outline history communication financials past acquisitions current and planned industrial presence...
TRANSCRIPT
Outlinewww.us.kohler.com
• History
• Communication
• Financials
• Past acquisitions
• Current and planned industrial presence
• The product ranges
• Kohler and it’s competitors
• SWOT
• Strategy
Outline• History• Communication• Financials• Past acquisitions• Current and planned
industrial presence• The product ranges• Kohler and it’s competitors• SWOT• Strategy
Electric kitchen
sink
Toilets wash-basins
of vitreouschina
1926
Completebathroom
setswith
matchingcolours
1927
Kohlerfoundet
1873
Firstenamel
bathtub
1883
One-piecebuilt-in bath-tub
1911
Brassfaucets
1920
Enterselectric
generatormarket
Startsmanufact.faucets +
brassaccessories
1925
1870 1880 1920 19301900
Kohler history in detail: industry + product development
New colours
for plumbingfixtures
1965
„Boldlookof
Kohler“ad theme
1965
Investm.in castiron
product.facilities
1971
100anni-
versary
1973
Acqui.of
SterlingFaucets
1984
Acqui.of 1st
Furnit.Comp.
1986
Salesby
1 m $
1987 1991
Vitreouschinaplantopens
in MEX
1995
JointVenture
inChina
Salesby
2 m $
1996
rapidexpansion
60 70 80 90 00
The 1990ties • Master suite concept• Product design• Innov. toilet and showers• Luxury whirlpool bath
Kohler history in detail: industry + product development
Communication
Form and Function The Bold Lookof Kohler
Art, Inno-vation, Life
Internal andexternal growth
1900 - 1920 1960´s 1990´s
Introduction of functional and technical innovations (bath, kitchen)
Establishing Kohler as a full-line manufacturer of bath products
Concern for aesthetics and manufacturing improvement
The four seasons of Kohler´s brand awakening
Form and Function The Bold Lookof Kohler
Art, Inno-vation, Life
Internal andexternal growth
1900 - 1920 1960´s 1990´s
Launch of exciting, new plumbing products in vivid accent colors withsignificant advertising campaign titled „THE BOLD LOOK OF KOHLER“
Campaign also solidifies Kohler´s culture and attitude (inside company)
Further lines followed:- Whirlpool baths in an array of shapes and sizes- Big kitchen sinks for big homes, and compact models for small apartments- Lightweight, easy to clean fiberglass shower modules- Faucets with interchangeable handle inserts
The four seasons of Kohler´s brand awakening
The Bold Look of Kohler adv campaign
Form and Function The Bold Lookof Kohler
Art, Inno-vation, Life
Internal andexternal growth
1900 - 1920 1960´s 1990´s
Kohler answers the trend towards increased luxury with it´s Master Suite Conceptanswers trend towards increased luxury (console tables + bath vanities + bedroom furnishings)
Electronics and other technological improvement as for example: - stylish toilets- faucets- water saving shower heads- innovative showering products and luxury whirlpools
As consumers spend more quality time at home, Kohler continues to meet these needs with a fresh design approach
Decorative fixtures, textured surfaces and expressive colors
The four seasons of Kohler´s brand awakening
Form and Function The Bold Lookof Kohler
Art, Inno-vation, Life
Internal andexternal growth
1900 - 1920 1960´s 1990´s
In 1984, Kohler starts an expansion program based on: - internal growth with new materials, products and markets- synergistic manufacturing facilities- direct access to new markets.
Currently Kohler encompasses an extensive business worldwide in the field of - plumbing products, cabinetry and tile - under a variety of brands
The four seasons of Kohler´s brand awakening
Kohler
„Improving the level of gracious livingfor each person who is touched by ourproducts and services.“
Mission
Kohler focus on design: • improving the level of gracious living• Stylish, lifestyle-oriented
Kohler point out a high standard of quality and manufacturing know-howthat promotes to be innovative in terms of product design (colours, materials) andaspects of comfort in the bathroom.
