dormakaba News, Ad hoc
dormakaba initiates transformation program to strengthen the company for the future
Monday, 3 July 2023
dormakaba is launching a transformation program to further drive customer centricity, strengthen the company for the future, and achieve its mid-term targets. The company expects resulting cost savings with a run-rate of approximately CHF 170 million by 2025/26 and a net reduction of full-time equivalent positions of up to 800. The program aims to further consolidate the global production footprint, to reduce the supplier base, to improve sourcing capabilities and to re-focus Product Development through a single global roadmap. In addition, dormakaba will optimize its General & Administrative functions by leveraging shared service centers for Human Resources and Finance. The transformation will be supported by consolidating IT initiatives to drive standardization for an improved customer experience.
Rümlang, 3 July 2023 – As part of dormakaba’s Shape4Growth (S4G) strategy the transformation program represents an important step towards achieving better profitability and sustainable volume growth. It is designed to ensure attainment of the company`s mid-term financial targets, an annual organic sales growth of 3%-5% for each future financial year, 16% to 18% adjusted EBITDA margin reached in 2025/26 financial year and a ROCE of above 30% starting from the 2025/26 financial year. The transformation program is projected to deliver estimated combined cost savings on a run-rate basis of approximately CHF 170 million per year by the end of 2025/26. One-off costs of approximately CHF 225 million and a one-time additional CAPEX investment of around CHF 100 million (IT, Operations) will be incurred starting in 2023/24. The main impact on Items Affecting Comparability (IAC) will materialize in the same year. For 2022/23, dormakaba expects IAC to increase to around CHF 60 million, including CHF 30 million related to the transformation. While the program`s implementation may impact up to 1800 positions, the expected net reduction of full-time equivalent positions will be approximately 800.
The program aims at boosting network and production efficiency and expanding procurement improvement efforts. It also includes the establishment of shared service centers for Finance and HR. The new organizational structure will focus all R&D efforts and shorten time-to-market. This will be supported by nearshoring and consolidating development resources, including newly established dedicated R&D Centers. Supporting all these initiatives, dormakaba will reduce IT systems complexity and costs while enabling process efficiencies and standardization across its operations.
All the organizational changes will come into effect step-by-step starting in 2023/24 once negotiations with the respective workers’ representatives have been completed in a socially responsible manner.
Jim-Heng Lee, dormakaba’s CEO, says: “We are intensifying our effort to become an undisputed industry leader that achieves above-market growth. This effort will free capacity for further investments in growth and strengthen our innovation capabilities. We are determined to get it right and will continue our path of sequential improvements. Eventually we must get better before we get bigger”.
Beyond the program, dormakaba remains committed to implementing strategies that create headroom for further investments in sustainable growth initiatives and innovation capabilities. Starting from 1 July 2023, dormakaba is operating under a more streamlined organizational structure, as announced on 30 March 2023. The new setup will sharpen the company's focus on its core markets, where it owns strong competitive positions.
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