What started with controversial press reports five years ago is now seen as a positive example for the involvement of private equity firms in Germany. Grohe AG is a successful company. In 2005, its owners TPG and Credit Suisse initiated massive changes so the firm would be able to obtain a solid position, especially amongst its international competitors.
Today, developments in recent years speak volumes: Grohe is recording strong growth and its sales and profit are increasing considerably. In 2007, Grohe generated over EUR 1 billion in sales for the first time in its history and in 2008 boosted consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) by more than 6% to EUR 216 million. At EUR 1.01 billion, group sales remained almost constant compared to 2007 despite the economic crisis, increasing its operating margin from 20% to almost 21%. Grohe has therefore been a success story for several years.
This is the result of a restructuring process that started mid 2005, transforming the entire company from top to bottom. The owners have not distributed any dividends since acquiring the company but instead carried out enormous investments to continue restructuring the manufacturer of sanitary products. Financing is secured until 2014 in the form of two bonds and cash flow has improved manifold, putting Grohe on an excellent footing for dealing with the consolidation process in the sector.
The Grohe plant in Hemer recently won the award “best production plant”. The investors also provided funds for achieving this feat. More than EUR 25 million has gone into the three German plants to date. The plant in Sauerland was completely modernised in recent years. A holistic approach was applied with workshop production being transformed into line production. Both machinery and logistics strategy were renewed with the entire organisation of the plant being adjusted accordingly. The plant layout has significantly reduced throughput times from 20 to just four days, enabling Grohe to react more flexibly to the requirements of the market and rising customer demand and achieve an even better international position. The company was chosen from more than 180 entrants with production plants in Spain, Germany, France and Eastern Europe.
In addition, Grohe invested into improving the professionalism of its sales unit and modernising its product portfolio: More than 100 new products were launched last year with even more in the pipeline for this year. As a global brand for sanitary products and systems, the company sets the standard for quality, design and technology and today employs an in-house design team for developing all Grohe products. This concept is a success, as Grohe products regularly win many international design competitions such as the Red Dot Product Design Award or the Good Design Award.
Today, Grohe is better positioned and stronger than ever. The German exporter has become a global player with German roots in recent years. The cooperation between management and owners over the past four years has once again secured Grohe’s future and is an example for the positive involvement of financial investors in Germany.