Mission: The integrated electrical system - gewiss.com
Mission: The integrated electrical system - gewiss.com
Mission: The integrated electrical system - gewiss.com
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<strong>Mission</strong>: <strong>The</strong> <strong>integrated</strong> <strong>electrical</strong> <strong>system</strong><br />
Reuters code GEWI.MI<br />
Bloomberg code GEWS IM<br />
Company Data<br />
Market MTA<br />
Industry Electrical Products<br />
(Bloomberg) MISC<br />
Price EUR 5.795 (07/11/06)<br />
N° shares 120,000,000<br />
Market capitalization EUR 692.76 million<br />
Free Float 22.6% (n° 27.1 ml)<br />
Stock Performance (as 10/05/07)<br />
1m 3m 1y<br />
Gewiss 1.17% 1.29% 1.31%<br />
Average daily volumes 42,727 58,404 56,192<br />
2007 max Euro 6.666 (17 th April)<br />
2007 min Euro 5.778 (5 th January)<br />
2006 max Euro 6.562 (10 th May)<br />
2006 min Euro 4.982 (3 rd January)<br />
Contact:<br />
GEWISS<br />
MIBTEL<br />
Marina Riva Tel. 02.72.02.35.35<br />
m.riva@barabino.it<br />
Key Figures 2003 - 1Q07<br />
(Euro/Millions) 2003 2004 2005 2006 1Q06 1Q07<br />
IAS IAS IAS IAS IAS<br />
Gross turnover 315.1 326.0 329.4 326.5 77.5 83.9<br />
Net turnover 300.2 308.7 314.6 308.3 74.3 80.2<br />
EBITDA 66.9 78.8 81.5 72.1 18.2 18.5<br />
EBIT 44.2 58.1 61.4 51.2 13.5 14.0<br />
Net profit 17.2 31.2 37.2 30.7 8.0 8.3<br />
Fixed assets 176.9 162.5 160.1 160.5 159.4 161.0<br />
NWC 73.1 62.9 74.0 71.2 76.8 87.9<br />
Net equity 178.8 207.4 235.3 256.1 243.2 264.5<br />
NFP -55.2 -4.4 15.7 41.0 21.9 32.6<br />
Dividends 0.05 0.08 0.08 0.1 - -<br />
Cash flow 39.9 51.9 57.2 51.6 12.7 12.8<br />
Financial Ratios<br />
Net turnover (var. %) 1.0 3.5 1.0 -0.9 1.0 7.9<br />
EBITDA % 21.2 24.2 24.7 22.1 23.5 22.0<br />
EBIT % 14.0 17.8 18.7 15.7 17.4 16.7<br />
Net profit % 5.5 9.6 11.3 9.4 10.3 9.9<br />
NWC % 23.2 19.3 22.5 21.8 - -<br />
Focus on quality, research and development<br />
• Gewiss Group, listed on the Italian Stock Exchange (segment MTA standard) since<br />
1998, is one of the leading European Groups operating in the electrotechnical<br />
sector.<br />
• Gewiss is an Italian multinational whose main activities stretch from the development to<br />
the distribution of <strong>system</strong>s and parts for low voltage <strong>electrical</strong> installations.<br />
<strong>The</strong> Group has a consolidated position also in the lighting sector where it produces<br />
and distributes lighting equipment.<br />
• Revenues by geographical breakdown, as of 31 December 2006, shows that the<br />
main contribution to the Group’s revenues is generated by Italy, Gewiss’s core market<br />
which accounts for 57.4% on total revenues followed by Europe with 36.8%.<br />
• Innovation, safety and functionality are the hallmarks of Gewiss products.<br />
Standards of quality are guaranteed by a major ongoing investment in R&D (more than<br />
4% of turnover) followed by relative industrialization.<br />
• Group’s strategy is focused on strengthening the direct sales network and the<br />
partnership with the distribution chain and progressing the internationalization<br />
project in Asia and Europe.<br />
• Regarding this, it has to be pointed out that in October and November 2005 the <strong>com</strong>mercial<br />
branches Gewiss Turkey and Gewiss Russia, respectively, were established<br />
and in March 2007 Gewiss Romania.<br />
• <strong>The</strong> Gewiss Group, in 2006, reached a gross turnover of Euro 326.5 million, up 2.2% if<br />
analysed on constant consolidation area, an EBITDA of Euro 72.1 million (EBITDA margin<br />
of 22.1%) and a net in<strong>com</strong>e of Euro 30.7 million.<br />
• <strong>The</strong> Gewiss Group, in the first quarter 2007, reached a gross turnover of Euro 83.9 million<br />
(+8.3% YoY), an EBITDA of Euro 18.5 million (EBITDA margin of 22.0%) and a net<br />
in<strong>com</strong>e of Euro 8.3 million.
