Strategy and Financial Targets
Glaston has reviewed its strategy and updated its financial targets for the strategy period 2018–2021 as a result of its acquisition of Bystronic glass.
The foundation of the strategy remains unchanged; we continue to seek growth in our core business and to win in services through digitalization. Combining the strengths of Bystronic glass and Glaston as well as leveraging the know-how Bystronic glass adds to our business, provides us with unique opportunities to build a strong machinery and services offering as well as the ability to capture new growth opportunities. Implementing a joint operating model will support us in reaching our strategic goals and in realizing the full synergy potential of combining Glaston and Bystronic glass.
Our overall strategic goal remains unchanged: our ambition is to be the industry’s innovative technology leader, realizing its customers’ highest ambitions in glass.
Glaston’s purpose is to build a better tomorrow through safer, smarter, and more energy-efficient glass solutions. The demand for environmentally sustainable and energy-efficient solutions, tightening safety standards as well as growing visual and functional quality requirements of glass, increasingly affect the way our customers operate as well as impact the specifications they require from their glass processing technology partners.
Our strategy is divided into four key themes:
GROWTH IN CORE
NEW GROWTH OPPORTUNITIES
JOINT OPERATING MODEL
UPDATED FINANCIAL TARGETS:
- Annual growth of net sales exceeding market growth* (CAGR)
- Comparable operating margin (EBITA)** above 8% at the end of the strategy period. EBITA excludes amortizations of purchase price allocations.
- Comparable return on capital employed (ROCE)** of more than 14% at the end of the period
*Flat glass market growth over the cycle.
**Calculation of key ratios:
Comparable EBITA excluding amortizations of purchase price allocations: Result before amortization of purchase price allocations +/- items affecting comparability
Comparable return on capital employed, % (Comparable ROCE): (Profit / loss before taxes + amortization of purchase price allocations +/- items affecting comparability + financial expenses x 100) / (Equity + interest-bearing liabilities, average of 1 January and end of the reporting period)
President & CEO's Review
Acting President & CEO Sasu Koivumäki in the January-September 2020 interim report, published on 27 October 2020:
Multifaceted quarter: The Insulating Glass segment performed well, Heat Treatment and Services slower than expected – profitability satisfactory under the circumstances
“Glaston’s third quarter development was multifaceted. The Insulating Glass (IG) business performed well with a faster than expected recovery in Europe, and several larger projects were picked up after the slow development in the previous quarter. Insulating Glass equipment and services order intake grew by 3% from the corresponding period last year, which gives the IG business a very good start to 2021. On the other hand, the market for Heat Treatment (HT) equipment and services remained very challenging. There is a significant difference in demand between the HT and the IG equipment markets. In the commercial building market, which is the main market for HT, forecasts are weak whereas the residential building market, important for IG, continues to grow. Consequently, we see a clear need to adapt our Heat Treatment business to current market demand. The Automotive business remains challenging due to overcapacity in the market. The short-time work implemented last year continues, and we are monitoring the situation very closely. During the quarter, we saw an increase in our Services business from the very low previous quarter, although recovery was slower than expected, mainly due to the remaining cross-border travel restrictions and restrictions on customer factory visits.
As a result of the low order intake in the previous quarters and the postponement of a number of orders, our net sales decreased in all segments. Third-quarter Group net sales totaled EUR 35.9 million. Our profitability was clearly impacted by low sales volumes in both HT and Automotive equipment and services but overall remained at a satisfactory level, supported by our rapid measures and synergy benefits. Demand for HT spare parts and service work was low, but demand for IG services was at a good level. Due to the current crisis, the Emerging Technologies (ET) market continued to be slow in the third quarter, but ET continued to develop its selected consulting projects together with its partners.
With the broadest and most versatile glass processing product and services portfolio, combined with innovation leadership, Glaston has a strong position in the market. In order to remain at the forefront of development we have continued to put significant efforts in 2020 into the continuous development of our core technology portfolio and R&D. The latest showcase of this work is Glaston’s cup wheel technology for glass edge arrissing of architectural glass which was presented at the virtual Glasstec fair in mid-October. Demand for arrissed glass is driven by stricter safety regulations and higher quality requirements.
Mitigating COVID-19 related near-term business disruptions continues to be high on our agenda and we are ready to reinstate measures to safeguard the health and safety of our employees and to safeguard the company’s financial stability quickly if necessary. We continue to constantly monitor the development of the situation, our orders and order book as well as the company’s cash flow and liquidity.”