Kohler looks back at great advertising campaings• The Bold Look of Kohler
Communication Conclusions
Outline• History
• Financials• Past acquisitions• Current and planned
industrial presence• The product ranges• Kohler and it’s competitors• SWOT• Strategy
Turnover & Income statementExhibit 6b Kohler Co. Projected Income Statements 1998-2002 (in $ thousands, as of December 31)
1998a1999 2000 2001 2002
Net Sales 1.511.000 2.240.528 2.393.187 2.509.100 2.608.385Cost of Sales 1.125.884 1.690.366 1.780.531 1.862.103 1.933.387
Gross Profit 385.116 550.162 612.656 646.997 674.998Gross margin 25% 25% 26% 26% 26%Selling & Administrative Exp. 268.748 411.254 428.161 446.143 460.518Amortization of Intangibles 13.680 12.876 12.876 12.876 12.876
Operating Income after Depreciation 102.688 126.032 171.619 187.978 201.604
Non-operating Income (Expense) -6.299 -10.173 -10.783 -11.430 -12.116Interest Income 2.307 4.569 5.670 7.500 9.932Interest Expense 11.521 14.325 12.987 10.286 8.134
Pretax Income 87.175 106.103 153.519 173.762 191.286EBIT 6% 5% 6% 7% 7%Income Tax Expense 38.585 46.071 66.659 75.448 83.057
Net Income 48.590 60.032 86.860 98.314 108.229EBITA 3% 3% 4% 4% 4%
Source: Company documents: Management Projections Estimated turnover 2005 : 3.1 Billion $Estimated number of employees 32.000
Turnover 1997 by Group
67%
24%
7%2%
Kitchen and Bath Group Power System GroupInterior Group Hospitality and real estate Group
Structure of Business FamiliesC ha irm an and C EO
H e rb V . K oh le r Jr
P re sid e n t K itch en & B a thD a v id K o h le r
K o h le r
K a llis ta
S te rling
A n n S a cks
Ja cob D e la fon
E n g le fie ld
K a ra t
R a d a C o n tro ls
M ira
H yte c
Kitchen & Bath
M cG u ire
B a ker
A n n S a cks
Furniture
R o b e rn
C a n ac
S a n iju ra
A n n S a cks
Cabinetry& Tiles
R e s id e n tia l ge n e ra to rs
M a rin e ge n e ra to rs
In d us tria l g en e ra to rs
M o b ile ge n e ra to rs
E n g in es
R e n ta l se rv ices
G lo b a l P ow e r G ro up
Engines, generator& rental services
H o te ls
G o lf
S pa
Resort, recreationand real estate
K ohler
Outline• History• Financials
• Past acquisitions• Current and planned
industrial presence• The product ranges• Kohler and it’s
competitors• SWOT• Strategy
1985 1993 1994 1995 1996 1998 1999 2000 2001 2002 2004 2005 2006
UK
India
China
New Zealand
France
Thailand
furniture
tiles
csw
baths factory
taps enclosure
showers
plumbing fixtures
kitchen
faucets, baths, whirlpools, lavatories, toilets,showers
*
*tiles
cws
taps
bathfurniturewellness
US
Mexiko
Marocco
Acquisitions 1985-2006
Outline• History• Financials• Past acquisitions
• Current and planned industrial presence
• The product ranges• Kohler and it’s
competitors• SWOT• Strategy
CSW production located all around the world. Weakness in Europe will be
remedy with the new Russian factory
Continent Country CompanyProduction location(s)
Capacity'000 pcs /yr
Production planned
Reference cost price
Africa / Middle East Morocco Delafon Tangiers 600 6,5 €Asia / Pacific China Shanghai Kohler Foshan, Guangdong Sheng 1.800 7,5 €Asia / Pacific India New factory Baroda - 1.500 7,5 €Asia / Pacific Thailand Karat KAENG-KHOI (Saraburi) 4.000 7,5 €Asia / Pacific Vietnam Karat Song Be Thu Dao Mot, Binh Duong 450 7,5 €E-Europe Russia New factory Moskau - 1.500 9,0 €N-America USA Kohler Brownwood (Texas) 1.900 20,0 €N-America USA Kohler Kohler (Wisconsin) 900 20,0 €N-America USA Kohler Spartanburg, South Carolina 1.200 20,0 €S-America Mexico New factory Ciudad Delicias, Chihuahua - 1.500 9,0 €S-America Mexico Kohler Sanimex Monterrey (Nuevo León) 6.000 9,0 €W-Europe France Delafon BRIVE LA GAILLARDE ( Corrèze, Limousin) 400 23,0 €W-Europe France Delafon SOISSONS (Aisne, Picardie) 800 23,0 €W-Europe Spain Delafon SOBRADIEL (Zaragoza, Aragón) 700 18,0 €Total 14 18.750 4.500 12,0 €