Business<br />
Market Overview<br />
Operating performance<br />
Company Profile<br />
Gewiss Group, for over 30 years has been one of the Leading European players in the electrotechnical<br />
sector. It specializes in developing and selling <strong>system</strong>s and parts for<br />
low voltage <strong>electrical</strong> installation and lighting equipment.<br />
Gewiss, is well recognize on the market for its wide range of products. With its “<strong>integrated</strong><br />
<strong>electrical</strong> <strong>system</strong>”, ranging from measurement and distribution board <strong>system</strong>s<br />
to installation materials and trough to lighting equipment, Gewiss caters for the following<br />
categories of users:<br />
- Civil<br />
- Tertiary<br />
- Industrial<br />
In 2006 both electronic and electrotechnical sectors have registered a 4% increase.<br />
During 2006 the electrotechnical sector, after recent years characterized by general staticity,<br />
has benefited from a benevolent macroeconomic context favourably influenced by the<br />
building sector.As for the Italian market, estimates referring to the distribution channel are<br />
confirming a discrete growth, although hardly influenced by both considerable <strong>com</strong>petition<br />
and the increasing incidence of the raw material costs ("copper effect").<br />
Hereinafter the detailed elements featuring the electrotechnical sector in 2006, and which<br />
could have an impact in the current year too, can be summarized as follows:<br />
- fair growth of the Italian market but below the European average;<br />
- fierce <strong>com</strong>petition requiring to focus on continuous innovation, value added<br />
production, brand equity and production efficiency;<br />
- increasing incidence of the raw materials and the connected erosion of<br />
margins;<br />
- copying of low technological content products;<br />
<strong>The</strong> year 2006 represented for Gewiss the climax of an important investing period which<br />
has been indispensable for future development. Despite the modest revenues increase<br />
(+2.2% on like-for like basis), the Group has registered a significant redditivity (partially<br />
influenced by external conditions, the increase of personnel costs and by the level of capital<br />
employed)<br />
Euro/mln<br />
350<br />
340<br />
330<br />
320<br />
310<br />
300<br />
311.9<br />
Gewiss Group - Gross turnover<br />
315.1<br />
326.0<br />
329.4<br />
326.5<br />
2002 2003 2004 IAS 2005 IAS 2006 IAS<br />
Euro/mln<br />
100<br />
80<br />
60<br />
40<br />
20<br />
0<br />
2<br />
56.2<br />
66.9<br />
Gewiss Group - EBITDA<br />
78.8<br />
81.5<br />
72.1<br />
2002 2003 2004 2005 2006
Group structure<br />
Gewiss Group has achieved a meaningful international presence, thanks to an internationalization<br />
process allowing the Group to achieve 12 production plants (6 in Italy, 2 in<br />
Germany, 1 in Portugal, 1 in France, 1 in India and 1 in China), 5 <strong>com</strong>mercial branches<br />
(UK, Spain, Turkey, Russia and Romania) and a central logistics centre in Italy<br />
(Calcinate, BG) which handles deliveries throughout Europe in 48 hours.<br />
100%<br />
100%<br />
100%<br />
100%<br />
100%<br />
GEWISS<br />
IBERICA SA<br />
(Spain)<br />
GEWISS<br />
UK LTD<br />
(UK)<br />
GEWISS<br />
ISTANBUL<br />
E.T.M.T. LTD S.<br />
GEWISS<br />
O.O.O.<br />
RUSSIA<br />
GEWISS<br />
ROMANIA<br />
Srl (*)<br />
Commercial Companies<br />
3<br />
100%<br />
100%<br />
100%<br />
100%<br />
50%<br />
GEWISS<br />
FRANCE SA<br />
(France)<br />
GEWISS<br />
DEUTSCHLAND<br />
GMBH<br />
(Germany)<br />
GEWISS<br />
