Schott's Quartz Glass Acquisition - A Mega Deal Worth Talking About
Company to undergo record-breakingly large acquisition led by Scott.
Hear ye, hear ye! Schott AG, the renowned specialty glass manufacturer, drops a bombshell with the biggest acquisition in its storied history. Last week, the CEO, Frank Heinricht, announced the signing of the acquisition contract for Qsil's quartz glass division in his annual press conference, leaving the price tag a tantalizing mystery. The Qsil GmbH quartz melting operations in Ilmenau, Thuringia employ 275 dedicated folk, raking in high double-digit million euros year after year. So, what's the deal? Well, the exact coins tossed are under wraps, but Qsil's quartz glass tubes are gold in the world of semiconductor manufacturing, thanks to their unique manufacturing process[1].
Schott's got its eyes on the prize when it comes to the semiconductor industry, and it doesn't stop there. You bet they're aiming high with glasses for augmented reality (AR) displays, that magical fusion of digital and analog life. They've even fired up a plant in Malaysia to capitalize on this exciting sector. But they're not done yet. They're setting their sights on rulership in the pharmaceutical industry, astronomy, and even space travel.
I know, I know, you want the numbers. Fair enough. In the 2023/24 fiscal year, Schott's revenue took a slight dip by 1%, landing at €2.84 billion. But, you guessed it, with a little currency adjustment, those numbers swelled by 3%, according to CFO Marcus Knöbel[2]. The operating result (EBIT) dipped by 3% YoY to €400 million, but net income saw a healthy 11% increase, thanks to a sizable €935 million in gross profit from the IPO of the pharmaceutical division back in 2023 fall.
So, was it a rough year? Yeah, to put it mildly. Factors wie weaker demand for household appliances, increased competition from China, and costly energy bills dogged Schott. But Nephew Heinricht ain't one to be daunted. He outlined the woes plaguing Schott's Ceran cooktops, starting with the sluggish construction industry in Deutschland, leading to scant kitchens and fewer cooktops being fitted. And let's not forget about the Chinese market, which lost its magnetic allure, while Chinese competitors set their sights on the European and American markets for household appliances[3].
But fret not, for innovation is the antidote to these headwinds. Heinricht revealed a new product rate of 31%, a record-breaking number. So, 31% of Schott's revenue comes from new, less than five-year-old products. But there's a bit of a challenge ahead: boosting productivity at European sites. Heinricht sees hope in automation, digitalization, and these tools could also help offset the mass retirement of the "baby boomer" generation in the coming years.
For the 2024/25 fiscal year, Schott's sniffing for a revenue bump of 2 to 5%. Now, considering the challenges, Heinricht expects to ride that lower end of the range. Schott has kept mum about earnings expectations. Capital expenditures are expected to remain steady at a healthy 400 million euros.
With close to 17,100 employees across more than 30 countries, Schott's headquarters, founded in Jena, Thuringia, calls Mainz home. The company is a proud member of the Carl Zeiss Foundation, which keeps its dual heads in Heidenheim, Baden-Württemberg, and Jena[4].
So, who's up next? None other than Torsten Derr, the current CEO of SGL Carbon in town, who's set to take the reins from Heinricht upon his departure in 2025.
[1] - Source for Qsil's unique manufacturing process
[2] - Source for Schott's 2023/24 fiscal year revenue and EBIT
[3] - Source for construction industry challenges, Ceran cooktops woes, and Chinese market issues
[4] - Source for number of Schott employees, headquarters city, and Carl Zeiss Foundation
Schott AG, driven by the desire to lead in the semiconductor industry, aims to leverage the unique manufacturing process of Qsil's quartz glass tubes, acquired through the purchase of Qsil GmbH's quartz melting operations, for technology advancements.
The acquisition of Qsil's quartz glass division represents Schott's continuous pursuit of expanding its reach in the technology sector, particularly in the production of glasses for augmented reality (AR) displays and beyond.
