The 2022 results of Lyreco UK – recently filed at Companies House – show strong double-digit top-line growth.
In the 12 months to 31 December 2022, the reseller generated revenue of £279.1 million, almost 20% higher than in 2021, as it noted a slow recovery in the economy from the impact of COVID-19.
Unsurprisingly, the company pointed to global inflationary pressures in 2022 that impacted its operating result. A lower gross margin, combined with higher distribution and administrative costs contributed to operating profit declining by 22.6% to £5.1 million.
In his strategic report, Managing Director Mike Milward said the pre-tax profit margin of 1.82% of sales was “an acceptable return during another challenging economic year”.
He added: “During the year, the company continued its ongoing investment in its corporate accounts SMB divisions as well as actively pursuing a number of new revenue streams and additional routes to market. These included the extension of our Nespresso B2B coffee proposition in England and Wales.”
In a statement to Workplace360, Milward provided some additional colour to the results.
“2022 for Lyreco UK was very much about continuing the rebuild following the COVID period,” he said. “Sales were boosted by the seemingly never-ending rounds of price inflation, both on our product purchases and on our operating expenses.”
Price inflation contributed about 12% to Lyreco UK’s year-on-year sales growth, and Milward noted it had been an “ongoing challenge” for sales teams to “keep having those difficult conversations with customers”.
In terms of categories, general office products grew by 19% and the Nespresso Professional business doubled in size versus 2021.
Regarding the supply chain, the Lyreco UK Managing Director noted it had settled back down to “normal levels” following a period of delays and disruptions. This, in turn, led to improvements in back-order rates and stockholding despite the company handling an additional 8% in volumes in the year. Distribution costs were pushed up due to fuel price hikes for its own fleet as well as increases in third-party carrier and long-distance haulage costs.
Looking at the current year, Milward noted: “2023 to date has been all about focusing on the underlying volume trends to ensure our sales results remain strong as the price inflation wave comes to an end (which it did for us in the summer). 2023 is projected to be the biggest sales year in the company’s history and we feel well positioned as we now move towards 2024.”