* Reference cost price = direct cost price for SAVAL wall-hang WC in battery casting
Details on some of the non-CSW factories
Africa / Middle East Egypt Jacob Delafon Cairo Taps & mixers (Faucets)Asia China Kohler Beijing Taps & mixers (Faucets)Australia / Pacific New Zealand Englefield Glenfield (Auckland) Acrylic bathtubs and whirlpoolsN-America Canada Canac Thornhill, Ontario Bathroom and kitchen furnitureN-America USA Robern Bristol, Pennsylvania Bathroom furnitureN-America USA Kohler Searcy (Arkansas) Synthetic sinksN-America USA Kohler Spartanburg, South Carolina Fiberglass plumbingW-Europe France Sanijura Champagnole Bathroom furnitureW-Europe France Jacob Delafon Dieuze (Moselle) Synthetic sinks => to be closedW-Europe France Jacob Delafon Noyon (Oise) Cast-iron bathtubs => to be closedW-Europe France Jacob Delafon Troyes (Aube)
W-Europe UK Kohler Mira Cheltenham UK-type electric showersW-Europe UK Daryl Showers Wallasey (Wirral) Shower enclosures
14 production locations for CSWTotal capacities: Europe: 1,9 mln pcs World: 19,0 mln pcs(New plants planned: MX, RU, IN=> >5 mpc)
CSW production located in such a way, that allows a locally presence in our (future)
markets, and at the same time assure an access to low-cost sourcing
Continent Country CompanyAfrica / Middle East Morocco Delafon Tangiers 600 6,5 €Asia / Pacific China Shanghai Kohler Foshan, Guangdong Sheng 1.800 7,5 €Asia / Pacific IndiaAsia / Pacific Thailand Karat KAENG-KHOI (Saraburi) 4.000 7,5 €Asia / Pacific Vietnam Karat Song Be Thu Dao Mot, Binh Duong 450 7,5 €E-Europe RussiaN-America USA Kohler Brownwood (Texas) 1.900 20,0 €N-America USA Kohler Kohler (Wisconsin) 900 20,0 €N-America USA Kohler Spartanburg, South Carolina 1.200 20,0 €S-America MexicoS-America Mexico Kohler Sanimex Monterrey (Nuevo León) 6.000 9,0 €W-Europe France Delafon BRIVE LA GAILLARDE ( Corrèze, Limousin) 400 23,0 €W-Europe France Delafon SOISSONS (Aisne, Picardie) 800 23,0 €
* Reference cost price = direct cost price for SAVAL wall-hang WC in battery casting
Details on some of the non-CSW factoriesContinent Country Company Production location(s) Comments
Africa / Middle East Egypt Jacob Delafon Cairo Taps & mixers (Faucets)Asia China Kohler Beijing Taps & mixers (Faucets)Australia / Pacific New Zealand Englefield Glenfield (Auckland) Acrylic bathtubs and whirlpoolsN-America Canada Canac Thornhill, Ontario Bathroom and kitchen furnitureN-America USA Robern Bristol, Pennsylvania Bathroom furnitureN-America USA Kohler Searcy (Arkansas) Synthetic sinksN-America USA Kohler Spartanburg, South Carolina Fiberglass plumbingW-Europe France Sanijura Champagnole Bathroom furnitureW-Europe France Jacob Delafon Dieuze (Moselle) Synthetic sinks => to be closedW-Europe France Jacob Delafon Noyon (Oise) Cast-iron bathtubs => to be closedW-Europe France Jacob Delafon Troyes (Aube)
W-Europe UK Kohler Mira Cheltenham UK-type electric showersW-Europe UK Daryl Showers Wallasey (Wirral) Shower enclosures
Acrylic bathtubs and whirlpools(but to get out of economy segment)
Non CSW production covers all the product categories that are part of our strategy
Industrial restructuration of non profitable operations in Europe already planned
Outline• History• Financials• Past acquisitions• Current and planned
industrial presence
• The product ranges• Kohler and it’s
competitors• SWOT• Strategy
Overview Brands / Product fields
TilesTaps & Mixers
FurnituresShower TBathtubsCSW
Info about Karat uncompleted
Core business
1989
1984
1989
1985
2000
2002
2001
1873
H yte c1987
Kitchen & Bath67%
Overview Brands / Price positioning
Each brand is available through the regional Kohler sales manager
Prof.