PORTUGAL<br />
LDA<br />
(Portugal)<br />
GEWISS<br />
ELECTRICAL DEVICES<br />
(SUZHOU) CO LTD<br />
(China)<br />
C&S<br />
GEWISS INDIA<br />
(P) LTD<br />
(India)<br />
Commercial / Industrial Companies<br />
(*) Established on 21st March 2007 with a share capital of 500,000 Euro fully paid up
<strong>The</strong> internationalization process has been carried out in two different phases (the second<br />
phase still on going):<br />
1) <strong>The</strong> first phase was characterized by the pan European expansion through<br />
targeted acquisitions in Italy, Germany and France (worth a total of Euro 88.1 million):<br />
- Feb 97 (GER) – Nowaplast:specialists in plastic trunkings for <strong>electrical</strong> <strong>system</strong>s;<br />
- Sept 98 (ITA) – Dielectrix: manufacturer of trunkings, flexible and rigid pipes<br />
and plastic accessories for <strong>electrical</strong> <strong>system</strong>s;<br />
- May 99 (GER) – Schupa: manufacturer of miniature circuit breakers, residual<br />
current devices and <strong>electrical</strong> distribution boards;<br />
- June 99 (GER) – Merz: manufacturer of rotary switches and metal site boards;<br />
- Oct 99 (FR) – Mavil: manufacturer of metal and plastic cable trays;<br />
- July 00 (ITA) – Riverplast:specialized in thermoplastic moulding (acquisition<br />
of a 20% investment);<br />
2) <strong>The</strong> second phase involves Group expansion to Far-East area and consolidation of its<br />
market share in Continental Europe:<br />
- Feb 04 (INDIA) – C&S Gewiss India:50% Joint Venture for the production<br />
and sale of the Gewiss catalogue in India addressed to a medium - high target of the<br />
India electrotechnical market.<br />
- Oct 04 (CHINA) – Gewiss Electrical Devices (Suzhou) Co Ltd:production<br />
and trading <strong>com</strong>pany for the Far East area.<br />
- Oct 05 (TURKEY) – Gewiss Istanbul E.T.M.T. LTD S.: Gewiss products trading.<br />
- Nov 05 (RUSSIA) – Gewiss O.O.O.:Gewiss products trading.<br />
- Mar 07 (ROMANIA) – Gewiss Romania Srl:Gewiss products trading.<br />
4
Products<br />
Catalogues<br />
With more than 18,000 items, designed and created to work in synergy the<br />
Gewiss Group provide the market with the "Integrated <strong>electrical</strong> <strong>system</strong>"<br />
able to provide the best in terms of design and functionality for civil, tertiary<br />
and industrial purposes.<br />
In 2004, the Gewiss Group launched on the market some new lines of innovative products<br />
on an international level, in particular the RESTART/AUTOTEST, the residual current<br />
device with automatic reset device and weekly self-diagnosis, and the Wireless<br />
device System RF.<br />
In the international exhibition INTEL (June 2005) were launched the new domestic<br />
range “Chorus” to manage and control your home (winner of the INTEL DESIGN 2005<br />
award) and the led emergency lamps of the startec range and road fixtures with a facilitated<br />
maintenance <strong>system</strong>.<br />
At the end of 2006 the <strong>com</strong>mercial launch, through two important events in Milan and<br />
Rome, saw the participation of electronic and electrotechnical professionals and journalists:<br />
over 1,500 people such as architects, distributors, installers experienced in<br />
CHORUS' characteristics and advantages. An important space to the "domotic <strong>system</strong>"<br />
has been dedicated at the International Sectorial Exhibition, LivinLuce, held in February<br />
2007 Milan, registering remarkable interest from Italian and International operators.<br />
Gewiss produtcs have been included in the following 5 catalogues:<br />
