German quality and German engineering enjoy an excellent reputation throughout the world. They are among the most important success factors for German companies operating on an international scale. Grohe AG, Europe’s largest and the world’s leading supplier of single-brand sanitary fittings, relies on innovation and quality “made in Germany” at all its worldwide locations – and quite successfully so. Following on from the new sales and earnings records marked in 2011, this successful performance continues in 2012.
2011 a successful year for the Grohe Group
Since July 2011, Grohe has held a majority share in Joyou AG through Joyou Grohe Holding AG, a joint venture in which Grohe holds 50.1 percent. In the financial year 2011, the Grohe Group (Grohe, Joyou) increased its consolidated sales revenues by 19 percent on the previous year to EUR 1,165 million. Even excluding Joyou, GROHE generated record sales of EUR 1,020 million in 2011, compared to EUR 980 million in the previous year.
In Germany, Group sales revenues increased by 11 percent. The strongest growth was achieved in the Asian market. The Group’s adjusted EBITDA rose by approx. 16 percent to EUR 232 million in the past financial year.
While the market as a whole was flat, the company boosted its consolidated sales revenues by 29 percent to EUR 345 million in the first three months of 2012. EBITDA amounted to EUR 69 million, while the sales margin again reached 20 percent.
Financial flexibility managed professionally and pro-actively
Thanks to professional cash management, Grohe has consistently improved the day’s sales outstanding and the day’s payables outstanding. This has helped to create a comfortable liquidity position which allows to respond flexibly to market requirements. This year, Grohe has again pro-actively increased its financial flexibility and successfully placed a secured EUR 375 million bond maturing in May 2017, with institutional investors. The funds were used to fully redeem the EUR 300 million bond issued in 2007, which will mature in 2014, and to redeem EUR 75 million of the EUR 335 million bond issued in 2004, which will also become due in 2014. With this refinancing, Grohe has successfully expanded its debt maturity profile.
“We have a healthy balance sheet structure with an equity ratio of over 50 percent and can rightfully say that we are excellently positioned,” said David J. Haines, CEO of Grohe AG. “Our sustainable growth strategy provides for further market share gains and a stable financial development.”
First anniversary of joint venture with Joyou
The first year of their joint venture was a great success for Grohe and Joyou and has redefined the strategic importance of Grohe in the water technology market. Grohe is able to expand its market leadership in Asia and to increase its growth opportunities thanks to improved access to the Chinese market.
The Grohe portfolio is characterised by a high percentage of innovations and young products. This strategy is paying off, as products that are younger than five years account for 52 percent of the company’s revenues. Accordingly, research and development play an important role and are constantly pushed ahead. Moreover, the products’ time to market has been reduced significantly, allowing Grohe to always launch the latest technologies and set new trends.
Responsibilities of the German plants based on product categories
Grohe has customers in over 130 countries and a global production network comprising six plants. About 60 percent of the finished products are made at the German plants. At the beginning of the year, the plants were placed under central management to ensure better coordination of the production activities. Moreover, the responsibilities of the plants are now based on product categories instead of technologies. This will facilitate both process management and communication with the relevant interfaces. Moreover, the capacity utilisation of the plants will be increased and synergies be improved. All told, this will help secure the German plants in the long term.
Grohe innovations “made in Germany”
Germany sets the quality standards for all Grohe plants in the international production network. It is the German plants which provide stimulation and drive innovations. Germany lays the basis for the Grohe standards that apply throughout the world. All innovation processes are launched and coordinated here; all products are developed in Germany and designed by the Grohe Design Studio in Düsseldorf. Germany is home to the research and development centre in Hemer and to the Lifetest lab in Lahr. This is where all new products are tested in complex testing procedures that go far beyond the relevant industrial standards. The plants’ specialisation in product groups will also strengthen their function as centres of competence in the global production network. All this is underlined by the company’s new “Made in Germany” quality seal. The latter is designed to make it easier for retailers, installers and consumers to understand the Grohe quality and to appreciate the benefits of the company’s innovation and production processes.
The key success factors include the high demands Grohe makes on its products. Quality, design, technology and sustainability are the core values of the brand. This is one of the reasons why Grohe is an active member in the fight against plagiarism. Grohe therefore cooperates closely with local and customs authorities and has recently helped to seize and destroy thousands of counterfeited products in the United Arab Emirates and China, among others.
New international brand campaign
This year has seen important innovations at Grohe not only in manufacturing but also with regard to the brand strategy. A new 360 degrees campaign will provide inspiration and make people curious to try and experience the innovative and unique products. This is the first time in the history of the company that Grohe will use TV advertising. The commercials will be shown not only on TV but also on social networks, video portals such as YouTube, the company’s own and its partners’ websites as well as on monitors in retailers’ shop windows and showrooms. Berlin-based agency dieckertschmidt has produced four commercials starring the Allure Brilliant faucet line, the Grohe Rainshower® shower systems as well as the Grohe Blue® and Grohe Red® kitchen systems. Custom-composed for Grohe, the music ideally conveys the emotions of the commercials.
The large-scale campaign will be flanked by print and online advertisements as well as the redesigned Grohe website. While the main focus is on the European core markets – Germany, the Netherlands, France and Belgium – all elements will be used by other Grohe countries in accordance with their local requirements.
“Our campaign will make it even easier for people to relate to the Grohe brand,” said David J. Haines. “The idea behind it is that every innovation started with an inspiration. This is also true of our products, which allow everybody to create the bathroom of their dreams.”
Friedrich Grohe established Grohe in 1936. Grohe is German manufacturer of sanitary fittings, including kitchen and bathroom faucets, and shower systems. Since its establishment Grohe has continuously built their reputation for unrivalled quality, superior design and impressive technology. With a history of technological advancement, a renowned in-house design team, and a customer promise with regards to quality that has stood the test of time. Eight decades down the line Grohe is now a multi award winning brand. Having won numerous awards such as reddot, IF and Good Design. All of these thanks to their great innovations in the industry.