Focus on increasing innovation and flexibility

The 2009/10 fiscal year saw the Plansee Group implement a range of initiatives in response to the drop in demand triggered by the global economic crisis. These included structural changes and a range of measures to improve liquidity and competitiveness. The Group’s sales fell by 22 percent compared with 2008/09, to 852 million euros, while its equity ratio increased to 47 percent. Overall, the Group’s outlook for the future remains positive. Plansee will focus on increasing its innovation activities and on implementing more flexible working practices.

The effects of the global economic crisis had already started to impact the Plansee Group’s sales back in autumn 2008, and this continued into 2009. “While the first half of the 2009/10 fiscal year saw a low business level in almost all of our markets, sales began to pick up slightly in the second half,” commented Michael Schwarzkopf, chairman of the Plansee Group’s executive board, during a press conference in Reutte, Austria to announce the annual results. At times, orders dropped by over 50 percent in certain business areas, leading to a 22-percent decrease in the Group’s consolidated sales – from 1.1 billion euros in the 2008/09 fiscal year to 852 million euros.
“In the last fiscal year, we faced the harshest conditions in our near 90-year history, and we implemented a range of initiatives to ensure that the Plansee Group can remain viable in the long term and increase its competitiveness,” said Schwarzkopf. These initiatives focused on strengthening the Group’s net liquidity (by reducing costs and working capital), managing costs in line with the decline in sales, and further optimizing the Group’s global sales and production network. The structural changes introduced aimed to improve the Group’s competitiveness and make processes more customer-oriented, by cutting lead times and reducing time to market for new products.

Plansee keeps reputation as employer of choice
“By using predominantly ‘soft’ measures to manage headcount and make full use of the flexible working practices available, we ensured that we retained our reputation as an employer of choice throughout the crisis period,” commented Schwarzkopf. The total number of people employed by the Group dropped to around 6,000 (from 6,350 the previous year).
As part of its systematic efforts to improve its liquidity position, the Plansee Group also reduced its investment budget for the last fiscal year. “Between 2006 and 2008, we invested over 400 million euros in new technology – so last year, we only needed to make investments which were essential or would deliver an immediate return,” explained Schwarzkopf. The total amount invested in the 2009/2010 fiscal year was 39 million euros.
The amount of money invested in innovations remained unchanged at around 27 million euros (3.2 percent of sales). “During the economic crisis, sales of new products (under five years old) were much more stable – a clear indication that our strategy to increase the amount of sales from new products is the right one”, Schwarzkopf says. Currently, new products account for 30 percent of sales, and the aim is to increase this further. According to Schwarzkopf, key growth markets are the energy technology, consumer electronics, lighting and mining industries.

PMG now 100-percent owned by the Plansee Group
As previously announced, since December 1, 2009 the PMG division has been wholly owned by the Plansee Group, marking the end of the Group’s joint venture with Mitsubishi Materials. Both companies decided that going their separate ways would enable them to react more quickly to the challenges brought about by the worldwide economic crisis. However they continue to use common technologies and patents. Schwarzkopf said: “Since the end of the joint venture, we have successfully restructured PMG. Now we are looking at whether PMG could become even more successful if it was more global in scale.”

Outlook for the current fiscal year
All in all, Schwarzkopf believes that the Plansee Group is well prepared for the future: “80 percent of our sales come from activities where we are one of the three leading suppliers in the world.”
All four divisions of the Plansee Group achieved an increase in sales in the first quarter of the 2010/11 fiscal year. This was driven by an increased demand from customers, sales of products aimed at new growth markets, and increased market share.
For the 2010/11 fiscal year as a whole, Schwarzkopf anticipates considerably better figures than in the last year. However, he believes that the Group should remain cautious: “There is still a lot of political and economic instability – and so we need to proceed with caution and continue to increase the flexibility of our company structures. This will ensure that we can react even more quickly to future fluctuations in demand.”
Key investments in the current fiscal year include the installation of the first production line for high-temperature fuel cell components in Towanda, Pennsylvania, and the opening of a new facility for automotive components in Shanghai, China.
Schwarzkopf also announced that the Group is set to increase its activities in China and India to profit from the dynamic growth in Asia, either through organic growth or acquisitions. Activities are also planned to further secure raw materials supply.

The Plansee Group
In the 2009/10 fiscal year, the Plansee Group employed 6,000 people worldwide and realized consolidated sales of 852 million euros. The fiscal year ends on the last day of February.