EuroDOMO, a wide range of design products with advanced solutions for energy and<br />
information distribution, security, safety and <strong>com</strong>fort management<br />
EuroDIN, a technologically advanced offer of modular devices and modular case circuit<br />
breakers, <strong>integrated</strong> with a wide range of enclosures, metal distribution boards and cabinets<br />
making up Gewiss Protection System.<br />
5
Business areas & segments<br />
Research and Development<br />
EuroBLOC, a leading range of industrial connections meeting most application requirements<br />
and an <strong>integrated</strong> <strong>system</strong> of distribution panels for special, fixed or mobile <strong>electrical</strong><br />
plants, co-ordinated from an <strong>electrical</strong>, design and functional standpoint<br />
EuroBOX, junction boxes and special enclosures sectors, co-ordinated series of surface<br />
and flush-mounting distribution panels and boards<br />
EuroLITE, lighting products advanced in technology and design, ideal for industrial and<br />
road applications, indoor and outdoor decorative installations and emergency lighting<br />
<strong>The</strong> 5 catalogues described above refer to three main areas of activity:<br />
- Domotics (20.7% of 2006 Gross Turnover)<br />
- Energy (71.8% of 2006 Gross Turnover)<br />
- Lighting (7.5% of 2006 Gross Turnover)<br />
Through its <strong>integrated</strong> <strong>electrical</strong> <strong>system</strong>, the Gewiss Group is able to offer a high level of<br />
coverage of the activities listed below which go to make up the low voltage electrotechnical<br />
segment:<br />
- Residential <strong>system</strong> 95%<br />
- Tertiary <strong>system</strong> 85%<br />
- Industrial <strong>system</strong> 60%<br />
Gewiss has achieved a sound market positioning thanks to the implementation of a marketoriented<br />
structure to develop new products whose characteristics are:<br />
- Innovation and design<br />
- Maximum safety<br />
- Functionality<br />
This result can be attributed to the ongoing <strong>com</strong>mitment to Research &<br />
Development which can be detailed as follows:<br />
- annual costs amounting to more than 4% of turnover<br />
- 4 R&D divisions specialized according to catalogues (Domo, Din, Energy and Lite)<br />
- approximately 200 full time dedicated employees (both internal and external)<br />
6
Critical success factors<br />
Strategy<br />
Gewiss, has implemented a strategy focused on the following corporate areas in order to<br />
achieve its current positioning and will continue to represent the driver for its future development:<br />
- marketing and <strong>com</strong>munication: boasts high <strong>com</strong>munication content put across<br />
using the most innovative and varied marketing tools (fairs, showrooms, working meetings,<br />
electrician training courses, etc.)<br />
- production innovation and design<br />
- sales policy<br />
- corporate efficiency: SAP, CRM, <strong>integrated</strong> logistics <strong>system</strong><br />
- high economic and financial capacity<br />
At a sales level, the recent reorganization resulted in the following structure:<br />
- sell-in: using an extensive distribution network formed of major buyer groups and<br />
consortia;<br />
- sell-out:creation of need in target market by publicizing Gewiss products through a<br />
direct sales network, educating end customers and marketing activities.<br />
<strong>The</strong>refore the local sales network has been built up and is specific to each country.<br />
Gewiss is concentrating on regaining shares of the French and German market, and<br />
