"Natural stone activities have definitely gone global"
Cipriano Gómez, CEO of Grupo Levantina: "This deal is a trendsetting landmark in the course towards the strengthening of the industry"
Currently faced with further challenges, Cipriano Gómez, new CEO of Grupo Levantina, knows thoroughly well all the ins and outs when it comes to achieving his goals. He does not hesitate to define the recently completed transaction as "an exceptional industrial plan that allows us to have a veritable - and much-expected - global leader among Spanish companies". An international viewpoint seems to be one of the particular traits of the CEO as "steady growth rates are a must and there is much more than Spain in world markets", and the first step to realise this state of affairs is to consolidate as a single company. Dealing with the troubles of the everyday working life, carrying out complex procedures and the issue of how to achieve a dynamic involvement in trade bodies are some of his own personal factors that "reveal how demanding is the challenge at Levantina and also explain the need for a full-time commitment".
We could say, broadly speaking, that a highly signifi cant transaction has been completed. When did you entered the project?
Cipriano Gómez: I didn't come in until the final stage of the transaction. I actually joined the project in January and the plan - as far as technical sides are concerned - was completed on May 5, so although I didnt have the chance of having a role in the most important chapters in the transaction, I am indeed informed of the way procedures evolved The deal is said to be the most important venture capital initiative of those carried out in Spain in 2006.
Could you tell us about its development?
It is widely known that venture capital firms raise and manage funds that will be placed in selected companies. These companies are chosen according to their growth potential and their short-to-mid term latent values. Grupo Levantina was constituted as an assemblage of companies whose common factor was their shareholder structure (composed of families from the Spanish Levant and Galicia). Capital firms were attracted both by the conglomerate style of Grupo Levantina and by the excellent prospects entailed in that organization. Parties started negotiations and quickly reached a sense of cooperation as there were solid fundamentals in the corporate and industrial respects. Just one year later, talks came to a successful conclusion.
So, what is the shareholder structure resulting from the agreement?
The share capital is held by two venture capital fi rms and a minority shareholder group made up of those former owners who decided to invest again in the firm.
What about figures?
In terms of corporate value the transaction amounts to about EUR 500 million. In 2005 sales rose to EUR 340 million and the Ebitda was EUR 78 million on a pro forma basis.
What are the challenges for the future?
We are moving on several fronts. As for financial field and back office functions our goal is to act as a single company. Accordingly, we need to introduce common IT systems, identical patterns for accounting and management functions and a uniform cash flow model as well. And this takes time. The second "big challenge" is to work out the best way to complete the merging of the companies included in the agreement. Moreover, we have to build and coordinate our new operating structure with a sales network to be designed a new under unified management. Concerning production details, we have also devised a single structure for both the marble and granite areas. In a manner of speaking, the scheme of our corporate organisation has been topped off and clarified.
Do you think you were faced with the most complex set of measures to be taken to date?
Designing plans is easy but putting them into practice is the hard part. Carrying out corporate and industrial functions according to plan is a rather difficult task. However, we have made much progress, partly because of the fact that market conditions are currently favourable. For the time being, this has allowed us to work calmly without much pressure.
Beyond these practical measures, what are your corporate strategies as a group of companies?
Our most relevant intent is to become a genuine global company. We want to be able to be a global manufacturing company with international suppliers. Consequently, widening our commercial structure and strengthening our warehouse network are among our priorities when it comes to achieve that global quality. Additionally, the launch of "Technoclassic", the new product range part of our brand Naturamia - a combination of ceramic and marble items - should act as technology and growth assets to push our products into the ceramic product market. This launch provides our company with huge possibilities.
The new Group controls a significant market share in the Spanish natural stone industry. How did the industry receive the deal?
I think this deal is a trendsetting transaction. Natural stone activities have definitely gone global. Supplying resources and demand niches are found all over the world. Our merge has set up a streamlined organization, whose strong financial muscle allows us to develop the kind of corporate agreements that smaller-sized companies might not be able to perform. In my view, our transaction should be seen as part of an overall consolidation trend. As a business deal, our merge is an exceptional agreement that enables us to confirm how unusual is the fact of having a global leading firm among Spanish companies.
What will be the Group's market share in Spain?
The Group will post a market share of around 15% in the Spanish market and will have a 1% share in the world industry. Although we are still far from results achieved by companies operating in other branches of activity, the case is that our course has just started and besides the chance to carrying out a stimulating industrial project, there are many financial opportunities and corporate growth niches ahead for our company.
And how did markets abroad perceive the transaction?
Well, it is the sign of the times. Consolidation is everywhere and such a global-sized industry as the natural stone sector could not be unaware of that trend.
What are your projects in the international scene?
When we look at foreign markets, we are also faced with several challenges. We are aimed, for starters, at strengthening our market position in the United States, which is our second largest market. The Chinese market is ranked third among our most signifi cant customers and it is a challenge as well. We should not forget that India is a strategically relevant market, as it produces some of our essential raw materials. Moreover, we would like to expand our profile in Brazil and in the European Union markets, where although we have some warehousing facilities, we still have to enlarge our business base. In other words, the major challenge for us is to gain international range, mainly because the Spanish natural stone market is going through a period of substantial growth that is directly linked to the real estate bubble. But this boost will finally come to an end and, as our Group needs to keep on growing, the most consistent answer lies in foreign markets. Thus, an enhanced international profi le will be among your main corporate qualities...
The world is larger than Spain and the demand for natural stone products is much more significant abroad. We are proud of being Spanish, but we can't forget that the homeland where we settle is a chance event. From a business viewpoint, products can be manufactured and marketed anywhere in the world. We shouldn’t desist from anything.
What are your assets to succeed?
Firstly, our financial resources are "almost unlimited", provided we are able to generate corporate value with them. For instance, we have what is seen as the jewel of Grupo Levantina: the Coto Pinoso ivory cream marble quarry, whose expanse and production capacity are exceptional in the whole natural stone industry. We also have marble or granite sites in Brazil, Africa or India. We have a highly diversifi ed set of resources and a powerful industrial capacity, particularly in the marble and granite segments.
Furthermore, we have 9 marble production plants in Spain and several granite production sites in Spain and in Brazil as well.
What about investments in the short and long terms?
We will focus on stepping-up our activities and functional divisions (most likely our commercial network) in foreign markets. Moreover we will invest heavily in R&D, particularly as far as the developments required by our "Technoclassic" project are concerned (in fact we are currently building a new ceramics plant in Novelda). Our investment plans will cover production lines too.
All in all, these are the guidelines of our development project, but the truth is that our largest investment was to put the company in motion. And as overall (both organic and external) growth results are expected, we do not discard new acquisition agreements.
What are your turnover prospects?
Our goal is to achieve a turnover of EUR 600 million by 2010, with Ebitda of EUR130 to 140 million.
Source: FPD