Guidance as published on 27 October 2020:
GLASTON’S OUTLOOK FOR 2020 REMAINS UNCHANGED
Glaston Corporation estimates that comparable EBITA for 2020 will decline from the 2019 level. The company’s current assessment is that fourth-quarter orders will improve from the third quarter but remain below the previous year’s levels. The lower than 2019 order intake and lower than normal volume in services business impacts the development of net sales and earnings in 2020. The uncertainty surrounding the assessment remains, and the situation might change quickly depending on the development of the COVID-19 pandemic and the general economic climate.
GLASTON’S OUTLOOK FOR 2020 UNCHANGED,
as communicated in the January-June 2020 Half-Year Financial Report on 6 August 2020:
Glaston Corporation estimates that comparable EBITA for 2020 will decline from the 2019 level. The company’s current assessment is that the market will recover gradually and that third- and fourth-quarter orders will improve from the second quarter but stay below the previous year’s levels. The lower than 2019 order intake and slower than normal volume in services business impacts the development of net sales and earnings in 2020. The uncertainty surrounding the assessment remains, and the situation might change quickly depending on the development of the COVID-19 pandemic and the general economic climate.
Glaston’s outlook as in the January-March 2020 interim report, published on 28 April 2020:
GLASTON’S OUTLOOK FOR 2020 UPDATED
Glaston Corporation estimates that comparable EBITA for 2020 will decline from the 2019 level. Due to low visibility and rapid market movements, the extent of the decline cannot be reliably assessed at this stage. The company’s current assessment is that orders received in the second and third quarters will be at a lower level than normal. The postponement of the delivery of some orders will impact the development of net sales and earnings in the near future. Exceptionally high uncertainty surrounds the assessments, and the situation might change very quickly.
On 20 March 2020, Glaston Corporation published a stock exchange release which stated that, due to the significant deterioration in the global financial situation following the coronavirus situation and the rapid changes in the company’s business environment, Glaston was withdrawing its guidance issued on 11 February 2020 and that it was improbable that company’s comparable EBITA will grow in 2020.
GLASTON’S OUTLOOK FOR 2020 as communicated on 20 March 2020
Glaston Corporation comparable EBITA unlikely to improve in 2020
Due to the significant deterioration in the global financial situation following the coronavirus and the rapid changes in the company’s business environment Glaston withdraws its guidance for the 2020 outlook, in which it expected the 2020 comparable EBITA to improve from the 2019 level.
Due to the weak visibility and high market volatility Glaston has decided to suspend its outlook for 2020. The company’s aim is to give an update on the outlook once a more reliable estimate on the potential impact can be made.
GLASTON’S OUTLOOK FOR 2020,
published in the Financial Statements Bulletin on 11 February 2020
Glaston Corporation expects that 2020 comparable pro forma EBITA will improve from the 2019 level (2019 comparable pro forma EBITA EUR 12.1 million).
GLASTON’S OUTLOOK FOR 2019 UNCHANGED (published in Glaston’s Q3/2019 interim report on 28 October 2019): Glaston Corporation expects that 2019 comparable pro forma EBITA will be at the 2018 level or will improve slightly on it (2018 comparable pro forma EBITA EUR 11.5 million).
At the end of 2018, Bystronic glass had a significant number of orders that were recognized as revenue in the second and third quarters of 2019, thereby improving Bystronic glass’ actual net sales and profitability. Bystronic glass’ fourth quarter net sales and profitability will be significantly lower than in the early part of the year. The Glaston segment’s result is skewed towards the second half of the year.
As in Glaston’s Half Year Financial Report, published on 8 August 2019:
Glaston Corporation expects 2019 comparable pro forma EBITA to be at the 2018 level or slightly improve (2018 comparable pro forma EBITA EUR 11.5 million). As the integration process is at an early stage, more uncertainty than usual is associated with the outlook and the company’s estimate.
At the end of 2018, Bystronic glass had a significant number of orders that will be recognized as revenue in the second and third quarters of 2019, thereby improving Bystronic glass’s net sales and profitability at the beginning of the year. Bystronic glass’s fourth quarter net sales and profitability will be significantly lower than in the early part of the year. The Glaston segment’s lower than 2018 first half order intake and result will affect the segment’s 2019 result. The segment’s net sales and result will be skewed towards the second half of the year and particularly to the fourth quarter, when several orders received at the end of 2018 will be delivered.
