The Tecnica Group is running ahead of its business plan, which was presented to the press in Milan last week. As we reported earlier this year (SGI Europe vol. 28 – 11+12 of April 21, 2017), the plan aims for an increase in annual sales to €500 million within five years, excluding acquisitions. It's based on the organic growth of its brands: Lowa, Nordica, Tecnica, Rollerblade, Blizzard and Moon Boot.
The pillars of the business plan, which also calls for a higher level of profitability, are the strengthening of each brand with a focus on the end user, investments in innovation to obtain “a highly differentiated product,” extra resources for digital distribution, and higher efficiencies in production and logistics.
The Italian company posted sales of €334 million in 2016 and its updated five-year business plan, which runs until 2022, calls for them to grow to €360 million this year and €380 million in 2018. However, Antonio Dus, who became Tecnica's chief executive in September 2015, said he is confident that the 2017 target will be beaten due to a good start of the winter selling season. Preliminary estimates indicate that this year's turnover will reach a level of around €370 million, up by 12 percent, compared with a previously projected increase of 8 percent. Tecnica claims that it is gaining market share, outpacing the growth of the market.
About a third of the group's revenues relies on snow conditions, implying that the performance of its winter-related business could accelerate or slow down the accomplishment of the business plan by a year either way.
Lowa, a German brand of outdoor shoes in its portfolio that is less dependent on the weather, will take the lion's share in the group's turnover this year, representing about 46 percent of sales. Nordica should come next with a share of 17 percent, followed by Tecnica with 12 percent, Rollerblade with 10 percent, Blizzard with 8 percent and Moon Boot with 7 percent.
Moon Boot has been the group's fastest-growing brand this year with a sales increase of around 50 percent, followed by Lowa and Nordica, both up by 15 percent, Tecnica, up by 11 percent and Blizzard, up by 8 percent.
By category, outdoor shoes will represent some 52 percent of the group's revenues, ski boots 18 percent, skis 16 percent, skates 9 percent and accessories 5 percent.
Geographically, Germany will contribute 25 percent of the group's turnover, the U.S. 20 percent, Switzerland 12 percent, France 8 percent, Austria 6 percent, Italy 6 percent, the rest of Europe 13 percent and other countries 10 percent.
The group's Ebitda rose to €27 million in 2016 from €21 million in 2015, aided by a reorganization of the group's brands in 2015 and 2016, which lifted their sales. The Ebitda level is expected to reach €31 million this year, according to the business plan, but the figure could be beaten.
Tecnica anticipates an Ebitda margin of about 8.6 percent in 2017 against 8.1 percent last year. The management feels that the margin could end up being slightly higher than 12 percent by 2022 - a level of profitability that the management considers being “normal.”
Tecnica expects to be able to generate a net profit this year but cannot yet quantify its size because of the impact of a recently concluded refinancing program. A few weeks ago, in fact, Tecnica reached an agreement with an Italian investment company, Italmobiliare, that has bought a 40 percent stake in the company through a €60 million investment intended to refinance the company, which was struggling with a high debt load. The exact details of the transaction were not released, but company officials indicate that Italmobiliare took part in a capital increase and in a bond issue. It also purchased shares from the Zanatta family, which continues to control the group.
Along with the recapitalization, Tecnica renegotiated its debt with a pool of banks at more favorable conditions. The management was coy about releasing details on its indebtedness but pointed out that the company's net debt now represents around 3.5 times Ebitda, so it can be estimated at €100-120 million. The net debt reportedly stood at €170.9 million at the end of 2015, and Tecnica officials indicate that the actual figure was close to this level.
Before joining forces with Italmobiliare, Tecnica had been approached by private equity firms and Chinese investors, but Alberto Zanatta, chairman of the company, said it preferred to deal with another family-owned investor, preferably Italian. He does not believe the group needs to further modify its shareholder structure until it achieves the €500 million sales threshold.
Founded in 1946, Italmobiliare is controlled by the Pesenti family. It is quoted on the Milan stock exchange and has a market capitalization of about €1.1 billion. At the end of September, it had net assets valued at €1.5 billion. The company previously controlled a large Italian cement group, Italcementi, which it sold in 2016. Earlier this week, it sold a procurement subsidiary, BravoSolution, after two years of ownership.
However, Italmobiliare has apparently pledged to accompany Tecnica for the long run. On top of a financial contribution, the investment group will provide assistance in terms of governance, management skills and industrial processes.
Tecnica does not rule out a possible flotation on the stock exchange and is open for further acquisitions, even though it is not actively seeking any at this stage. The group went on a buying spree in the previous decade with the purchase of Nordica in 2002, Rollerblade in 2003 and Blizzard in 2006, causing it to accumulate debts. It then sold two other brands, Think Pink in 2011 and Dolomite in 2015.
The company has direct sales agencies in Italy, Austria and Germany as well as sales subsidiaries in France, Switzerland, the U.S., Canada, China and Japan. Its products are made in Italy, Austria, Germany, Hungary, Ukraine and Slovakia.