Tillmann Blaschke, the new Meissen boss, has launched a revamp of the traditional porcelain manufacturer. His goal, he told Handelsblatt, is to return the ailing firm to the black.
The man at the top of Germany's Meissen porcelain maker says he will leave no stone unturned in his bid to boost profitability of the company. Speaking to Handelsblatt in an interview, Tillmann Blaschke said he will probe to see “which products suit Meissen, which are more and less popular, and which are profitable.”
His plans raise a big question mark over Meissen's current range and strategy. Mr. Blaschke's predecessor Christian Kurtzke had sought to reposition the historic porcelain brand as an international luxury and lifestyle firm, creating a new fashion and furnishings line and opening boutiques in Italy and China.
The porcelain manufacturers' venture into the fashion business remains controversial in the industry
Over the next few weeks the shape of the new company will start to emerge, including what will happen to its fledgling luxury strategy and its management board.
But Mr. Blaschke, who took the helm of the company last year, outlined clear goals. “We have the task to reach a clear improvement in earnings,” he said, adding that he aimed to steer the company “close to operational profit.”
And he has his work cut out to reform the 300-year-old porcelain house, which belongs to the German state of Saxony. In 2014 the business slid deep into the red. Following on the heels of a 2013 loss of more than €2 million ($2.17 million), the manufacturer posted a minus of €19 million on sales which only slipped slightly to €38 million.
And the firm's future hardly looks radiant for 2015. Adjusted for special effects, Mr. Blaschke is expecting “a slightly improved operating result.” But it remains to be seen how the company will be hit by its difficult business in Russia and lackluster Chinese operations.
The company's Italian subsidiary, which develops and delivers new product lines, such as furnishings, accessories and couture, was largely to blame for its dire 2014 performance. Mr. Blaschke has already ushered the Italian chief towards the exit door.
“What happened in Italy required these drastic steps to avoid damaging the company as a whole,” he said, adding that he had to depreciate claims, write off inventories and find a new head for that business.
Mr. Blaschke said he has started to make the company “sustainable in the long-run,” a process which requires new organizational structures and processes.
The porcelain manufacturers' venture into the fashion business remains controversial in the industry. “It is hard to establish yourself as a newcomer against the bigger firms in the luxury fashion market,” said Franz-Maximilian Schmid-Preissler from the strategy consultancy firm of the same name.
Critics of its new luxury business are particularly vocal in political circles. Around two years ago Georg Unland, Saxony's finance minister, commissioned a study from the accountancy firm KPMG to “illuminate and explore the plausibility of the manufacturers' growth strategy.”
That report was never made public. The state government however, did give an indirect thumbs up to Kurtzke's strategy by releasing extra funds for him to invest. It founded the Meissen Porcelain Foundation, which bought the manufacturers' forms and museums exhibits. Profits of some six million euros were then passed on to Mr. Kurtzke to fuel his new strategy.
But Mr. Kurtzke no longer steers the company. Last year he shocked market players by switching to the helm of Porsche Design. And those who supported his vision, such as the former prime minister of Saxony, Kurt Biedenkopf, exited the board.
But the Saxony government continues to back the traditional porcelain company. The Free State of Saxony will continue to stand by the firm and its staff of around 600 people. “We will continue to support it,” said a Finance Minister spokesman.
But he added that he is awaiting a more in-depth analysis of “the company's 2009 business strategy of sustainability”.
Georg Weishaupt covers the luxury and fashion industry for Handelsblatt. To contact the author: [email protected]