Glaston’s Outlook 2019, published on 12 February 2019 in Glaston’s 2018 Financial Statement Bulletin:
The company’s business is seasonal and, historically, the first quarter of the year is generally the weakest and the fourth quarter the strongest. Net sales and comparable operating profit are expected to be low for the first quarter of 2019, due to the low number of new orders received in the third quarter and the beginning of the fourth quarter of last year.
Deviating from Glaston’s disclosure policy and due to the timetable of the Bystronic glass acquisition, Glaston will disclose information on its outlook for the whole of 2019 at a later stage.
Glaston Corporation develops, manufactures, sells and services glass processing machines, equipment, and technology to glass processors who provide glass products for different needs. Main customers are glass processors in the architectural glass, automotive glass, solar energy equipment and appliance industries.
In order to better reflect business dynamics and market drivers, our operations are, as of January 2020 divided into three business areas: Glaston Heat Treatment Technologies, Glaston Insulating Glass Technologies and Glaston Automotive & Emerging Technologies. The business areas also form the company’s three reporting segments in which Services are included.
Glaston Heat Treatment Technologies
Glaston offers a wide and technically advanced range of glass heat treatment machinery, services, upgrades and modernizations as well as spare parts for flat tempering, bending, bending-tempering and laminating lines.
Flat tempering machines are the most significant product group and the FC Series™ tempering line has a strong position in the market. More information about our products is available in the Offering section.
Our services meet globally to the most demanding needs of our clients. Glaston’s services offering ensures uninterrupted production capacity for our customers and efficient usage throughout the machine’s life cycle.
Glaston Insulating Glass Technologies
Energy efficiency and the need to improve the energy performance of buildings is supporting demand for insulating glass.
As a result of the acquisition of Bystronic glass in April 2019, Glaston is today a leading supplier of state-of-the art Insulating Glass technologies with tailor-made and flexible solutions to meet all customer needs such as double and triple glass units with dimensions of height of up to 3.30 meters and length of 9.0 meters. Please click to see our Offering.
Glaston Automotive & Emerging Technologies
In the automotive industry, the relative proportion of glass is growing, and the use of thin glass, in particular, is increasing.
Glaston is one of the markets leaders in pre-processing solutions for automotive glass manufacturers and offers complete standardized or customized solutions for the pre-processing of automotive and display glass (cutting, drilling, grinding, breaking).
Emerging glass technologies and value-added glass products, such as smart glass, are strongly entering the market. In accordance with our strategy, Glaston is actively seeking new business opportunities in emerging glass technologies and aims to develop and commercialize innovative glass solutions. The Emerging Technologies unit is continually seeking new business opportunities in emerging glass technologies, offering consulting and engineering services for new glass technology fields.
Research and Development
Glaston’s technology leadership is based on continuous, customer-oriented product development, enabling us to consistently bring to the market more advanced technology to meet customers’ changing needs.
Our product development is guided by the development of solutions requiring deeper technological expertise and by new business opportunities presented by digitalisation. Our position is particularly strong in developing technologically demanding products. The most advanced glass processing machines developed by Glaston have risen to the status of standards in many countries. We hold patents for all of our key solutions.
The energy saving and energy consumption of tempering machines have been important drivers of Glaston’s product development. This work has yielded results, as for example, in the low-emissivity glass tempering process, energy consumption has decreased by an average of 30% over the past 10 years.
Glaston utilises new technology and the opportunities presented by digitalisation to develop products and make them better, more efficient and more reliable. Glaston brings to glass manufacturing new sensor, processing, interface and cloud service technologies. By utilising cloud services and opportunities offered by IIoT, Glaston helps its customers use their equipment as efficiently as possible.
Glaston has been involved in a nanotechnology project in California since the latter part of 2015. Heliotrope Technologies is developing for the market a new electrochromic smart glass technology, which gives end-users the opportunity of regulating, for example, the heat and light transmittance of glass in a building or vehicle, precisely and quickly. A further advantage over solutions already on the market is significantly lower production costs.
In order to step up innovation and create new business opportunities utilising the opportunities presented by digitalization, the company organized in summer 2017 the glass industry’s first start-up event, Step Change. Step Change aims at promoting development of the industry as well as meetings between new innovators, potential partners, customers and investors. The second Step Change event was held in June 2019 in connection with Glass Performance Days conference, which is a forum dedicated to the development of the global glass industry.
