El.En, the challenge is the relaunch of laser systems in China. Focus on innovation

Relaunch business, and profitability, in China. Then: expand in the USA. Also: continuing product innovation. These are among the priorities of El.En to support the business. Yeah, the business. The company, which Letter to the Saver heard from top management, produces laser systems and applications (beyond restoration) for essentially two sectors. The first - the main one (56.7% of revenues in 2023) - is Medical. This essentially includes three sub-sectors: aesthetics, surgery and physiotherapy. The second (43.3% of turnover) is, on the other hand, the so-called Industrial sector. This sector includes sheet metal cutting, marking and laser sources.

Well: one focus, precisely, is the revival of business in China. In the past financial year, at a consolidated level, the pocket-sized multinational was, on the one hand, characterised by rising revenues (+3%); but, on the other hand, profitability fell. Ebitda settled at EUR 90.86 million (-4.6%), while net profit (EUR 48.2 million) fell by 12.5%.

Contributing to the trend was the red flag of the business in China, where El.En is mainly present in the Industrial segment. The trend was the consequence of a mix of factors. First of all was the dynamic economy, hampered by the crisis in the real estate sector, which put pressure on the group's Chinese corporate customers. Also relevant was the increasing clash between the West and the former Middle Kingdom. A condition which, by limiting Chinese exports, contributed - again - to reducing market demand for El.En.'s solutions. In such a scenario, on the one hand strong competition led to a decline in laser systems for Industry; and on the other hand, although the company managed to maintain volumes, the group's margins still slipped. In the face of this, the company is intent on getting profitability back on track. How? First - it is emphasised - there is the intervention for cost reduction and operational efficiency. Then,' says El.En, 'the aim is to increase the company's direct exports, so as to depend less on Chinese domestic demand. In particular, to neighbouring South East Asian states such as Japan or South Korea. In this sense, although the creation of subsidiaries is not ruled out a priori, on the one hand, the expenses for the group's sales representatives travelling to those countries are increased; and, on the other hand, the presence at trade fairs (again in the geographical area in question) is increased. The objective? To triple exports from China in the medium term. The project is ambitious. El.En, however, is confident and - assuming market conditions remain as they are today - says that by 2024 Chinese assets should be back in balance.

More indecipherable, on the other hand - at least to date - are the prospects for the planned listing of the 'Laser Cutting' business unit. Due to the impossibility of signing the application for the IPO - also in the wake of the poor results in China in 2023 -, the private equity firms that had invested in Penta Laser Zheijang started the contract termination procedure. As of today," El.En confirms, "the listing process is interrupted and the possibility is being considered that the same funds may still be in the game. If they were to leave, however, the options on the table are different. From purely organic growth to the search for new partnerships to the re-listing. At present, however, El.En concludes, the situation is fluid and the company is not giving any specific indications.

But it is not just a question of China. Another geographical area, along with Europe, in which the group has a focus is the United States. In America, the company, although also present in the Industrial sector, is mainly active in the Medical sector. In particular, in Aesthetics. Well: the desire is to accelerate business there. How? First and foremost by offering new products and technologies. Thus, among other things, the group is evaluating the concrete utility of marketing a new laser system, designed by El.En, for the treatment of inflammatory acne. More. The company has received the OK from the Food and drug administration for another laser with a new technology (inserted in an already successful product) aimed at re-shaping the body (slimming treatments). In addition to product innovation, the company also aims to further develop relations with business partners. This is an articulated strategy, which the pocket-sized multinational wants to leverage to grow in the United States. So much so that, for the whole of 2024, the expectation is an increase in turnover of around 10%.