Tuesday, May 16, 2000

Multi-Color on the rise

Firm looking to expand label market

By Mike Boyer
The Cincinnati Enquirer

        Not a day goes by that consumers don't come in contact with the handiwork of Cincinnati's Multi-Color Corp.

        The company, which employs about 70 in Greater Cincinnati, has been a printer and innovator of consumer product labels for more than 80 years.

        “Walk up and down any supermarket aisle, and most of the product labels you see are supplied by Multi-Color,” said president and chief executive officer Frank Gerace.

        Its list of consumer-product clients includes Procter & Gamble, Johnson & Johnson, Minute Maid, Dial, Clorox, Unilever and Colgate-Palmolive.

        “Our labels become their billboards,” Mr. Gerace said.

        And after years of struggling to restructure its operations and turn a consistent profit, Multi-Color fortunes lately have taken on a brighter hue with a new senior management, a new growth strategy and eight consecutive quarters of improved profitability.

        But the company's brighter prospects haven't yet been reflected in its stock price, which trades at about four times latest earnings vs. about 6.5 times by some of its other publicly traded peers, chief financial officer Dawn Bertsche said.

        As part of an effort to raise Multi-Color's investor profile, the company Monday outlined its strategy and growth plans for about 40 local money managers.

        “We've reinvented Multi-Color over the last couple of years,” said Mr. Gerace, who was named president a year ago. “We're very results-oriented and performance-driven.”

        The money managers apparently took the message to heart. Multi-Color's shares closed Monday at $8, up 183/4 cents, on trad ing of 9,800 shares, almost twice its normal volume.

        Mr. Gerace said the company is focused on entering new markets, adding new customers and developing new technologies.

        “We want to break out of our two- or three-year pattern of 7 percent (sales) growth and get to double-digit growth,” he said, through a combination of acquisitions and internal growth.

        But Multi-Color, with sales in the last fiscal year of $53 million, still commands just a sliver of the

        overall $9 billion U.S. label market.

        The market is highly fragmented, with the largest producers commanding sales of about $250 million annually.

        Mr. Gerace said that in the next five years Multi-Color could achieve that sales level.

        More than 80 percent of the market is controlled by about 3,000 mainly small, privately held label printers.

        Multi-Color expects in June to complete its second acquisition in less than a year — Uniflex Corp., a California producer of heat-shrink labels. Multi-Color wants to be a consolidator among those printers.

        As corporate clients put more demands on label producers, Multi-Color thinks its expertise as a printer of more demanding label applications will pay dividends.

        “Product innovation is the key,” said Steve Mulch, senior vice president of sales and marketing. “When you're doing business with Procter & Gamble, they're introducing dozens of new products, faster than in the past, and they need a supplier capable of meeting those needs.”

        Multi-Color has targeted a $2.4 billion piece of the overall label market for growth. That includes about a third of the estimated $6 billion pressure-sensitive label market and another $400 million share of the high-tech specialty label market.

        Multi-Color has been an innovator and market-share leader in one segment of that market for in-mold labels — printed labels placed in plastic molds to become part of the bottle when the containers are formed.

        And with its December acquisition of Buriot International, a printer of pressure-sensitive labels in Union Township, Clermont County, Multi-Color entered that market for the first time.


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