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Answers |
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1 :
What do the letters SEB stand for? |
| The Company’s original name was Société d’Emboutissage de Bourgogne. (Burgundy Stamping Company). |
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2 :
Are you planning to develop online product sales? |
| For consumer products companies like Groupe SEB, statistics show that in general revenue generated via the Internet represents only a small portion of total sales. So far, we’ve focused on developing relations with retailers rather than selling our products directly online. However, we haven’t taken a position that is too rigid or dogmatic in this regard. For several years, we’ve been developing websites that provide general information about our brands and products. This has enabled us to establish direct contact with consumers around the world. In response to the increase in alternative distribution channels, we’ve diversified our networks. In 2007, approximately 10% of Group sales were generated outside stores. This trend should intensify and accelerate, possibly leading to the development of online sales. |
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3 :
Are there still products that could be invented that would truly revolutionise the small domestic equipment or cookware markets? |
The trend towards commoditisation is not irreversible. On the contrary, it has had a collateral effect, which is the growth in demand for new, differentiated products that create value for customers and may have very upmarket positioning. It’s our task to meet that demand with products that are more enabling, more ergonomic, more environmentally friendly and more attractive.
This focus on improvement has led to important new product concepts. Among our recent examples are the Actifry nearly oil-free fryer, the ultra-quiet Silence Force vacuum cleaner, the Quick & Hot instant hot water kettle, the Espressaria fully automatic coffee maker and bread makers. All of these products provide new benefits for the consumer, and while they are high priced, they have proven very popular. We are leveraging their strong sales momentum to deploy them in international markets.
So there is still considerable potential for new discoveries that could be marketed worldwide. It’s up to us to invent the daily life of tomorrow. |
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4 :
You have a large portfolio of brands. Do you intend to keep them all? What’s your strategy in this regard? |
In the highly segmented small home equipment market, our brand portfolio gives us an important competitive advantage, enabling us to cover the entire market with an offer extending from entry-level products to the most sophisticated upscale products.
In addition to Krups, Lagostina, Rowenta, Tefal and Moulinex, which are clearly global brands widely available around the world, the portfolio also includes market-leading national brands like All-Clad, Arno, Calor, Panex, Seb and Mirro WearEver. They enjoy brand recognition, and changing—or eliminating—them would be very costly and, moreover, would result in lost market share. So we have no reason at present to cut back on the number of brands in our portfolio. |
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5 :
What about Groupe SEB’s environmental performance? |
Our environmental policies are intended to reconcile economic efficiency and social responsibility. That’s why our environmental management system has embraced eco-design and eco-production as its two priority objectives.
With the exception of Seb and Tefal—two special cases with significant stamping operations—our industrial processes are generally light and have only limited environmental impact. Our initiatives focus on recovering waste, reducing energy consumption, obtaining ISO 14001 certification for our sites, and recycling and reusing scrap products.
Our Annual Report presents all our environmental initiatives in a long, clearly identified section dedicated to sustainable development. It provides detailed information about the challenges we face, our initiatives and our improvement indicators. This information is also available on our website. |
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6 :
What is the principle of the environmental tax applied to domestic electrical equipment? |
| The new directive on Waste from Electrical and Electronic Equipment (WEEE) integrates the principle of collecting and recycling end-of-life products when they’re ready for the scrap heap. All stakeholders in the process have a role to play, whether manufacturers, retailers, consumers or local authorities. The new tax in question is called the “visible fee.” Introduced on 15 November 2006 to finance the collection and recycling of end-of-life products, the fee is added to the selling price of new products. It is clearly marked (and will continue to be until 2011) so that consumers are aware of what they must pay for the recycling of a similar end-of-life appliance. It’s a set amount that varies from one product to another. The Eco-systèmes website (in French only) provides a wealth of information on the subject. |
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7 :
How is Groupe SEB’s profitability impacted by the currency effect, especially the dollar, the Brazilian real and the yen? |
The Group has constantly sought a natural balance in its cash flows, especially with regard to the dollar. Achieving this kind of balance is not really possible with other currencies, where cash flows only one way. This is the case for most of our other functional currencies, such as the yen, the Turkish lira, the Korean won, the Mexican peso and the Polish zloty.
Today, Groupe SEB is relatively short in dollars, buying more than it sells in that currency (notably for raw materials and sourced products). This creates a dollar shortfall but has a favourable impact on purchases and therefore on operating margin.
In 2007, gains on dollar-denominated costs more than offset a decline in margins (converted into euros) at subsidiaries whose functional currencies are weak compared to the euro, such as Japan, Turkey and South Korea. This resulted in a €15 million positive currency effect on operating margin for the period.
