The powerful Danish DLG Group has approved an extraordinary write-down of the book values in Kongskilde Industries as part of the on-going turn-around process. The write-downs and restructuring has a total net effect for the DLG Group of DK555 million (£54 million). “We’ve taken the necessary strategic decisions to make Kongskilde Industries more profitable and subsequently prepared for a potential divestment,” says Lars Sørensen, DLG Group’s CFO, deputy group CEO and chairman of the board in Kongskilde Industries. Mr Sørensen says Kongskilde Industries is on the right track after a couple of difficult years, which saw the company record a loss of DK64 million (£6.2 million) during 2014. “We have made a major effort in the on-going turn-around to make Kongskilde profitable again but in order for the company to reach its full potential longer-term there is a need to find a strong partner or a new owner,” he says. The DLG Group is the largest shareholder in Kongskilde Industries, and Group chairman Niels Dengsø Jensen says Kongskilde no longer fits the company’s strategic focus. “The write-down breaks with a failed strategy in the production of farming equipment. In fact, Kongskilde would do better in a group where agricultural machinery is the core competence. Likewise, the DLG Group will better be able to concentrate on developing its core business and increasing revenues.” Kongskilde is already preparing for a new future, the first signs of which were visible at last week’s French SIMA show where it announced its new single brand strategy. In the future, all products will carry the Kongskilde brand name and red colours to pave the way for further expansion on the global agricultural market. Previous brand names like JF, Becker, Nordsten, and Howard will no longer be marketed separately.
The introduction of what Kongskilde calls its ‘One Brand Strategy’ is part of a large-scale process where factories, sales companies and administrative functions have been integrated in order to form a more streamlined Kongskilde. The subsidiaries Becker in Germany and Howard in Spain are already fully integrated in the company, as the company names have been changed to Kongskilde. Furthermore the distribution of spare and wear parts has been centralised.
“We are very excited about the introduction of our new strategy. It expresses our move towards a more visible Kongskilde brand, creating solutions that improve the bottom line for farmers,” says CEO Ole Gade of Kongskilde Industries. “SIMA 2015 marked the beginning of an exciting journey for all of us.” It remains to be seen where this exciting journey will end. Faint rumours circulated the SIMA halls last week that a Chinese company is looking to acquire a European implement maker, and New Holland is making no secret of plans to enter the European cultivation scene. Could Kongskilde be the company New Holland is looking to team up with, or perhaps even take over? Such a move would not only give it cultivators, drills, ploughs and even grain handling equipment, but also an extensive range of grassland equipment and mixer wagons.
