In December 2013, Sanitec Corporation was successfully listed on NASDAQ OMX Stockholm – the IPO was the largest in Sweden since 2006. Behind the strong institutional demand lay an extensive corporate restructuring which reaffirmed Sanitec’s position as Europe’s leading bathroom ceramics specialist.
“Compared to five years ago, Sanitec is a fundamentally different company; leaner, meaner, more efficient and focused. The restructuring has yet more benefits to bring but Sanitec is already well placed to capitalize on a potential market upturn in Europe”, says Peter Nilsson, CEO of Sanitec since 2010. Prior to that, he was executive Chairman of the Board 2008-2010. He is also a member of EQT’s network of Industrial Advisors.
The transformation of Sanitec is reducing the number of manufacturing plants from 18 to around 11 and an extensive standardization effort has cut the number of suppliers to about 10,000 (from previously 30,000) in just two years.
“From a family of largely independent brands and regional organizations, we are creating “One Sanitec” with strong local and well-established brands. We are probably around half way to fully achieving this but I believe we already have the most modern and efficient manufacturing base in the industry”, Peter Nilsson continues.
The financial crisis that erupted in 2008, in the wake of the Lehman collapse, caused an unprecedented market downturn for Sanitec. In particular, the new construction market came to an almost standstill in parts of Europe. Earlier sizeable investments in Russia and Ukraine, and a burdensome debt, forced Sanitec into financial restructuring in 2009.
Throughout the crisis, EQT fully supported Sanitec. In an agreement with a bank consortium, EQT invested a further EUR 115 million to put Sanitec on a sound financial footing and give the company the opportunity to reorganize and restructure in order to be able to deal with a new market reality.
“EQT’s extensive network of advisors and in-house competence made it possible to rally massive support in a very short time. The change in the market was abrupt and the work was on two fronts; a new financial structure and a viable strategic plan for Sanitec that could gain the confidence of the financial community. EQT’s industrial focus played a crucial role in being able to achieve this”, says Caspar Callerström, member of the Sanitec Board and Partner at investment advisor EQT Partners.
Although markets have been largely sluggish since the restructuring, the streamlining of the production network and the sales and administration units has led to a sharp up-swing in profitability. Since 2009, adjusted EBITDA grew 22.6% per year, from EUR 58 million in 2009 to EUR 108 million in 2012. On the back of the recovery, Sanitec also issued a public bond in 2013 to refinance the debt, resulting in increased operational flexibility and lower interest payments.
Sanitec has strong pan-European portfolio of locally well-established brands in bathroom ceramics that are positioned as number one or two in their markets. Currently, Sanitec markets its products through five geographical regions in Europe, mainly in Northern and Western Europe with a strong growth potential in Eastern Europe. Among the brands operated by Sanitec are Ifö, Ido, Sphinx, Keramag, Twyford, Kolo, Colombo and Allia. Sanitec had sales in 2012 of EUR 753 million and the number of employees is around 6,500.