The good prospects are based on the all-embracing ... - ALNO AG

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50 sinGLE-Entity and GRoup manaGEmEnt REpoRt | Risks / oppoRtunitiEs and FutuRE pERspECtivEs servICes Risks exist in particular with regard to the development of transport costs due to the sharp rise in fuel prices and the foreseeable shortage of carriers' capacity. ALNO is planning to reorganize its logistics sector in 2012 so that it can once again operate cost-efficiently and counter the risks arising in conjunction with market developments. MarKeT rIsKs In the kitchen furniture sector, the ALNO Group operates in a market characterized by fierce competition. <strong>The</strong> pressure on margins is increasing constantly due to fiercely competitive prices, especially in the lower price segments, and simultaneously squeezing less competitive manufacturers out of the market. <strong>The</strong> activities of competitors and the trade could lead to distinctly lower sales revenue and earnings for the ALNO Group. <strong>The</strong> ALNO Group's customers <strong>are</strong> primarily retailers, the vast majority of whom belong to purchasing associations. If major purchasing associations were to reduce their order volumes, terminate blanket agreements or be compelled to file for insolvency, and if the ALNO Group were unable to win new customers of comparable magnitude or were unable to obtain a commensurate increase in the volumes ordered by existing customers, this would lead to a tangible reduction in capacity utilization and sales revenue, as well as to the loss of receivables for the ALNO Group. <strong>The</strong> process of repositioning the ALNO Group brands must also be continued and the new sales structure must become more firmly established. <strong>The</strong>se processes also entail risks. Germany is the ALNO Group's main market, accounting for more than 70% of the total sales revenue. Other major markets include the United Kingdom, France, Austria, Switzerland, Spain, Italy and the Benelux countries. <strong>The</strong>se markets have developed differently in the past. ALNO AG presumes that the individual markets will continue to develop differently in the future too, depending on the influence of economic factors. For this reason, the ALNO Group will step up its sales activities in selected foreign markets in order to minimize the risks. IT rIsKs A large part of the ALNO Group's production, w<strong>are</strong>house management and accounting is essentially <strong>based</strong> on computers. Failure of the computer or production systems could bring production to a halt and thus lead to a considerable financial loss for the company. What's more, ALNO AG has outsourced its IT systems almost entirely. Any disruptions in the contractual relationship governing services throughout the IT sector at ALNO AG would impair all work processes in the company's data processing. sTraTeGIC rIsKs To stabilize the net assets, financial position and results of operations of the ALNO Group, the company considers it necessary to take steps to boost efficiency in administration and sales, to cut costs and ensure profitable growth, in particular by repositioning the brands. <strong>The</strong>se measures require investments and corresponding funds. In the year under review, the reorganization concepts were adjusted in the light of changed market conditions and new priorities within the Group. Instead of standardizing administration processes almost simultaneously throughout the Group, it is now planned to harmonize processes in stages. This gradual implementation at different times gives rise to the risk of delays in reducing administration costs. opportunities voluMe aNd value of sales Series production of the product "WELLMANN new" presented at the company exhibition in 2010 started in 2011. This product was more favourably received by the market than originally planned and series production of the product "WELLMANN old" was discontinued in summer 2011 instead of at year-end as originally planned. Particularly the new lacquer fronts have been very well received by the market. For a large number of customers, the logistics service was improved together with the change of product, in that the accuracy of delivery schedules was improved when confirming orders. In other words: the so-called "two-week logic" was eliminated in Germany. For the ALNO brand, the upward trend in volume of sales of the "glass kitchens", i.e. high-price ranges with glass fronts, has continued. On the basis of this success, a new front made from ceramic material was presented at the company exhibition. This front is resistant to scratching and was very well received by both trade visitors and customers. Since then, the new kitchen has already won several innovation awards. This product will help considerably in strengthening the position of the ALNO brand.
