European segment increased its sales by no less than 65% in U.S. dollars and 55% in local currency compared to the fourth quarter of 2019. An impressive performance that we are eager to learn more about. So we asked Mr. Georg Bettin, the Head of Acme United Europe, about last year and the outlook for the current one.

Smallcaps Investment Research: Mr. Bettin, let us immediately start with the outstanding sales increase that you achieved in the fourth quarter last year. How did you accomplish that?
Georg Bettin: This was really a great quarter and we are proud and grateful for this success during these difficult times. Two key drivers supported our growth. First, the fact that we started focusing on online sales several years ago, of which we are now reaping the benefits. And second, our wide range of products that we offer in the different categories.

Where is that growth coming from, is it with existing customers or are you also winning new accounts?
Fortunately, not only our online sales are developing extremely well, also our existing traditional customers are growing. Not as strong as our online partners, but far beyond the average numbers for our industry. I must say though, that it is quite difficult to gain new accounts due to COVID-19. Although we have been able to win some new business, it is hard to convince people when we can’t meet them face to face.

How come do you think that Acme is doing so well online?
As I mentioned earlier, we entered this market from the very beginning. As such, we have gained a lot of knowledge about what works and what doesn’t. Another very important aspect is the quality and knowhow of our teams. They are extremely dedicated to their market and have a very good understanding of the tools needed to be successful here.

Let’s go into a little more detail by discussing some of Acme’s brands. First, let’s talk about Westcott, the school and office products brand. Can you give us some color on how the market for these products, and Westcott in particular, is doing in Europe?
In general the stationery market is weakening in Europe. But our strength is again the variety of products, that enables our customers to have one point of purchase for a huge range of different products.

What does the first aid market look like in Europe, and what are Acme’s best sellers in that category?
The market is very fragmented. Each country has a similar, yet specific set of regulations. As a result, there are a lot of “local heroes” that take care for their market or country. We are confident, however, that we will also find a way to be successful in this segment.

Shortly before the COVID outbreak in 2020, we had started to significantly enlarge our already existing first aid assortment. Although we were confident that this range would become a success, we were positively surprised, that in just one year the first aid segment became so important to us.

Getting back to your question on best sellers, there is not one single product, that I would like to emphasize, as it is really a mixture of all kinds of items: first aid kits for companies, home and outdoor kits, eye wash solutions, plasters, bandages etc. In fact, just this week a new assortment of First Aid Cabinets arrived at our warehouse, so there is surely more to come and plenty of room to grow.

How is the Camillus knives brand performing in Europe at the moment?
People definitely have more time on their hands these days due to COVID. As a result, they spend more time outside, which is supporting the success of all our Camillus branded products. Also here we see, that online sales on outdoor related products are booming.

The final brand that I want to highlight today is DMT, a leader in sharpening tools. It’s apparently hard to keep up with demand as production at the U.S. facility constantly has be increased. Why is it you think that DMT is growing so fast since Acme acquired it in 2016?
On the one hand it is our physical presence here in Europe. After the acquisition, DMT immediately had a sales team in Europe that was able to visit customers, discuss their needs and shorten lead times due to our warehouse in Solingen, Germany. This increased demand from existing customers and also enabled us to attract new customers, that were not willing to purchase products directly from the US.

We also introduced the DMT range to Acme’s existing customers. What is noteworthy, is that even if their core competence is stationery related, they are still willing to sell a selected range of DMT products as well.

During Acme’s fourth quarter conference call, Mr. Johnsen indicated that he continued to see sales and earnings growth so far in the first quarter of 2021. Is that situation similar in Europe?
In January and February we also realized similar growth rates than in Q4 of 2020 here in Europe. Therefore we are very optimistic that we will realize another record year in 2021.

And as a final question, in the United States, Acme United just leased a new headquarter that’s twice the size of the old one, to keep up with its growth. But also in Europe you have plans to expand the facilities right?
Georg Bettin: Indeed, we have an absolute necessity to expand our facilities. The project to find the right location in or around Solingen has already started. This is an important decision, because the new headquarter and warehouse shouldn’t only cover our current growth, but also our future growth.

Mr. Bettin, thank you very much for the interview.
You’re very welcome.

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