Deceuninck is determined to make profit during the running year. According to the chairman, the company which produces window profiles in synthetic materials, will make a turn for the better in the coming year.
A year ago, in the lowest-point of the crisis Tom Debusschere took over as CEO. He immediately realized that drastic measures had to be taken to find a way out of the depression.
First of all the new chief executive officer decided to close 4 factories, consequences of this decision were that 630 employees became unemployed. This is about 17% of the total staff. Moreover all the other sites were right sized. By this intervention they reached a reduction of costs for 38.3 million Euros. Debusschere is convinced that because of the lowered basis of costs, the company will make profit at the end of 2010. All of this in spite of rising costs of raw materials and the awaiting restoration of the building market. The CEO believes that also in 2011 the profit will keep on growing. This because their products offer the best possibilities to isolate houses. The rising isolation standards imposed by the government will fundamentally contribute to the sales of Deceuninck.
The reorganization within the company was insufficient to come to a change in their financial situation. In addition, they have made an appeal to a capital increase of 85 million Euros. This capital has been placed at their disposal by several banks. On the other hand we see that the company is subject to strict rules due to this measure. The banks will evaluate the financial position of the stock-listed company on a quarterly basis. The CEO underlines that they are ahead of their scheme so they are prepared for some unexpected circumstances.
Finally, another item in our story is that a dividend does not belong to the possibilities, simply because the banks don’t allow it at the moment. The credit givers expect that the available capital will be used to pay back creditors. This phenomenon will be sustained over the following years.
At first sight it’s a pity that some 600 employees have lost their jobs because of the difficulties of the company. In contrast to the latter, we must not forget that this is why the company has become healthy again and in the long term they will create new employment if they keep doing well.
As for the situation of the shareholders, we should use a long term vision. Every investor who’s familiar with the stock exchange and has a good view on the main activities and expectancies of Deceuninck knows this company is worth the investment. In the past they have already proven that they are able to gain profit in a liable way. Maybe in the future they should think about taking bigger innovative measures. I’m sure there are other products they can manufacture with the knowhow they’ve built up through the years. Maybe the stronger isolating standards set by the government will involve opportunities.
In addition to the article, I think it's comprehensible that the company gave a rather cautious guidance if we take into account that the uncertainty concerning the economical recovery and the increasing PVC-prices could cause some serious damage to the growth potential in the short and mid-term.
BeantwoordenVerwijderenWe also don't see an immediate recovery of the housing market yet. We aren't there yet because building is investing, and the latter is just what people still aren't keen on at the moment. Anyhow, I believe that when the housing and building market starts recovering, the economy will experience better circumstances and gain more potential.