SA a worthwhile investment for Lexmark

While Lexmark International Inc. has reported first-quarter EPS growth of 25 percent, its South Africa (SA) subsidiary has reported the highest growth in the global organization. The local company saw large growth in market share and in the number of printers sold.

Lexmark SA's MD, Hans Horn, says that this confirms that the strategy of focusing on key market areas, introducing channel programs, the appointment of new sellers, and selling consumer focused all-in-one products, was the best for the SA market.

"This proves that we made the right choice by investing in SA, and that, because of aggressive market growth, local businesses are doing better then their global counterparts with regards to EPS growth," he adds.

Lexmark International's revenue increased by 13 percent to US$1.256 billion and earnings per share were $0.91, up by 25 percent from a year ago.

"Our first quarter results came in above expectations, and mark the third consecutive quarter of double-digit revenue growth," states Paul J. Curlander, Lexmark chairman and CEO. "These strong results reflect Lexmark's exclusive focus on printing solutions and the power of our supplies-driven business model."

Gross profit was $411 million or 32.7 percent of revenue for the quarter, versus $356 million or 32.1 percent a year ago. The higher gross profit margin was due to improved product margins, somewhat offset by a higher mix of printer revenue.

Operating expense for the first quarter was $246 million compared to $228 million in the same period for 2003. Operating income was $165 million or 13.2 percent of revenue, versus $129 million or 11.6 percent of revenue a year earlier.

Net earnings were $121 million in the first quarter, up by 28 percent from $95 million reported a year ago. Diluted net earnings per share for the period were $0.91 cents, an increase of 25 percent from 73 cents in the year prior.

Lexmark's debt-to-total-capital ratio at March 31, 2004 was 8 percent, unchanged from December 31, 2003. Capital expenditures were $23 million in the first quarter.