middle
US - Canada Europe / middle east Asia / pacific
Price
Karat
upper
High end
Brand architectureCore brand
• Kohler
Main brand for worldwide use; covers entire spectrum
Regional brand
• Jacob Delafon (F,E)*• Englefield (AUS)• Karat (THAI)
• Kallista* (US)• Sterling* (US)• Ann Sacks* (US)*Regional brands withcomplete offer
Specialist brand
• Sanijura (F)• Mira (UK)• Daryl (UK)
• Robern (US)
Local brands with special offer
Kohler has long encouraged an ongoing dialogue with the art community. Kohler works with international designers and architects for:
– product development (2006, launch of 3 Artists Editions ‘Top Art Collection’)
– bathrooms arrangement, to show customers how a dream Bath from Kohler could appear (www.kohler.com).
– in the Kohler Design Center in east central Wisconsin, where they offer educational seminar series, design services, showroms with current range and a museum
Kohler wants to be state-of-the-art.
– Acquisitions of innovative companies (hightec, mira, etc.),
– Launch of innovative products, that combine state-of-the-art design with innovative technologies and take care to save water (performance flush technology, urist mirror with faucet, C3 Toilet Seats)
Kohler offers end consumers many ideas and services to arrange their bathroom to a dream space for a higher level of gracious living.
- complete bath offer
- complete bath offer
- core business tiles & stones
- complete bath offer
- Showers, enclosures, trays, brassware
Mixing valves, accessories, pumps
- Bathtubs and Showers
Hydrolux® WhirlpoolsHydrolux® Air jet Systems
- Product OverviewToilet suites / Showers / Plain baths / SPA baths / Vanities
* < 100 USD / lavatory
- Product Overview
Bath / Shower moduls and doors / wirlpools, sinks, toilets
Outline• History• Financials• Past acquisitions• Current and planned
industrial presence• The product ranges
• Kohler and it’s competitors
• SWOT• Strategy
As Kohler itself, most of our international competitors cover almost the entire spectrum of bathroom products
Source: Kohler researchLegend: X = minor weight in sales of company
XX = medium weight in sales of companyXXX = great weight in sales of company
Presence of main suppliers:by product group Power base
Bathtubs & trays
Showerenclosures Whirlpools
CeramicSanitaryware Hydrotherapy
Taps &Mixers
Bathroomfurniture
Installationsystems
CeramicTiles
Kohler N-America XX (x) X XXX X XX XX X (x)
American Standard World XX (x) (x) XXX (x) XX (x)
Duravit Europe X (x) XXX (x) XX
Grohe Europe XXX XX
Inax Asia XX X X XXX X X XX XX XX
Masco N-America X XXX XX XX XXX
Roca/Laufen Europe XX(ES/PT)
X X XXX X(ES/PT)
X(ES/PT)
X(ES/PT)
X(ES/PT)
X(ES/PT)
Sanitec Europe XX X X XXX X X
Toto Asia XX X X XXX X XX XX XX X
Villeroy & Boch Europe XX X X XXX X XX X XX
100
200
300
400
500
Europe Asia AmericaDE FR UK/IE IT BNL Sca ES/PT RU Oth
EUR JP CN IN Rest
S+OA US CA MX Rest
S-Am
Size (m€) 278 320 378 350 102 165 253 173 372 475 702 186 >700 1.209 100 124 >240 Villeroy & BochAmerican StandardDuravitEczacibasiGroheInaxJacuzzi brandsKludiKohlerMascoRocaSanitecToto
Legend: Market share (volume): > 15% Market share (volume): >2% - <5%Market share (volume): >5% - <15% Market share (volume): <2%
Ceramics(incl. sinks and
