Management Board member, Finance (CFO), Villeroy & Boch AG
Villeroy-&-Boch-CFO Warncke: „Haben noch keine Strafzinsen bezahlt“
Mit einer Nettoliquidität von rund 58 Millionen Euro hat der Keramikproduzent Villeroy & Boch das abgelaufene Geschäftsjahr beendet. Diese so anzulegen, dass keine Strafzinsen fällig werden, stellt CFO Markus Warncke vor Herausforderungen. „Bislang haben wir aber noch keine Strafzinsen bezahlt“, betont er. Dies liege auch an dem großen Bankenkreis des saarländischen Unternehmens, der neben deutschen auch französische und luxemburgische Institute umfasst. Unter welchen Vorzeichen ein Gang an den Bond- oder Schuldscheinmarkt möglich wäre und wie sich die inzwischen fast 250 Familiengesellschafte...
Transcript (14 segments)
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Interviewer0:08
Welcome to Feiern TV. The Saarland-based ceramics producer Villeroy & Boch is a family-owned company but has also been listed on the stock exchange for many years. How to bring the various stakeholders under one hat and what the next steps are from a financial perspective, I'm discussing today with Dr. Markus Warncke, CFO of Villeroy & Boch. I'm glad you're with us in Wolfen. Mr. Warncke, the shareholder base of Villeroy & Boch is split. You have the preferred shareholders of the listed shares and you have more than 200 family members who are still involved through ordinary shares. They have a slightly lower dividend claim but also voting rights. How do you manage to coordinate this multitude of shareholders, especially on operational issues, and get everything under one hat?
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Markus Warncke0:52
For operational issues, you don't need to ask the shareholders. We are a normal public limited company. The management board runs the company, and we have a supervisory board where three family members also have their seats. The family can bring their concerns into the company through that, but it's not like we are in regular dialogue with the 150 family shareholders, ordinary shareholders.
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Interviewer1:18
You said you want to distribute around 50 percent of the operating results to shareholders as a guideline. How do you ensure that despite this mark, you still have enough left for investments and that it doesn't affect the substance? How flexible can you be, deviating from this guideline? As I said, it's a guideline, not a fixed resolution.
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Markus Warncke1:39
Villeroy & Boch has had successful growth every year. We have now increased our profit for the seventh year in a row to just under 50 million, 49.8 million euros EBIT, and we finance our investments from the operating cash flow.
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Interviewer1:56
In recent years, you've always had the issue of currency fluctuations. Last year, revenue rose to 836 million euros, up 2 percent. Currency-adjusted, it would have been 2.7 percent. You also had fluctuations in previous years, for the Russian ruble, recently the British pound, and also in China. What portion of currencies can you hedge, and where do you say you have to live with a residual fluctuation?
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Markus Warncke2:26
We are also powerless with hedging instruments there. We had a very heterogeneous revenue development. In the Bad & Wellness division, revenue rose by 6.4 percent nominally, with currency effects it would have been plus 7 percent. Strategic changes in Tableware led to a decline, which then resulted in the 2 percent nominal revenue increase you mentioned. We have foreign currency revenues in the order of more than 150 million euros. The largest amounts are the US dollar, British pound, Swedish krona, Norwegian krone, and increasingly the retail business we have there. For the dollar, we have a natural hedge in the group, so we don't need to hedge. Otherwise, we hedge primarily via forward contracts with a horizon of 18 months. The contracts are closed, and only in exceptional cases do we go for longer maturities, for example, when the Swiss franc was below parity, we hedged for several years.
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Interviewer3:34
Do you also sometimes use Eastern European currencies as a long-term financing source? You have around 50 million euros in long-term liabilities currently reported. You also have lines of over 250 million euros that are currently unused. Now, some are already seeing the interest rate turn. Are you currently thinking about refinancing or new financing with a view to the interest rate environment?
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Markus Warncke3:57
I said, not at the moment, because we have a very positive net liquidity of 158 million euros. That means with 50 million in long-term financing, we have 108 million on the asset side, which is also no joke to place so that we don't have to pay negative interest, which we don't. But that was the challenge in the past, not negotiating any credit agreements. We are observing the interest rate environment and the trend you mentioned, we see it too. At the moment, however, we don't plan to take on any further debt. We also have special projects in the real estate area that will generate income in the future. So, we are currently more on the investor side and have to see if we need more money for organic investments or acquisitions.
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Interviewer4:46
The topic of negative interest rates is becoming more pressing. Do you categorically rule out ever paying negative interest, or do you assume that you won't be able to avoid it in the long run?
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Markus Warncke4:55
We want to avoid it. So far, we have been able to avoid it. We have relatively many banking partners, which also has to do with the fact that we are in the Saarland, on the border with France and Luxembourg, and are almost seen as a home country there. We have a circle of banks that have enabled us not to pay any penalties so far. The trend of rising rates at the long end will probably also prevent it from becoming stronger and more critical. You can never completely rule out getting into a situation where it makes sense to do it before you do something illogical, but we have been able to avoid it so far.
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Interviewer5:36
There are many other forms of financing, for example, bonds or promissory notes, which would theoretically be open to you. Is that an option?
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Markus Warncke5:44
Theoretically, yes. I would rule it out for the short or medium term, for the next few years. We can do that. In the special situation where we have a chance to make a larger acquisition, we have looked at everything. We also have templates for promissory notes and have looked at bonds more closely, like a US placement, but it's not on the agenda at the moment.
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Interviewer6:09
I would like to ask you three closing questions and ask for a short answer. First, you once set a target of achieving an EBIT margin of 7 percent. At the end of fiscal year 2017, you were at 6 percent. In which year do you see the 7 percent? Second, will you obtain financing outside of the banking sector in the next two to three years? And finally, do you still own a complete set of dishes? I won't even ask where you got it from. Thank you for your assessment. That's it for Feiern TV for today. We look forward to having you with us again next time. Take care.
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Markus Warncke6:24
In three years. It is not excluded, but also not likely. Yes.