Nailing a profit
Following its recent purchase of the Scottish firm Rawlplug, Koelner has set its sights on conquering the Western European market.
Koelner is a family business that evolved from the hard work and determination of one person into a European, bourse-listed leader in its sector. What is now a big capital group started out when the parents of the current CEO, Radosław Koelner, lost their jobs during the martial-law era and had to use their own resources to make ends meet.
Now, the Warsaw Stock Exchange-listed fittings and fixtures producer plans to become the European leader in the industry and, with the boom on the construction market and the company's consistent expansion policy, it looks likely to succeed.
Apart from its activities in Poland, the company has a number of branches in both the CEE region (including the Czech Republic, Romania, Bulgaria, Russia, Hungary and Ukraine) and Western Europe, where its presence and distribution network considerably improved after Koelner purchased the Scottish fittings-producer producer Rawlplug.
Empire building
The company is also expanding its operations in Asia. "Branches that we opened this year are located in Almaty, Kazakhstan, and Dubai. The United Arab Emirates is one of the world's biggest markets for fixings and tools," Radosław Koelner said during a press conference at which he announced the company's development strategy until 2009, and presented its European Leader Project 2015, aimed at turning Koelner into the most modern fittings-producer producer in Europe.
"The European Leader Project is related to research and development. Now, we spend some zł.3 million annually on R&D. We want to be the best, not just when it comes to one or two products, but in the entire offer," Koelner announced.
The company's target is to post sales revenues of zł.930 million and a net profit of zł.96 million in 2009. To that end it has earmarked considerable sums for its investment plans. Kamil Kliszcz, an analyst at DI BRE, is optimistic about the realization of the scheme. "Looking back at the former achievements of Koelner, it seems that the company should keep up the dynamic growth and the planned investment outlays will help them to meet the financial prognoses," he told WBJ.
Radosław Koelner announced that the minimum investment outlays until 2008 will amount to some zł.120 million, but in order to keep up the tempo of development, the company will need to reinvest up to zł.250 million for the three following years.
Production boost
The bulk of this year's investments will go into the intensification of production both in the Polish plants and Rawlplug's Glasgow factory. "The key to our development is boosting production in Wrocław, Glasgow and St Petersburg. If the takeover of rubex goes through, then we'll also increase production there," Koelner explains.
Koelner already owns a 20-percent stake in rubex, but it is interested in fully taking over the WSE-listed firm in 2007. "The only possible way of taking over rubex is its full incorporation into the Koelner group. Other methods are out of the question. We believe we're an attractive enough partner for the shareholders to agree," Koelner said.
Analysts are optimistic the transaction will go through. "Surely Koelner has a lot to offer rubex's shareholders. rubex would develop much faster as part of the Koelner group than on its own. They've only just started to try to change their products so that they can compete better with Chinese production, but the company is not in good repair," said Kliszcz.
If the deal is finalized, Koelner will move part of its production from Wrocław to Łańcut. The company will also invest zł.15 million in the development of its new acquisition.
Future investments
Apart from the tie-ups in Poland, Koelner is also planning to buy a production plant in Germany for EUR 5 (zł.19) million in Q1 2007.
In order to finance its investments, Koelner will conduct a share issue in January or February 2007. "The share issue will not exceed 10 percent of the current number of shares. It will be addressed to qualified investors only," Koelner said. The details of the share issue will be announced by the Supervisory Board on December 15. Soon after the issue is finalized, Koelner will start negotiations with rubex.
Koelner manufactures some 20,000 different products sold under such brands as Koelner, Rawlplug, Rawl, Globus and Modeco. The group's sales revenues in 2005 amounted to zł.241.3 million with a net profit of zł.27.9 million. After three quarters of 2006, the company's revenues reached zł.307.5 million and net profit equaled zł.32.9 million.
Koelner
CEO: Radosław Koelner
Strengths:
-Extensive development strategy
-On track to meet strong financial prognoses
Weaknesses:
-Strategy calls for significant investment
-rubex takeover has yet to be finalized
