Shaping future viability
The Conzzeta Group’s business units continued to make progress in 2018. As a Group we achieved a marked increase in revenue of 20% and a further improvement in the operating result. Action is still needed in terms of evening out the results' contribution made by the respective segments.
After a very strong start, the business environment cooled off noticeably over the course of the year, particularly in China, but also globally in important industrial sectors. Nevertheless, net revenue increased once again in the second half of the year compared with the very strong second half of the previous year, although the margin declined due to a marked weakening in the Chemical Specialties segment and increasingly mixed trends accross regions and businesses.
Increasing geopolitical uncertainty
Business is becoming more challenging due to protectionist tendencies and the stagnation of political reforms in key markets. At the same time, modern technological capabilities present new challenges within a more demanding social environment. This also creates new opportunities for companies like Conzzeta.
Conzzeta is continuing to build on the four priorities established in 2016: Through consistent market orientation (first priority) and increased internationalization (second priority), Group net revenue increased by more than 50% over the last three years thanks to organic growth as well as acquisitions, with an increase of 80% in the defined growth regions, i.e. Asia and the Americas. The personnel development measures (third priority) continually strengthen our future managerial capabilities within the context of our management model. The Group-wide Business Excellence Program (fourth priority) has now been launched and the first concrete improvements were reported in 2018.
Uneven contribution to results
In 2018, profitability increased in three out of four segments, namely Sheet Metal Processing, Glass Processing and Outdoor. By contrast, there was a slump in the result of the fourth segment, Chemical Specialties The slowdown in the global automotive sector, especially in the fourth quarter, additionally reduced the result, which was already weighed down by high raw materials’ and reorganization costs.
On a positive note, the Group achieved a significant increase in profitability, excluding the divestment gain generated in the previous year. Overall, however, profitability from segment to segment is still too uneven. Measures to significantly improve profitability in the Chemical Specialties and Outdoor segments are currently being implemented.
The increasing importance of agility
Conzzeta will have to prepare for further changes in the market, which will require rapid and flexible responses at a local level. With this in mind, we implemented organizational measures in 2018. We are additionally working on increasing the scalability of our business models, optimizing our infrastructure and promoting customer proximity. We are also investing in digital solutions, both for our customers as well as for our own production, sales and management processes.
In addition to innovative solutions, lasting commercial success also requires the consideration of environmental and social aspects. In 2018, we carried out a systematic analysis of the relevant issues for the first time and documented them in the annual report.
Developing leading market positions
We are shaping Conzzeta’s future viability with the backing of our employees. We are concentrating on the areas in which we are able to develop and consolidate leading market positions with the resources available to us. This also requires a focused approach.
The divestment of the Glass Processing segment announced on January 25, 2019, is a step in this direction. The employees have worked hard and loyally to achieve an impressive improvement in results, creating the prerequisites for a successful sale. We are convinced that this step too will improve future viability – for all parties involved.
In all of our markets, we need qualified and dedicated staff with different and also local skills in order to implement our ambitious plans. They deserve our thanks for their work in 2018.
The Board of Directors also gives special thanks to Werner Dubach, who will no longer stand for re-election to the Board of Directors at the forthcoming Annual General Meeting on April 16, after 25 years as a member. Michael König, however, is a candidate with proven specialist and management experience in the global chemicals business.
Geopolitical and macroeconomic uncertainties have gained in importance for 2019. For the businesses continued after the announced divestment of the Glass Processing segment, Conzzeta currently expects net revenue in 2019 at the level of the previous year. Not including any potential one-off effects from the divestment, the operating result is anticipated to be more broadly based across the segments with a slight improvement in the EBIT margin.
Chairman of the Board