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Day 4 - IFA International

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at w w w.ifa-international.org KEyNOtE rEVIEW DE’LONGHI fOrEcasts sPEctacULar GrOWtH “LOOKING tO tHE fUtUrE, WE INtEND tO acHIEVE 5%-10% GrOWtH” By Gary Smith De’Lohngi Group CEO Fabio de’Longhi At his keynote speech on Saturday, DeLonghi Group CEO and Vice- President Fabio De’Longhi revealed the reasons behind the spectacular growth of his company: “At root, we are a company that is always changing and evolving because we all believe that to survive you have to re-invent your company every day,” he said. “And it’s a philosophy that has turned a small family-owned business employing 320 people in the 1970s into an operation that now has offices in 24 countries, 6,500 employees, five factories, a stock market listing and a 2008 turnover of €1.2 billion.” The company is now the world’s number one Download Podcast Download Video at w w w.ifa-international.org manufacturer of oilfilled radiators and the European N o 1 in portable air-conditioning and food preparation (through Kenwood). It is also the global number one manufacturer of espresso machines. This has all been achieved thanks to a relentless drive that made full use of the strong industrial culture in the family factory. “Building on the know-how that we already had and given the oil shortage at the time, we started making electric radiators,” continued De’Longhi. “But we quickly realised that the product cycle was a kind of trap in that we would be making the radiators starting in January and then you’d spend the whole year selling your inventory. Despite this, the company had a turnover of €10 million by the end of the decade.” In the 80s, the company expanded its product range with the Pinguino portable air-conditioning and focussed on building the brand through a high profile Formula 1 sponsorship, which put the brand on the map internationally. It also transformed the airconditioning market forever. “Previously, the airconditioning market had belonged entirely to installers, but by building a portable unit we broke that monopoly and awareness of the brand on the international market grew significantly as a consequence,” said De’Longhi. “So by the end of the 80s we had reached a turnover of €370 million and the number of employees had more than quadrupled to 1,400.” As a result of the success of the Pinguino, De’Longhi felt the need to create an international distribution network. “It was time to start opening offices abroad and so we started with the US and Mexico in 1986 and it’s something that we’re still working on. In 2009, we opened offices in Portugal, Brazil and Poland to bring the total to 24,” he said. Alongside the development of the international distribution network, the company brought the Alfredo oven to the market and its first espresso machine. Behind the launch of the coffee-maker lies an unexpected drama. “We thought it would be a good idea to acquire some expertise so my father bought an espresso machine maker,” he said. “It was a Friday when my father made the deal but by the Monday we realised that we would be obliged to sell the company, because all the company’s customers said that if we acquired it, they would no longer buy its products. So had to start from scratch but in the end, that was no bad thing.” By the end of the 90s the company was employing 2,000 people and had a total turnover of €550 million. It also had a significant global footprint. “The start of the 21st century was very important for us because we were listed on the Italian stock exchange and in 2001, we bought Kenwood which gave us a huge opportunity in kitchen appliances,” De‘Lohngi said. “We were also faced with the collapse of the dollar, which obliged us to relocate some of our manufacturing to China and that affected the way that we did business. We partnered with TCL in order to market and manufacture air-conditioning units for the Chinese and Asian market. We also got together with Nespresso and both joint ventures have been very fruitful.” In 2008, the company had a turnover of €1,2 billion and now employs 6,500 people globally. “Since relocation it has been the supply chain that we consider to be the most important element, alongside a meaningful regional presence and customer-centric organisation,” De'Longhi said. “Looking to the future, we intend to try to achieve 5-10% growth in revenues year-on-year and we will be trying to reinforce our leadership positions in various product categories. Alongside that we will be working hard to improve our position in the kitchen and ironing categories. We are also looking at new categories but we will not be moving back into large domestic products. We stopped doing that and we won’t be going back. But you might see some acquisition activity in the not so distant future.” Hall 6.1 / Stand 101 IFA International • Monday, 7 th September 2009 www.ifa-international.org 7

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