Building better businesses - Permira

Investment
overview
Marazzi Group (‘Marazzi’) is a worldwide leader in the
design, manufacturing and distribution of ceramic tiles.
The company is a technological leader in the tiles sector
and has a strong track record in design and innovation.
The group sells into 130 countries, with leadership in
most of the markets in which it operates and has
manufacturing facilities in all of its key areas of activity
(Europe, the US and Russia) as well as direct distribution
in Russia and the US.
The Permira funds’ investment in Marazzi was
motivated by the company’s international
leadership, which makes it well positioned
to capture market opportunities through
organic growth and acquisitions, as well as
the proprietary nature of the deal and the fact
that the management were well known to
Permira. Marazzi’s offering extends to both
residential and commercial customers, and
includes products ranging from floor and wall
tiles to solutions for exterior wall coverings.
Marazzi has experienced challenging market
conditions since the business was acquired
by the Permira funds. All of the company’s
key markets experienced sales declines of
between 20% and 40% by volume, while a
devaluation of the Rouble (Russia is one of
Marazzi’s key markets) placed further
pressure on the business. The nature of the
tiles industry, which operates with long lead
times and a continuous manufacturing
process, means that Marazzi and its peers in
the sector have a high operating leverage.
The combination of these factors meant that
the company’s profitability came under
significant pressure throughout 2009.
The company took quick and appropriate
action in response to this pressure.
Marazzi’s management focused on reducing
manufacturing and administrative costs while
maximising cash generation. The business
also successfully reduced its level of debt
through effective management of net working
capital. In addition, debt covenants were
renegotiated in 2009 and Marazzi now has
adequate financial flexibility to pursue its
strategic objectives in the coming years.
Marazzi also strengthened its management
team in 2009, appointing a new CEO and a
new country manager for Italy. Having
successfully finalised the restructuring,
Marazzi is now focusing on developing
its top line and exploring further
growth opportunities.
Permira Annual Review 2009 Our Portfolio 59