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Strategic goals for 2025
The new orientation is also associated with new, ambitious strategic goals that TAKKT is aiming to achieve by 2025. As part of a comprehensive approach, these goals include financial aspects such as a significant increase in sales, earnings and free cash flow as well as moves to address the concerns of key stakeholders by improving customer satisfaction and employee motivation and conserving natural resources. The strategy is based on three pillars Growth, OneTAKKT and Caring. The table below gives an overview of TAKKT’s new strategic goals.
| Strategic goals until 2025 | |
|---|---|
| GROWTH | Sale of EUR two billion |
| OneTAKKT | EBITDA of EUR 240 million TAKKT free cash flow of EUR 150 million |
| CARING | Customer NPS of 60 Employee NPS of 50 Share of women in executive positions of 45 percent Share of "enkelfähig" products of 40 percent Complete reduction or compensation of CO2 emissions (Scope 1 and Scope 2) |
TAKKT is aiming to use its new strategic orientation and a clear customer focus to increase its business volume to EUR 2 billion by 2025. Slightly more than half of the additional sales is expected to come from organic growth and the rest from value-creating acquisitions.
Organic growth
TAKKT is aiming to achieve a marked increase in the Group’s sales over the coming years and raise the organic growth rate to an average of ten percent per year. In the years prior to the coronavirus pandemic, the Group averaged organic growth in the low to mid single-digit range. TAKKT is convinced that the new orientation and strategy will allow it to achieve much higher growth rates in the future. The products that the divisions offer allow them to address a very large and fragmented market in which even leading brands like KAISER+KRAFT have a market share that is only in the very low single-digit percentage range, meaning they offer a lot of potential for growth.
This should be driven in particular by even stronger e-commerce growth. The evolution of TAKKT’s business model has already been connected with a steady increase in the e-commerce business in recent years, which by now accounts for well over half of the business volume. TAKKT believes that the changes in customer behavior and the increasing shift towards e-commerce will accelerate further in the B2B sector due to the experience of the pandemic. In the future, the Group intends to achieve organic e-commerce growth of 15 percent per year on average in the long term. Relevant e-commerce functions will be coordinated Group-wide and managed within the divisions to achieve this. The project will involve improving and further standardizing the web shop technologies and the methods for measuring success, efficiency gains resulting from the shared use of the IT infrastructure, as well as measures to expand Group-wide cooperation.
On division level, the different sales brands will cooperate more closely in marketing and sales to offer their customers a wide product range of various product groups. This way, for example, a logistics buyer will be able to procure products for the storage and transport of their goods as well as packaging from a single source. With this increase in cross-selling, TAKKT expects an increase in business volume with its existing customer base and therefore positive contributions to growth. In addition to increasing e-commerce and expanding cross-selling, the Group believes that sustainable products and business models offer considerable growth potential.
TAKKT also sees a major opportunity for additional growth in an improved and intelligent pricing strategy and has launched a Group-wide project to this end. The aim is to expand the functions involved in this, to define prices that are geared more towards customer and competitive data, and to use algorithms for flexible and customer-specific pricing.
Greater strength through acquisitions
In addition to organic growth, TAKKT also wants to continue to grow through acquisitions. For this, suitable companies are sought whose products and solutions strengthen and complement the existing activities. With a view to strengthening existing businesses, TAKKT makes sure that an acquisition target has an attractive customer base. Another aim is to enhance the added value within the Group through future acquisitions. TAKKT also wants to acquire companies offering products or services that expand the existing range of services for customers. These could be, for example, solutions for manufacturing, refining or adapting products as well as service offerings.
With regard to acquisitions, TAKKT aims to achieve a strong integration of a target company. This allows the acquired companies to benefit from the competencies and expertise at the divisional and Group level (e.g., in logistics, IT, data & analytics, purchasing and marketing). In addition to taking advantage of synergies, growth will be accelerated through improved scalability. Both result in a higher increase in value as opposed to the acquired company continuing to operate independently.
One key component of the new strategic orientation is a more compact and integrated corporate structure. This includes both the central coordination and management of key Group functions, like logistics and IT, and much greater cooperation in the marketing activities of the various brands within a division. TAKKT expects this more compact line-up to bolster growth, but also to improve profitability through economies of scale and the more efficient use of resources. Starting from an EBITDA margin in the high single digits last year, the Group aims to increase its profitability by two to three percentage points and lift its EBITDA to EUR 240 million by 2025.
Improvement in profitability, earnings and free TAKKT cash flow
TAKKT achieves high levels of profitability by positioning itself as a B2B distance seller in attractive niche markets and using efficient processes. The starting point is a gross profit margin, which should exceed 40 percent for the Group average. The relatively high margin results from the market position as a provider of business equipment as well as from targeted long-term measures such as the expansion of private labels and increasing the share of direct imports from Asia and Eastern Europe. The current environment with mounting inflation rates poses new challenges in terms of pricing, which TAKKT intends to address through a margin management project.
