At a press conference yesterday, Tony Langley, Chairman & CEO from Langley Holdings PLC outlined the reasons for acquiring manroland sheetfed company and the future direction of the company. Sabine A Slaughter reports from the event that shed further light onto the German press manufacturer's future.
"After just 4 weeks, we are delighted with our investment. We have experienced no particular surprises and the ones we had have been good ones", explains Tony Langley. "It is very early days yet", he continues. "I'll be here (at manroland sheetfed in Offenbach) regularly, weekly. We get very close to businesses that we acquire. We understand our businesses."
"I prefer to be called an industrial parent and tend not to use the expression investor or entrepreneur, the term industrialist with a vision for profitability meets it more. The industry is what it has been about the last 35 years."
What were the reasons for you to acquire manroland sheetfed and do you see synergies with your existing businesses?
Tony Langley: In our analysis of manroland, they scored 8 out of 8 points. Manroland reflects the type of business that we are in. We are looking at clearly defined criteria as to the type of business we acquire. It has to have a certain size and needs to be located in Northwestern Europe. This is for manageability - get time and spend time with the business on a regular basis. So a core need is that it is to be within a two hour radius of London. We came into this business eyes open and we hope to buy a profitable business. We engage in capital equipment. I try to look at it as my field. Others of the eight criteria are that the company is 100 % available, is engaged in capital equipment and is leading or holds a strong niche market position and has one or two principal locations. We define manroland sheetfed to be in a very strong niche market position. The company needs stability and a long looking perspective and we are willing to commit to our long-term investment. All our other takeovers were non core businesses from companies that wanted to divest. manroland sheetfed is the first major corporation that we take over.
I consider manroland sheetfed a good investment and am very happy with it. The production facility here is part of our forward looking strategy in the service and heavy metal manufacturing business. At the moment only 25 to 40 per cent of capacity in terms of real estate and facilities is used. The utilisation is at 90 % and when we see increasing demand for machines, we require no further investment in real estate etc. The only investment we would have to take is in people - manpower.
Synergies with existing businesses have not been a consideration for acquiring manroland sheetfed. If and when we discover those, we naturally will explore those in the future. For example there could be synergies in terms of common purchasing, manufacturing. If and when there is more than one subsidiary in one country we look closely at synergies and will try to combine them.
What kind of measures have you been taking since you acquired the company four weeks ago?
Tony Langley: We have been introducing a medium sized business management style that gives us a good size and will help us return to profitability and into black numbers as early as 2012. We have moved manroland sheetfed from an institutional management style more to a so-called "Mittelstand" management (medium sized business management). There is no secret in what we do - apply a money test, turn over every stone. This is time consuming but it is still early days and we have found tremendous support on that. We have received a tremendous amount of good will from everyone. My impression of the employees is excellent and I've been overwhelmed with positive responses to the takeover.
If you could summon up business wise for manroland the last four weeks, what can you tell us about them?
Tony Langley: In the last four weeks, new orders have been in line with expectations. We are not expecting a huge amount of order intake at this point as we think about the drupa effect that will trigger new orders. A number of prospects, that were waiting for outcome of the talks about manroland, have ordered their presses now. We did not lose any business as a result yet.
What are your plans for the near future?
Tony Langley: In the next two months we will review those cuts that were made. We are quite comfortable with the structure that exists. We will review the structure further and we have a good model and a good size. However we will examine the model for the headcount we have now as business progresses. in the foreseeable future we plan to do no more restructuring or give uncertainty. We plan on stability.
What does a good size mean to you?
Tony Langley: We have a headcount of 1,000 employees at manroland sheetfed in Offenbach. In addition the sales and marketing organisation oversees has about the same headcount. The overseas distribution, sales and marketing is located in 40 subsidiaries all around the world and were until the acquisition representing the sheet and web business from manroland. In future, it is our expectation that the companies we've acquired will be represented by those. An exception are the distribution and sales channels in Australia and India that were acquired by Possehl. Here we have not yet finalised an agreement with Possehl yet, but in principle that is what we conclude.
You are know to stand by your companies and decisions...
Tony Langley: Yes, it is true that once we engage ourselves we will stand by it. This is our principle. We are not a Venture Capital organisation. We do not leave businesses, we invest in value as they put it. I told the employees that it is the start of a new year and a new start for the company. We do not invest in a new area and then sell it off again.
You said you are expecting black numbers for 2012?
Tony Langley: Our assumption for the first year is based on a low level of capital orders that expect to continue in 2012. Our guidance stays at 350 to 400 million gross income in 2012. We don't expect this to go on in the coming years. There will always be demand for offset presses. What we see right now is the recession and finance agreements etc, that reduces the demand. We expect a high demand for our equipment from emerging markets. Our customers need to have confidence and credit and we are going to see that as early as this year. Growth in packaging in the developed world as well as the demand from emerging markets will drive the business. Onslaught of digital media is a fundamental problem for capital equipment today, but it is only a contributing factor. Collapsing confidence and availability of credit are the main factors that prevent investments.
When you say there will be much demand from emerging markets would you also consider manufacturing in those and how do you define emerging markets?
Tony Langley: Emerging markets are the BRIC states, but also other areas such as Africa, South America etc. I do not see the need to produce in emerging markets as they want to buy German made products. There are many places in the world we are not present yet and we will invest in market development where there are markets. I am very optimistic from the prospects right now. We do not talk about where the industry came from, but talk about where it is going.
We do not see any necessity and do not have any plan to change the position or perception of manroland historically. It is a company that is over 150 years old and I am quite happy with the position the brand has. It enables our growth in existing markets. We are calculating with conservative growth - the biggest growth is from coming out of recession. In the long-term we are targeting a reasonable growth and there are two balances that influence it.
There are rumours that you are interested in acquiring manroland UK..
Tony Langley: I confirm that these are more than rumours. We are willing to buy, an agreement with the administrator is outstanding currently. However these things take a bit of time.
The current product portfolio of manroland sheetfed covers many sizes from small to big. Will there be changes in the portfolio?
Tony Langley: We will not stop manufacturing presses for any format. The 50 format is available although it is the one that hurts most from digital. There are niche applications that still require small format offset presses. All products are fully developed products and it really doesn't make a lot of sense not to offer them. Over time we will analyse the portfolio and our decisions will be based on volume of demand. The business requires a long-term strategy and we are committed to it.
The printing industry is transforming itself towards digital offerings and printing. Do you plan likewise?
Tony Langley: This is a topic for our R&D department and is part of the future. We are definitely going there too.
Drupa 2012 is just round the corner - what can be expected from manroland sheetfed?
Tony Langley: We will be exhibiting full scale at drupa. Together with Possehl we will have a 2,000 sqm exhibition space that will be split evenly. All we can tell you at the moment is that we will be exhibiting a Roland 708 for packaging with new features. Further exhibits will be announced at a later date.