Major corporate move on the horizon: Scott set to spearhead record-breaking acquisition within the company.
ARTICLE:
Schott's Acquisition of Qsil's Quartz Glass Division: A Million Euro Boost - Profit Soars
Reporting From the Ground Up
In a historic move, Schott AG, a renowned glass manufacturer, has sealed the largest acquisition in its history. On the heels of the annual press conference, CEO Frank Heinricht announced the acquisition of Qsil's quartz glass division, without disclosing the buyout price for Qsil GmbH's quartz melting operations in Ilmenau, Thuringia. Employing a whopping 275 employees, this division generates high double-digit million euro revenue for the company. Qsil GmbH specializes in manufacturing quartz glass tubes used in semiconductor components, featuring an exclusive production process.
Eyes on the Semiconductor Market
With high expectations, Schott is eyeing the lucrative semiconductor industry, alongside the vibrant AR display market. An AR production plant in Malaysia has recently seen the light of day, positioning Schott as a potential major player in the digital-analog life sphere. The mission doesn't stop there; Schott aims to dominate the fields of pharmaceuticals, astronomy, and space travel, further expanding its reach.
Financial Footings
Despite a slight revenue drop of 1% to €2.84 billion in the 2023/24 fiscal year, Schott shows resilience. While revenues grew 3% when adjusted for currency effects, operating results (EBIT) dipped by 3%. Net income, however, soared by 11% to €308 million, mostly due to a €935 million gross profit from the IPO of the pharmaceutical division in fall 2023.
Shining Moment
Reflecting on a demanding year, outgoing CEO Heinricht called the result promising. Setbacks like declining demand for household appliances, stiff competition from China, and escalating energy costs were hurdles tackled.
Addressing the waning business of household appliances, particularly Schott's Ceran cooktops, Heinricht pointed towards a sluggish German construction industry and the shifting dynamics of the Chinese market. Chinese competitors are increasingly aiming for market share in Europe and America, he noted.
Innovation: The Antidote
Headwinds are expected to persist in 2024/25, amid which innovation serves as the solution. With a fresh product rate of 31%, setting a new record, Schott is diversifying its product portfolio, launching innovative goodies that contribute 31% or less to revenue. Efforts towards digitalization and automation are also slated to help minimize the impact of the "baby boomer" generation's retirement.
Transformation Ahead
Projections for the current fiscal year aim for a 2-5% revenue hike. Given the ongoing challenges, Heinricht anticipates growth towards the lower end of this range. Schott refrained from offering an earnings forecast. While capital expenditures (Capex) remain steady at 400 million euros, Schott's global footprint boasts around 17,100 employees across more than 30 countries. The company's headquarters, rooted in Jena, Thuringia, is nestled in Mainz. Torsten Derr, currently CEO of SGL Carbon, is slated to take the reins from Heinricht in early 2025.
- The acquisition of Qsil's quartz glass division by Schott AG, a well-known glass manufacturer, is expected to boost the company's revenue, as this division specializes in manufacturing quartz glass tubes used in semiconductor components, contribute significantly to Schott's fiscal year earnings, and has generated high double-digit million euro revenue.
- With the acquisition of Qsil's quartz glass division, Schott is positioning itself to expand its reach in the lucrative semiconductor industry and the vibrant AR display market, similar to its recent move of establishing an AR production plant in Malaysia.
- Schott's diversification and innovation initiatives, such as the launch of new products contributing 31% or less of the revenue and efforts towards digitalization and automation, could mitigate the impact of the "baby boomer" generation's retirement and help Schott maintain its competitive edge amidst headwinds in the future fiscal year.
