Gefran sets its sights on India. Several M&A operations in the pipeline

(Il Sole 24 Ore Radiocor) - Gefran continues on its path of internationalisation and after China and North America puts India in its sights. A country, explained CEO Marcello Perini in an interview with Radiocor during the 50th edition of the Ambrosetti Forum in Cernobbio, which has been growing at double-digit rates in recent years. The company, which specialises in the design and production of sensors, systems and components for the automation and control of industrial processes, also has a number of acquisitions in the pipeline: the focus is on technology companies with a size of between 15-20 million euro turnover. From an economic point of view, the company is aiming to consolidate what it did in the previous year, which closed with revenues of EUR 132.8 million and a net profit of EUR 11.7 million. The top manager explained that the decline in Germany weighed heavily, but this was partly offset by the good performance of the Asian markets.

By the end of the year we project a consolidation of the results achieved during 2023. When we started at the end of 2023 to project what could be the performance of 2024, we expected a complex year in the first three months, particularly difficult in the first quarter and then hoped for a recovery in the second half of the year. I have to say that the facts did not follow this dynamic: we had a positive first quarter, higher than expected, and a second quarter that was still positive, which led us to close the six months with EUR 68.5 million in revenues. What was not realised in the first six months was the possibility of seeing a recovery in the second half of the year. Germany is still marking time; on the other hand, the Asian markets were very positive for us in the first half of the year and helped us compensate for what could have been declines in orders coming in from Germany. On the European front, however, we have not yet seen a reversal of the trend; therefore we believe that what we saw in the first two quarters of the year will hopefully be repeated in the second half of the year from the point of view of revenues, thus projecting a year-end in line with the previous year. As far as margins are concerned, they are positive and will remain so; the absolute value will probably not be at 2023 levels, but we believe this is a transitory situation.

Absolutely not. There are two areas that are particularly relevant for us: the area of research and development and the area of business development. In 2023 we have invested around EUR 10 million in both R& D and facilities to increase our production capacity. In 2024, the investment in R&D is unchanged and will remain so in 2025. This year we have slowed down the launch of new investments in production capacity only because first we have to saturate what we have already done, and the current demand trend does not urgently call for new investments in this area. But already by 2025 we will resume the growth trend.

From the demand point of view, the period after the covid saw the geographic areas have completely different dynamics than in the past. At the beginning of 2023 we had the US, Germany and Italy performing very well, and we were coming from a 2022 where we had managed the supply issue very well and therefore had a back log and significant orders. Asia was coming out of its pandemic and so it was struggling to grow but then it started to pick up. In this context, the country where we have had and still see, year after year, absolute consistency in double-digit growth, is India where we are present with a commercial reality. To date, the size of this country is still not particularly relevant in our turnover, we realise just under 6 million euros, out of a total turnover of 130 million. Since 2021, however, the country has had a track record of double-digit year-on-year growth. So for us India is an area of great interest, it has strong growth potential and is therefore a market we look at closely. Our policy and plan is to strengthen ourselves in countries like China, North America and Germany where we are already present and where we believe there are still important market shares to be won. In North America and China we are present not only in commercial realities but also with production realities that we are strengthening from time to time. The theme of being local in production in these two countries is an essential one: to be successful in these markets we have to produce the technology and know-how locally to guarantee customer service.

Yes because it is clear that inorganic growth allows for acceleration and that is why we are active on this front. Today we do not have any transactions that will be concluded in the very short term because due to the nature of the targets we are looking at the incubation time is quite long. We are active in the sensor sector and are looking at this sector in the context of acquisitions. In particular, technology companies with a turnover of between EUR 15-20 million. Typically these are still family businesses and have an underlying entrepreneurial vision that is very strong, so the preparation phases are important. The dialogue with the entrepreneur is important to make them understand or convince them that there are even greater growth opportunities for their company from joining forces. We are having discussions with several entrepreneurs, both Italian and foreign, particularly German.