showers)
Global presence of the main competitors in CSW (2004)Kohler : Good presence in America, limited presence in Europe
15,4%
14,2%
11,0%
10,6%
8,3%
6,5%
3,0%
2,9%
2,9%
1,8%
1,4%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18%
American Standard
Kohler
Roca
Sanitec
Toto
Villeroy & Boch
Jacuzzi
Inax
Crane
CISA
Duravit
Market shares CSW - World
Total value as basis:5,2 billion Euro (ASP)
* Due to lacking data inclusive ceramic shower trays and kitchen sinks Source: BSRIA - Consult - Kohler research
* V&B incl. Vitromex, Roca incl. acquisitions 2006
World-wide shares of main suppliers of CSW* - year 2003; coverage ca. 80% of total world market
On the world ranking list, we estimate that we rank #2
21,4%
19,0%
14,7%
10,2%
3,5%
2,7%
2,1%
1,8%
1,6%
0% 5% 10% 15% 20% 25%
Sanitec
American Standard
Roca
Villeroy & Boch
Duravit
Kohler
Eczasibasi
Qualceram Shires
Jacuzzi Brands
Market shares CSW - Europe
Total value as basis:2,2 billion Euro (ASP)
*Ceramic Sanitaryware exclusive ceramic shower trays and kitchen sinksSource: Consult and Kohler research
* Inclusive acquisitions of Roca 2006
Shares of the main supliers of CSW* in Europe - year 2003 -
In Europe however we are still relatively
weak at #6
Outline• History• Financials• Past acquisitions• Current and planned
industrial presence• The product ranges• Kohler and it’s competitors
• SWOT (only Kohler team)
• Strategy
Strengths and WeaknessesSTRENGTHS• Internationality
– Industrial and market presence in 3 continents
• Strong presence in the US market in several bathroom product categories
• Complete offer for the bathroom (and Interior Design competence)– including material
diversification
WEAKNESSES• Limited international
presence of core brand• Weak presence in Europe
– Failure to enter the German market
– No success in transferring ranges from one country to another (Delafon/F vs Kohler/D)
– Specialist brands have only local presence (Mira, Sanijura)
Strengths and WeaknessesSTRENGTHS• Family owned company
(long term objectives and outlook, less short term pressure)
• Experience with acquisitions and investment minded
WEAKNESSES• Complexity of organisation
– factories– brands– countries
Opportunities and Threats
OPPORTUNITIES
• Fast growth of the Asian market will benefit to the Kohler local presence
• Ceramic acquisition or alliance in Europe
THREATS
• Concentration in industry & trade
Outline• History• Financials• Past acquisitions• Current and planned
industrial presence• The product ranges• Kohler and it’s
competitors• SWOT
• Strategy (Current)
Current strategy• Expansion of all kinds
– Geographically (Markets and production facilities)• Asia : China, India, Thailand• America : Mexico and US
– By product and material categories– for sourcing reasons
Current strategy
• Reinforcing of the core Brand and establishing sub-brands to cover all market segments– Enlarge/improve the core brand Kohler
• by taking control of the quality of our distribution in the US (Showroom programs . The Kohler Store) (US)
• Art’s involvement (Product, communication)– Other brands:
• Creation of Kallista and Ann Sacks as a luxury brand (US) • Be present in the lower segment with Sterling (US)• Use specialist brands (Europe/US)