Chairman's Statement & Strategy

Guillaume Robin

Never in the course of the past 10 years has our multi-channel, multi-market strategy felt so right. It was clearly a strong pillar of our resilience during the 2020 crisis, which was as brutal as it was unexpected. Indeed, the performance of our consumer, swimming pool, e-commerce and renewable energy businesses offset our declines in the new housing, industrial and international sectors.

Our teams have been the second and most important pillar of our resilience. They have been exemplary, courageous, responsive, committed, supportive and forward-looking when the indicators have been in a fall-and-rise frenzy.

A vital support in such circumstances, our IT specialists implemented across-the-board home-working in record time, enabling us to maintain service to our customers during lockdowns.

Finally, the quality of our stocks and the reliability of our industrial partners undoubtedly made the difference in periods of very high demand.

As a result, and despite a particularly chaotic context, we managed to increase our sales (2.6%) and net profit (10.1%) on a like-for-like basis.

With Distrilabo and Thermacome, which joined the group on January 1 and May 1, 2020, respectively, our turnover increased by 7.2% and our net profit by 11.8%. The onboarding of these two fine companies is under way, in line with our forecasts. In this respect, we would like to thank Laurence and Denis Straub for their cooperation in the handover to Anne-Sophie Bultey at the head of Distrilabo, as well as our new partner Acome for its loyal support to Thermacome, whose Managing Director, Florent Kieffer, remains in place.

In accordance with commitments made at the beginning of 2020, we do not plan any external growth operations in excess of €5 million in 2021, preferring to concentrate our resources on our many and varied onboarding operations.

Our stock level fell from 190 to 173 days of purchases consumed, a decrease that needs to be put into perspective given the unexpected increases in turnover during the second half of the year. This indicator once again underlines the prowess of our teams in an extremely volatile situation.

At December 31, 2020, our net cash position was €39.9 million, our bank debt at €39.4 million and our shareholders’ equity after allocation of profits, at €224.8 million. These figures show our excellent financial solidity.

This means that 2021 can get under way with a degree of serenity, and we are ready to manage the inevitable vagaries of the markets. The context remains broadly the same as in the fourth quarter of 2020, assuming a slowdown in sales to the general public, which cannot continue to rise indefinitely. The recovery of our export sales depends largely on how the pandemic evolves in Europe. In France, we can count on the government’s household energy subsidy MaPrimeRénov’ to compensate for the erosion of sales of accessories linked to fossil fuels and our accessory ranges, used notably with renewable energies in buildings. Our 10-year strategic plan, laid out on pages 10 and 11 of this document, has been slightly modified to show our willingness to take long-term action to protect the environment.

2020 was marked by a very sharp increase in trading volumes on our share. Also, the influx of new small investors onto the stock market, and our good results, have encouraged the arrival of new ones, whom we warmly welcome. 7,116 of you now have a stake in our capital, which is also a guarantee of our resilience. In December 2020, institutional investors held 46% of the capital, individual shareholders 40% and our employees 9%, getting close to the 10% target we set ourselves, thanks in particular to the 1% capital increase you approved at the 2020 AGM. In line with our distribution policy and aware of the very uncertain nature of the year ahead, we are proposing a dividend of €1.82, up 1.1% on last year.

Unless the pandemic forces us to repeat the digital version of this event, our AGM will be held in Lyon on April 6 at 5 p.m. at Hôtel Dieu. We are counting on your presence or your votes to exceed a 70% attendance rate, a symbolic threshold that would demonstrate the vitality of this democratic body. As far as possible, we will also organise an information meeting in Paris on April 8 at 4 p.m. at Salons Hoche.

Our strategy

Challenges 2021-2026

• Attract and hold onto talent at every level of the group.

• Promote parity in all governing bodies.

• Better understand and satisfy our customers’ expectations.

• Increase the proportion of international business.

• Foster and support internal initiatives to protect the environment and to commit ourselves more specifically by building the relevant indicators to measure our progress.

• Continue the integration process for recently-acquired companies.

• Develop our digital skills and tools so that our products can be sold via digital channels.

• Ensure the integrity of our information systems.

All about strategy

Thermador Groupe owns, controls, groups together and drives companies distributing:

• materials and accessories for fluid circulation in buildings and industry,

• large tooling for the retail and pro markets.

Our objective is to pursue growth at a similar pace to that of the past ten years whilst respecting our employees, shareholders, customers, suppliers, other stakeholders and the environment.

We continue to prioritise trust, transparency, simplicity, sobriety and conviviality in human relations, whilst continuing to be highly demanding and alert to the best possible efficiencies. We ask everybody to work well and do things properly, to ‘get it right first time’, so as not to have to do them again.

We want to offer our staff excellent working conditions and coherent, fixed earnings. Some of the profits are shared in the subsidiaries. The Thermador Groupe FCPE (mutual fund) is the Group’s incentive tool.

We expect our executives to perform highly, to be exemplary, communicate effectively and be primarily driven by the collective interest.

Our choice of opening up our capital very broadly imposes upon us the obligation of satisfying our shareholders through exemplary communication, management and behaviour, regular results and dividends, a high level of transparency and flawless accountability. We continue to pursue a determined policy to ensure that our employees and executives own a substantial share of capital.

Our model

Our model involves a high-performance information system, large amounts of stock and suitable buildings we are able to own thanks to our very solid financial structure, which we must continue to defend.

We seek to increase our sales and logistics efficiency by:

• the continued improvement of our information systems by increasing our degree of autonomy and development capacity,

• the collection, storage, analysis and exploitation of data useful to our business by adding appropriate algorithms to our information systems,

• the gradual introduction of mechanised storage systems.

The model relies on specialist commercial subsidiaries performing sales, marketing and logistics in their geographical areas, and with the customers and distribution channels agreed with their manufacturing partners. Their purchasing price and cost control policies ensure good profitability whilst keeping them competitive.

They are differentiated by:

• the stability, quality and commitment of their staff,
• taking customer satisfaction into account at every turn,
• the breadth, depth and incessant adjustment of product ranges,
• permanent, high-performance sourcing,
• product expertise in after-sales service,
• efficiency and consistency in after-sales service,
• excellence of logistics and operational processes,
• mastery of digital tools at their disposal,
• the pertinence of information sent to the market to effectively feed the digital channels,

• an ability to adapt and innovate.

Executives have substantial autonomy as to the conduct of their business activities and man-management.

Our growth

We can act on several levers to ensure our growth.

Organic growth. Each subsidiary acts on three levers to develop sales through:

• the development of market share for product ranges where it is below 30%,

• the price increases where market conditions allow it,
• extension of product ranges without ever competing with another subsidiary of the Group.

International. From France, we focus on markets that are accessible to our logistics organisation and product ranges for which we have a competitive advantage. Subsidiaries physically present abroad apply the conventional levers of organic growth.

Creation of subsidiaries. This is possible in a segment that is close to what we do already, as long as we can find the men and women to lead the project and the industrial partners to provide the basic offer.

External growth. We study opportunities by fixing a number of prerequisites: distribution companies which work in a way that is compatible with our model and our market, a proven strategic interest, a reasonable price which is acceptable to our shareholders, honesty, professionalism and commitment of the executives and management teams, 100% control of capital in time, upholding of operational excellence in the medium term. We announced a break in 2020 and 2021 on external growth operations that are time-consuming or above €5m so that our resources can be dedicated to implementing synergies and operational efficiencies.