Why invest in Glaston
- Global megatrends support demand for Glaston’s products
- Global flat glass market is estimated to grow at +3.4% CAGR for 2016-2021*)
- Competitive advantage provided by complementary positions and offering of Glaston and Bystronic glass
*) Source: The Freedonia Group 2018
- Long history of developing glass processing equipment
- Technology leadership based on continuous, customer-oriented product development, enabling us to consistently bring to the market more advanced technology to meet customers’ changing needs
- At the heart of product development is digitalisation, which facilitates the shift towards automatic glass processing
- The increased size of the company provides the financial backbone for delivering the technology roadmap
- The expanding installed base provide growth potential in lifecycle services
- Bystronic glass acquisition is expected to strengthen the sales mix through higher proportion of service and spare parts revenue streams
- Additional potential in extending the equipment upgrades to 3rd party machinery, in new monetization models, and in potential future increase within emerging technologies
- Strengths of the combined company form the basis for the new strategy
- Anticipated synergies stemming from multiple sources e.g. revenue synergies, cost synergies and general improvements to the business operations
- Improvement potential in best-practice sharing from Glaston to Bystronic glass supporting the cash flow profile going forward
Mergers and Acquisitions
|1981||Tamglass Oy||Acquisition||Kyro acquires the entire share stock of Tamglass Oy, founded in 1970. Exports already account for 93 % of Tamglass’ net sales of FIM 54.7 million and the company has 148 employees. Kyro becomes a diversified company.|
|1985||Tecnomen||Acquisition||Kyro expands its electronics business by acquiring Tecnomen, which supplies Tamglass with automation and control systems. The company also operates in the field of telecommunications.|
|1986||Glaston forest holdings and local electricity network||Divestment||The company sells its forest holdings to Suomi-Salama and its local electricity distribution network to Oy Nokia Ab.|
|1995||Glaston’s forest industry business||Divestment||Kyro sells its forest industry business to Metsä-Serla Oy, amid a major restructuring of the entire sector.|
|1996||Cattin Machines||Acquisition||Cattin Machines, a Swiss manufacturer of safety glass machines, is acquired for the Tamglass Group.|
|2002||Finton Oy||Acquisition||The Tamglass Group’s glass processing business is supplemented by the balcony glazing manufacturer Finton Oy from Lahti Finland.|
|2002||Uniglass Oy||Acquisition||The Tamglass Group’s machine business is supplemented by the flat tempering machine manufacturer Uniglass Oy from Tampere Finland.|
|2003||Z. Bavelloni Immobiliare S.p.A. and Glasto Holding B.V. as well as Suomen Lämpölasi Oy||Acquisition||Kyro acquires Italian Z. Bavelloni Immobiliare S.p.A’s and Dutch Glasto Holding B.V’s all share as well as a majority shareholding in Suomen Lämpölasi Oy. Glaston Technologies, consisting of Tamglass and Bavelloni, becomes the world’s largest comprehensive supplier of glass processing machines, and its glass processing product range becomes the biggest in Finland.|
|2005||Glaston’s hydropower and district heat distribution businesses||Divestment||At the end of the year, the Group sells its hydropower and district heat distribution businesses.|
|2007||Glaston’s Energy Business||Divestment||Kyro sells its energy business area to M-real Oyj.|
|2007||A+W Software AG Group||Acquisition||Glaston acquires the German A+W Software Group in July 2007, after which the Business Area, Software Solutions, is formed.|
|2009||Tamglass Glass’s insulated and architectural glass processing operations||Divestment||Glaston Corporation’s subsidiary Tamglass Glass Processing Ltd. sells its insulated and architectural glass processing operations to INTERPANE Glass Oy.|
|2010||Glass processing operations||Divestment||Glaston’s joint venture, the glass processing company INTERPANE Glass Oy, is sold to Rakla Finland Oy.|
|2013||A+W Software GmbH||Divestment||Glaston sells A+W Software to Constellation Software Inc. acting through its Friedman Operating Group.|
|2014||Glassrobots||Acquisition||Glaston acquires the industrial property rights to all Glassrobots products.|
|2015||Pre-processing machines business||Divestment||Glaston sells 100% of the shares of Glaston Italy S.p.A. to the local management of Glaston Italy S.p.A.|
|2017||Pre-processing machines business in USA and Canada||Divestment||Glaston continues as a reseller of Bavelloni’s Pre-Processing machines in Mexico, Brazil and Singapore.|
|2018||Tools business||Divestment||Glaston sells its Tools business to Italian Bavelloni S.p.A. The sale is carried out through a share deal of Glaston Tools S.r.l in Italy.|
|2019||Bystronic glass||Acquisition||Glaston acquires Bystronic Maschinen AG and Bystronic Lenhardt GmbH and their subsidiaries (“Bystronic glass”) from Conzzeta Group|