more generally on increasing penetration and therefore strengthening its positioning<br />
in countries where Gewiss has been operating for a long time.<br />
At the same time the Group is aiming at increasing its level of internationalization by<br />
gaining control of new markets in the Mediterranean and Europe through partnerships,<br />
local distributors and joint ventures.<br />
Projects in China and India are of great importance since they offer significant potential<br />
both with regard to increasing turnover and cutting costs.<br />
7
Turnover<br />
Ebitda<br />
Ebit<br />
2006 Financials<br />
Consolidated Gross Turnover amounted to EUR 326.5 million, increasing by 2.2% on<br />
FY05 revenues on like-for-like basis (-0.9% net impact of the MERZ GMBH deconsolidation,<br />
disposed in December 2005). Positive contribution by the parent <strong>com</strong>pany<br />
(+2.3%) and by the other Group subsidiaries, GEWISS FRANCE SA (+5.7%) and<br />
GEWISS IBERICA (+7.7%), partially offset by the declining GEWISS DEUTSCHLAND<br />
's turnover (-14.9%) owing to the diminished clientele base following Merz GMBH deconsolidation.<br />
* IAS<br />
Euro/mln<br />
350<br />
300<br />
250<br />
200<br />
150<br />
100<br />
50<br />
0<br />
Euro/mln<br />
300<br />
275<br />
250<br />
225<br />
200<br />
140.7<br />
171.2<br />
Gewiss Group - Gross turnover<br />
by geographical area<br />
128.9<br />
132.7 142.9 139.2<br />
186.2 193.3 186.5<br />
Consolidated EBITDA, amounting to EUR 72.1 million, passed from 24.7% on gross<br />
turnover registered in 2005 to 22.1% in 2006. This variation is mostly attributable to the<br />
increase in promotional incentives and to the variation in the value added owing<br />
to supplying costs, advertising, marketing, <strong>com</strong>mercial and personnel expenses<br />
whose benefits, in terms of redditivity, will be registered in the next fiscal years<br />
thanks to higher marginality new product mix.<br />
Consolidated EBIT passed from EUR 61.4 in 2005 to EUR 51.2 million in 2006, with<br />
an incidence on total revenues amounting to respectively 18.7% and 15.7%, owing to<br />
considerable capital expenditure as per automation, moulds (Chorus) and industrial buildings.<br />
8<br />
187.3<br />
2002 2003 2004* 2005* 2006*<br />
235.5<br />
Italy Abroad<br />
Gewiss SpA - Gross turnover<br />
265.3<br />
285.1<br />
284.2<br />
294.0<br />
2002 2003 2004* 2005* 2006*
Net Results<br />
Net Working Capital<br />
NFD<br />
Shareholders structure<br />
(18/05/07)<br />
In 2006 Gewiss Group recorded net result for EUR 30.7 million (EUR 37.2 million in<br />
2005) mostly due to higher tax rate (EUR 20.7 million).<br />
Net working Capital improved, passing from 74.0 to 71.2, thanks to the increase of<br />
short term liabilities as per EUR 6.2 million, of which EUR 4.2 million related to trade<br />
payables and EUR 1.9 million as per other liabilities (payables to clients for promotional<br />
incentives and payables to personnel), partially offset by the increase of inventory amounting<br />
to EUR 6.4 million as a consequence of the creation of a stock for the launch of<br />
Chorus foreseen for 1Q07.<br />
Net Financial Debt is positive for EUR 41 million, improving by EUR 25.3 million, driven<br />
by the cash generation for EUR 51.6 million and partially offset by capex (net of disposal)<br />
of EUR 21.3 million and to dividend distribution of EUR 9.6 million.<br />
Merrill Lynch<br />
7.887%<br />
Source: Consob<br />
22nd May 2007<br />
Arnhold and S.<br />
Bleichroeder<br />
Adviser llc.<br />
7.506%<br />
Market<br />
17.600%<br />
9<br />
Bosatelli<br />
Domenico<br />
67.020%