However, the potentially unfavourable effect of a strong euro on the productivity of manufacturing resources, mainly in Europe, is much more difficult to quantify. |
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8 :
Who is the Group’s largest customer? What percentage of sales does it account for? |
| Carrefour is the Group’s largest account, representing around 8% of sales. Our ten biggest customers account for approximately 35% of revenue. |
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9 :
Is the Group planning to launch operations in India? |
| India is potentially a very large market for household equipment but it currently lacks an efficient, modern retailing structure. However, things are starting to change. We are watching the situation closely in order to leverage the development of a modern retail sector and are analysing potential targets in the country. |
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10 :
How big a share of the global small domestic equipment market is held by Chinese manufacturers? |
| It’s hard to estimate because we have access to very little reliable data. What we do know is that very few Chinese manufacturers hold a significant share of their local market. Many them are specialised subcontractors, which makes estimates even less reliable. Clearly, however, for certain small electrical appliances, like filter coffee makers, kettles and toasters, China has become “the world’s factory,” manufacturing nearly all of these products. |
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11 :
What is Supor’s shareholder structure now that you’ve acquired a majority stake in the company? |
| We currently hold 52.74% of all shares, with the founders (the Su Family) and the Supor Group retaining a 36.26% stake and the public (investment funds and small Chinese investors) holding 11%. |
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12 :
Does Groupe SEB intend to increase its equity investment in Supor? |
| If we did, Chinese law would require us to launch a public tender offer for all Supor shares, which we will not do since we’ve made a commitment to the authorities to keep Supor listed. |
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13 :
Why has trading in the Supor share been suspended? |
| Following our partial public tender offer, the free float accounted for just 11% of Supor shares. For a listed Chinese company with fewer than 400 million shares, like Supor, the minimum is 25%. That’s why we’re going to carry out a one-for-one bonus share issue, which will increase the number of shares outstanding to over 400 million. Following that transaction, Supor will once again comply with Chinese securities legislation, and trading in its shares can resume. |
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14 :
What is required of a company listed on the Chinese market? |
| Companies need to have a quarterly reporting system, since financial statements must be released every three months, as well as a designated head of investor relations. The requirements are about the same as for a listed company in France. The fact that the company is listed ensures that the financial statements are audited regularly and that its investor relations are transparent. |
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15 :
Why did you choose Supor? |
| Because it’s a very attractive company. Unlike many Chinese operators, it holds strong positions in the domestic market. A very well-known brand in China, Supor is No. 1 in cookware and No. 3 in small domestic equipment. It has developed extensive skills in products that are specific to the Chinese market and has a diversified, competitive manufacturing base. Its distribution network is broad and dense, enabling it to cover a very large portion of the country. The company recently launched manufacturing operations in Vietnam, with the goal of developing its presence in the ASEAN member states. Supor represents a powerful springboard for expanding our business in China and Southeast Asia. |
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16 :
Are you planning to relocate any R&D resources in China? |
| We feel that the close ties between R&D and process engineering give us competitive advantages that obviously will be maintained, notably in France. Moreover, Supor has R&D resources in China that are adapted to specific products and to the local market, and we fully intend to keep them, but we have no plans to offshore research and development operations to China. |
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17 :
Will Supor’s integration into the Group result in plant closings in Europe, and more specifically, in France? |
The purpose of our equity investment in Supor is to enable Groupe SEB to develop in the Chinese market, not to offshore more operations. We have enough Chinese subcontractors for our business needs. There’s no reason to carry out a major transaction of this type just so we can subcontract more. So our investment in China will not result in the closing of production facilities in Europe. |
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18 :
When you announced the redundancy plan in early 2006, you said that China represented a real threat to your Group. So why are you going there now? |
| China is a very serious competitor in terms of production. It has truly become “the world’s factory” for certain highly commoditised product families. But it’s also developing extremely fast as a sales outlet. The market for domestic equipment in particular is expanding rapidly and, as a world leader, we have to develop its presence in this huge market. So the transaction provides an opportunity for the Group, enabling it to penetrate a new, very fast-growing market and to leverage production and technical resources in order to supply markets in the region. |
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19 :
Are other acquisitions planned? |
| The Group has always alternated periods of organic growth and acquisitions. We’re still on the lookout for new opportunities that may arise, especially since our financial position is solid. But there’s no hurry and we’re determined to choose our targets carefully. For that matter, US-based Mirro WearEver, acquired in 2006, and Supor in China will require a lot of energy and manpower. So it’s unlikely that we’ll make any major acquisitions as long as Mirro WearEver is in the recovery phase and Supor is still being integrated. But we will remain vigilant and ready to respond if an opportunity arises. |
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20 :
What is Groupe SEB’s share buyback policy and how is treasury stock used? |
| In practice, shares that are bought back are allocated upon exercise of stock options and possibly for employee shareholding plans. If the share price declines, we may also make other buybacks from time to time, thereby demonstrating management’s confidence in the future. This does not, however, affect the share buyback policy, which remains as described above. |
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