sinGLE-Entity and GRoup manaGEmEnt REpoRt | Risks / oppoRtunitiEs and FutuRE pERspECtivEs In the case of IMPULS, the market's acceptance of product variance combined with delivery performance has been confirmed. New service packages <strong>are</strong> being developed which will make use of the Brilon plant's delivery performance in particular. <strong>The</strong> ALNO Group's potential for boosting sales in the foreign markets is generally high. On the one hand, reorientation of the export sector will lead to an extension of sales partnerships in the European markets, such as France. At the same time, separate sales concepts <strong>are</strong> also being planned for the large existing markets, as well as for such growth markets as China, Russia and the United States so that ALNO can participate more strongly in these markets' potential in future. MarKeTING First steps have been taken to standardize the sampling process, i.e. the dispatch of samples to our customers, throughout the Group. <strong>The</strong> aim is to enhance our cost management and present a more uniform image to the customer. Comp<strong>are</strong>d with its direct competitors, ALNO enjoys outstanding brand recognition and sympathy among consumers. This unique differentiator must be utilized more strongly in future and the existing potential realized. <strong>The</strong> first projects have already been started in this context with the aim of communicating more directly with the consumer. Among other things, these include the development of consumer-oriented advertising, more specific management of all points of contact with the brand and point-of-sale presences. Together with the planned revision of ALNO's marketing terms, this opens up new market opportunities overall. PurChasING Regular "make or buy" analyses <strong>are</strong> undertaken systematically. In addition to minimizing risks in conjunction with suppliers' price increases, this also yields an opportunity to cut costs. <strong>The</strong> first glass fronts for the ALNO brand were also produced in-house in the year under review, as the figures <strong>are</strong> economically more favourable than for external purchasing. loGIsTICs Logistics competence is to be developed more strongly as an in-house competence in the future. This applies in respect of both scheduling and organizational know-how. From today's vantage, it may be assumed that this will lead to a reduction in fixed costs. In addition, transport costs may also be reduced for structural reasons as planning between the locations is optimized. ProduCTIoN <strong>The</strong> in-sourcing aspects already mentioned in conjunction with purchasing also apply here. Reactivating component production in Pfullendorf opens up further potential for additionally in-sourcing carcase components. At the same time, it allows the Group to "shift" production volumes between the individual plants. Using the available production capacities to produce furniture or vendor parts for other companies is a further aspect. This is already successfully being done in the case of components. qualITY Nonconformance costs <strong>are</strong> to reduced further, above and beyond the volume planned. Through quality improvement projects with the trade and further training courses for the field staff, this will give ALNO an opportunity to reduce not only the number of complaints, but also the corresponding costs. <strong>The</strong> same also applies with regard to consistent quality audits among suppliers permitting more specific recourse action. II. fuTure PersPeCTIves Both the volume and the value of sales developed favourably for the kitchen furniture industry in the financial year 2011. In the Group, sales were impaired among other things by the fact that production in Enger had to be changed over to the new Wellmann product sooner than planned. Changes in the Board of Management made it necessary to review and reassess individual activities. <strong>The</strong> Board of Management essentially viewed the financial year 2011 as a year of consolidation for the Group's reorganization and reorientation. For 2012, it has been possible to raise prices for all brands so that the erosion of margins due above all to higher material prices can be compensated. A project group has been set up to develop a new Group strategy. A second team is working on an optimized production logic for the respective locations. Reviewing and developing potential cost savings is a third major <strong>are</strong>a of work. Following the reorganization of our foreign business, the new objectives can be implemented without delay in exports. Making use of Group synergies in the production sector and logistics will also help to improve our performance. <strong>The</strong> brand positioning that is currently being implemented will be consistently accompanied by corresponding priorities in product development. 51
Page 1 and 2: 2011 annual report
Page 3 and 4: The Alno brAnds <s
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ALNO Aktiengesellschaft 88630 Pfull
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The good prospects are based on the all-embracing ... - ALNO AG

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