DORMA: Sharp rise in sales outpaced by earnings growth
Acquisition of new sales and distribution company in Turkey
 Düsseldorf/Ennepetal, Germany. The DORMA Group concluded fiscal 2006/07 (June 30) with a substantial increase in sales of 9.3 percent to €838 million (previous year €767 million). And there was also good news on profitability with earnings before taxes (EBT) growing by 25.4% to €62.3 million (previous year: €49.6 million). “This means that, for the second year in succession, we have posted a growth in Group profits more than double that in consolidated revenues,” declared DORMA CEO Dr. Michael Schädlich speaking at a press conference convened to present DORMA’s year-end results. The EBT of €62.3 million corresponds to a return on sales of 7.4%. Earnings before interest and taxes (EBIT) amounted to €64.3 million, yielding a return on sales of 7.7%. Both metrics were adversely affected by exceptional charges amounting to €10.1 million and a foreign exchange impact of €0.8 million. At the press conference, DORMA also announced its acquisition of the Turkish distributor Milenyum, a company able to offer a dense sales and distribution network of trade specialists coupled with excellent expertise in relation to the important project business segment that has developed in Turkey.
Encouraging growth in Central Europe - foreign sales steadily increasing
The economic environment led to encouraging growth of 8.3% (previous year +1.6%) in the Central Europe region with its core market of Germany. “A major growth driver here was the Glass Fittings and Accessories division with a rise of over 20%. However, our Movable Walls and Door Control divisions also made an important contribution to growth,” explained Dr. Schädlich. The high euro exchange rate is increasingly hampering exports from DORMA’s main site in Ennepetal and from Germany as a whole. “Germany accounts for 40% of our workforce, yet here we only generate 25% of our business,” said the DORMA CEO. The foreign share of total sales is now 75% and still rising. Revenues generated in the Gulf, Emerging Markets and Far East regions underwent significant double-digit percentage increases.
As at the end of the fiscal year, the number of people employed by the DORMA Group was 6,532, with the company succeeding in keeping the workforce numbers in Germany stable at around 2,600 employees.
Steady expansion in growing markets
The geographical emphasis of DORMA’s expansion strategy remains on the Gulf, Emerging Markets and Asia regions. At the end of April, 2007, DORMA commissioned a new manufacturing facility in Suzhou, China which is expected in the future to provide a cost-efficient platform not only for its domestic Chinese market but also for the export sector. With approx. 16,000 square metres of floor space it will be one of the largest DORMA factories in the world. A new building for DORMA Gulf in Dubai is scheduled to open for business in October 2007. The company’s growth in the Emirates particularly has rendered new office, storage and assembly space necessary. Since February, operations there have extended to the production of automatic doors and sliding glass partitions.
Increased efficiency in Germany
In Germany, the company has already acquired properties adjoining its facilities in Bad Salzuflen as a basis for the planned capacity expansion at the DORMA-Glas site. This is to accommodate the rapid rate of growth currently being exhibited by the Glass division, where revenues have increased by 20% for the second year in succession, and also facilitate further growth. Implementation of the future-aligned PREMIUM project affecting the company’s Ennepetal HQ continued to plan. A new paintshop and assembly facilities representing an investment outlay of €3.1 million have been installed at the Door Control plant. This construction phase is a major component in the PREMIUM project geared to converting the Ennepetal site into a highly modern production centre by spring 2008.
Acquisitions as a strategic means to enhancing future viability
Effective November 1, 2006, DORMA acquired MAME Türendesign GmbH of Rietberg, Germany. MAME is the German market leader in the field of surface-treated all-glass and fully-glazed doors and, through its distribution channel in the form of the timber and construction components trade, is represented at around 1,200 exhibitions throughout the country. With its 50 employees, the company generates annual sales in the region of €10m. DORMA has thus opened up the possibility of utilising a previously unavailable national and international distribution channel for its extensive range of architectural hardware products.
The formal closing of the acquisition of Milenyum came towards the end of fiscal 06/07. With a current workforce of 24 employees, this Turkish distributor headquartered in Istanbul generates total annual sales amounting to some €4.5 million. Founded in 2000, Milenyum has at its disposal a dense sales and distribution network of trade specialists as well as outstanding expertise in the important project business. “The acquisition of Milenyum provides us with an important platform of increased depth for developing the Turkish market,” explained Dr. Schädlich.
Bar again slightly raised at DORMA
The DORMA CEO sees opportunities arising primarily in the boom regions of the world economy. He also emphasised as a key factor for the Group’s success the need to continue its twin-track strategy of investing in growth markets on the one hand and, on the other, driving forward cost-efficiency in production and in DORMA’s core regions. Risks for DORMA arise primarily from a continuing fall in prices, the problem of Asian counterfeiters and rapidly rising material costs. “We succeeded in raising the bar slightly in fiscal 2006/07,” the DORMA CEO concluded and the company is looking forward with confidence to its centenary year.
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DORMA Sales by Regions
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DORMA Personnel (annual average)
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Dr. Michael Schädlich, CEO of the DORMA Group
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Headquarters of the DORMA Group
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DORMA quality check
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