TAKKT aims to significantly increase absolute EBITDA to EUR 240 million by 2025. In addition to high organic growth, acquisitions are also expected to contribute to this. The Group also aims to increase the EBITDA margin from currently below ten percent by two to three percentage points. Two main effects will contribute to this. First of all, organic growth and better infrastructure utilization should reduce the cost ratios for marketing, personnel and other expenses. Second, TAKKT expects to see considerable economies of scale and efficiency gains from the stronger integration of Group functions, as well as from moves to expand cooperation between the various brands within a division.
TAKKT’s business model is not only characterized by above-average profitability, but also enables the company to generate high free cash flows. In addition to sales and earnings growth, the change in net working capital is another decisive factor in free cash flow development. The Group will be paying even more attention to allocating capital as efficiently as possible. The goal is to achieve a long-term increase in the free TAKKT cash flow to EUR 150 million by 2025.
An important part of the new strategy is the repositioning of activities that do not currently perform according to expectations. This relates in particular to Displays2go and Hubert, whose market environment has changed for the long term during the pandemic. TAKKT has launched extensive repositioning projects at both companies. These involve redefining the customer groups and markets that the companies focus on and reviewing the product range and additional services that are offered. The aim is to generate stronger growth and to return to previous levels of profitability.
The new strategy is not limited to improving the company’s financial success, but pursues a comprehensive approach. TAKKT is convinced that addressing the concerns of all important stakeholder groups is the prerequisite for sustainable financial success. This is why TAKKT has set itself ambitious goals for 2025 relating to customer satisfaction, employee engagement, and the environment and climate.
Increasing customer satisfaction
By focusing more strongly on the customer, TAKKT wants to improve their shopping experience and satisfaction. This can be measured with the customer NPS (cNPS), which shows a customer’s willingness to recommend and is monitored continuously. TAKKT’s goal is to achieve a cNPS of 60 points. To this end, the various business units are working on improving customer satisfaction further in a targeted manner. This includes continuously developing the product range with new, innovative products, providing better advice and problem-solving expertise in customer service, and even faster and more reliable delivery to customers. The more integrated structure will also allow customers to benefit from standardized processes for order entry, processing and delivery, and consequently from higher process quality.
Dedicated and motivated employees
Dedicated employees are the key element for excellent performance and the best customer service. The Group wants to further strengthen employees’ identification with the company and its attractiveness as an employer. While the cNPS indicates a customer’s willingness to recommend, the employee NPS (eNPS) provides information about the attractiveness of the employer and the willingness of employees to recommend it to others. This value is measured on a regular basis. TAKKT’s goal is to achieve an eNPS of 50 points in the long term. In order to achieve this, the business units are working on specific measures to boost employee commitment and identification with the company. This can include factors such as development opportunities or improving communication within the company. Details on the calculation of cNPS and eNPS can be found in the Management system section starting on page 43.
TAKKT is convinced of the advantages of assembling diverse teams at all hierarchical levels. Diversity refers to attributes such as cultures, nationalities, ethnic and social backgrounds, age, sexual orientation and also genders. The Group has set itself the goal of significantly increasing the share of women in executive positions by 2025, to 45 percent.
Preserving natural resources and combating climate change
TAKKT has also revised its sustainability strategy and defined new goals as part of its new orientation. The Group is convinced that sustainability represents competitive advantages across all stages of the value chain and enhances company value for the long term. As a result, the Group aims to differentiate itself even more from other market players in this area. In addition to further improvements in the company’s own processes and in the supply chain, the main focus will be on products. In addition, TAKKT intends to review the feasibility of business models that do justice to the idea of the circular economy.
Sustainable product ranges are increasingly sought-after, making them an important growth driver. At the beginning of 2022, TAKKT introduced a product classification system to help it measure the sustainability of its products and make this information visible, namely a rating system using criteria that determines whether products add value for the generations to come. By 2025, TAKKT wants to increase the share of "enkelfähig" products to 40 percent and thus make a significant contribution to resource-conserving business.
Moreover, TAKKT is committed to combating climate change. By 2025, all direct and indirect CO2 emissions (Scope 1 and Scope 2 according to the GHG Protocol) that result from the consumption of electricity, heat and steam will be reduced or offset. In 2022, the Group will extend the emissions survey to all activities and define and initiate a project with specific targets for their gradual reduction.
Further details on these sustainability goals and measures are presented in the new sustainability report, which will be published together with this annual report.
