“A year of
Interview with Edwin Eichler, Chairman
of the Board of Directors, and Clemens Iller,
CEO of SCHMOLZ + BICKENBACH.
Mr. Iller, how did you find 2018?
Clemens Iller: It was a bit of a mixed but ultimately good year. The highlight was undoubtedly the acquisition of Ascometal early on in the year. The favorable economic environment, especially in the first half, played into our hands from an operational point of view. And thanks to the solid foundation on which the Group stands today, we were able to raise adjusted EBITDA, our key metric, by 6.3 %.
How is the integration of Ascometal going?
CI: We have made good progress and are on track. Our main focus during the reporting period was on stabilizing business in the wake of the uncertainty caused by the bankruptcy and on recruiting new management. Only after that was dealt with were we able to get started with the company’s effective integration. Ascometal has been operating as an independent Business Unit within the Group since February 2018. It was integrated into the Group’s systems, processes and platforms at the end of 2018, with most changes and adjustments going smoothly. We have since started to implement the industrial concept – which also involves investments of several million euro – on schedule and in keeping with our strategy.
Mr. Eichler, how does the acquisition of Ascometal fit into the Group’s strategy?
Edwin Eichler: The acquisition is the third of a four-phase strategy that was approved by the Board of Directors in 2013. The first phase involved securing the Group’s financial survival. The second phase was all about restructuring the company with the aim of making it more powerful, agile and efficient. This created a solid foundation for future growth. In the third phase – which includes the acquisition of Ascometal – we aim to contribute to the long overdue consolidation of the European special long steel industry by making acquisitions that make sense.
What do you mean by “make sense”?
EE: In this context, acquisitions make sense if they lead to achievable, effective and measurable synergies, the company targeted is a good cultural fit for us, and – most importantly – the purchase price is reasonable and financially feasible. In the fourth phase, we now have to ensure the Group remains profitable in the long run and generates value for all stakeholders.
What do you mean by “value”?
EE: For shareholders, value means a rising share price and the prospect of a dividend being paid out in the medium term. For our customers, it’s all about being able to get the right products at the right time and at a fair market price. And for our employees, the greatest value lies in a high-quality workplace and a competitive salary.
Our employees, for their part, are also responsible for creating value.
CI: That’s right. Each employee is a value creator in his or her own field. We bring this across in this annual report using a wide range of examples. Presenting our employees as value creators is also a sign of how much we appreciate them.
“We would also like to extend our thanks to our employees, who work for the future success of our Group on a daily basis.”
You referred to 2018 as being a bit of a mixed year, Mr. Iller. Which aspects were especially important?
CI: We continued to work on increasing our efficiency by introducing, harmonizing and streamlining processes. These include the rollout of a new Customer Relationship Management (CRM) system that enables us to provide our customers with better support. Another important aspect is the progress we made in terms of sustainability. We give a well-structured report of this in this annual report in accordance with the Global Reporting Initiative (GRI) standard. Topping up the EUR 150 million bond also proved to be a challenge in the first half of the year. In geographical terms, we reinforced our presence in South America by opening a Sales & Services location in Colombia.
Were there any negative sides to 2018?
EE: Yes. Our North American Business Unit Finkl Steel found itself in choppy waters. The trade disputes and resulting punitive tariffs also proved to be more of a challenge than we cared for. But, we were able to steer the Company through these trade disputes in the reporting year with practically no damage.
How did you accomplish this?
EE: Well, there’s not much we can do to directly influence political issues. But we did bring our influence to bear via politicians, industry associations and in direct dialog with the authorities, and drew their attention to the potential consequences. That was undoubtedly necessary. On the whole, we prefer to rely on our own strengths, however, as this is the only way we can improve in operational terms, which ultimately increases the Company’s value. Unfortunately, the market has not yet rewarded the progress we have made with a higher share price. It is now up to us to make our equity story as attractive and coherent as possible in the fourth phase, so that the Group’s performance also translates into a higher share price and enables us to resume paying dividends.
What are you focusing on over the next two to three years?
CI: One of our main tasks is implementing our industrial strategy in the wake of the acquisition of Ascometal. We have set the course for strengthening our market position over the medium to long term. We now want to exploit this opportunity, while not making the mistake of believing that the integration is already completed. Combining processes, systems and platforms is one thing, but changing people and their mindset is quite something else. We will certainly be occupied with the latter for a few years to come. Alongside integrating Ascometal, we aim to boost efficiency and profitability, and further increasing our commitment to sustainability.
EE: We will resolutely drive forward the key elements of our strategy and in so doing create added value for all stakeholders. What’s more, we have to face up to the rapid change under way in the steel industry. Take digitalization, for example. We will push forward with digitalization and the associated transformation both internally and externally so that we also remain competitive in future, always with the clear objective of substantially and steadily raising the value of SCHMOLZ + BICKENBACH.
What is your closing message, Mr. Eichler?
EE: I hope we can continue to count on the support of our shareholders during this key phase of our Company’s development. I would like to take this opportunity to thank them on behalf of the Board of Directors and Executive Board for the confidence they showed in our Company in 2018. We would also like to extend our thanks to our employees, who work for the future success of our Group on a daily basis. And last but not least, we want to thank our customers and business partners for the good and long-standing working relationship and the trust they have placed in us.