In inter­view: A hid­den cham­pion reinvents itself

Inter­view with wallstreet:online and Von Roll CEO Dr. Chris­tian Hennerkes


Switz­er­lan­d’s eldest indus­trial group has been rely­ing on high-qua­lity insu­la­tion sys­tems for decades.
With elec­tri­fi­ca­tion, a new era is daw­ning for Von Roll. Inter­view with CEO Dr. Chris­tian Hennerkes.


Von Roll Headquarter, Breitenbach, Switzerland

When Chris­tian Hen­ner­kes took over as CEO of Von Roll AG in 2016, not much was left of the glamor of the
venerable Swiss indus­trial group. Von Roll was making los­ses of 20 to 50 mil­lion euros a year, and most of
its 19 sites were in defi­cit. Since then, the for­mer BCG mana­ger has tur­ned the com­pany around.
Today, Von Roll is debt-free and all loca­ti­ons are ope­ra­ting pro­fi­ta­bly, as Hen­ner­kes reports in an interview
with wallstreet:online.

After years of buil­ding up the com­pany, the time has come for the mana­ger to talk about what he has achieved
and pro­vide an insight into the com­pany’s future pro­jects. He talks to the w:o edi­to­rial team about the emerging
auto­mo­tive busi­ness, pos­si­ble acqui­si­ti­ons and the great poten­tial of Von Roll shares.

wallstreet:online: Mr. Hen­ner­kes, Von Roll is a house­hold name for many people, espe­cially in Switzerland,
as a steel manu­fac­tu­rer with a long history. In the mean­time, howe­ver, the focus has shifted to a completely
dif­fe­rent area.

Chris­tian Hen­ner­kes: Our cur­rent core busi­ness no lon­ger has anything to do with steel, but with power generation
and glo­bal elec­tri­fi­ca­tion. We are the world mar­ket lea­der for electri­cal insu­la­tion sys­tems, which are nee­ded in every
electri­cal app­li­ca­tion. Our big­gest sales mar­kets are pro­ducts for indus­trial motors and large electri­city generators
in power plants and wind tur­bi­nes. We sup­plied these sys­tems to China 40 years ago for large hydroelectric power
plants. Swiss qua­lity is highly appre­cia­ted on the Chi­nese market.

There is also the area of indus­trial resins, which are used to pro­tect elec­tro­nics in ever­ything from cell pho­nes to cars.
These are spe­cialty che­mi­cals that are used on many pro­duc­tion lines. Often invi­si­ble to the user, but essen­tial to
improve performance.

wallstreet:online: Now, with the energy tran­si­tion and the rapidly advan­cing elec­tri­fi­ca­tion of trans­port, a completely
new busi­ness area is ope­ning up. What role does this topic play for Von Roll?

Chris­tian Hen­ner­kes: The auto­mo­tive sec­tor is still small, but it is gro­wing at a rapid pace. Mean­while, the demands
on e‑motors and bat­te­ries are gro­wing just as fast: Long ran­ges, fast char­ging, and, if pos­si­ble, ever ligh­ter and more
power­ful. But as per­for­mance incre­a­ses, so do the tech­ni­cal chal­len­ges, for example with regard to bat­tery cooling
and par­tial electri­cal dischar­ges in the motor.

The trend is toward high-vol­tage sys­tems. This is an area in which Von Roll has tra­di­tio­nally been very well versed.
Our sys­tems for use in large power plants often have to with­stand hig­her loads for decades.

wallstreet:online: What does Von Roll do those large car manu­fac­tu­rers such as Volks­wa­gen can­not pro­duce themselves?

Chris­tian Hen­ner­kes: The electric power­train con­sists of nume­rous com­pon­ents. The manu­fac­tu­rer does not have
its own exper­tise for every com­po­nent. The mate­ri­als for the electri­cal insu­la­tion sys­tem have been deve­lo­ped, produced
and tes­ted by us for more than 100 years. Our cus­to­mers bene­fit from this experience.


Dr. Christian Hennerkes, CEO Von Roll Group

wallstreet:online: The shift toward elec­tro­mo­bi­lity is, above all, sup­po­sed to be sus­tainable. How does Von Roll,
as part of the value chain, manage to meet these requirements?

Chris­tian Hen­ner­kes: Sus­taina­bi­lity is indeed a regu­lar focus in dis­cus­sions with our cus­to­mers. This involves
both envi­ron­men­tal impacts and ethi­cal working con­di­ti­ons across the ent­ire sup­ply chain. What lithium is for
the bat­tery, mica is for the insu­la­tion. We have been mining this raw mate­rial — which is often asso­cia­ted with
child labor in the media — in our own mines under close con­trol for over 30 years. This gives us an important
com­pe­ti­tive advan­tage over the competition.

wallstreet:online: For many inves­tors, Von Roll is liter­ally a “hid­den cham­pion.” It has been quiet around
the com­pany in recent years. Why has­n’t the stock been on the radar of inves­tors and ana­lysts for a long time?

Chris­tian Hen­ner­kes: We spent five years tur­ning the com­pany around, and during that time we also gained
many new, talen­ted employees. We are now in a very good posi­tion, pro­fi­ta­ble, debt-free and have an equity ratio
of over 75 per­cent. Howe­ver, with sales of around EUR 220 mil­lion, we are pro­bably still too small to be on
the radar for many investors.

I am sure that will change. We have great pro­ducts that are important for the future of elec­tri­fi­ca­tion. We were an
early player in the elec­tro­mo­bi­lity mar­ket, inclu­ding being one of the first sup­pliers to Tesla. We esti­mate that our
pro­ducts are now in almost every second electric car in Europe. Von Roll also pro­du­ces the electri­cal insulation
sys­tem for the worl­d’s lar­gest off­shore wind turbine.

Our pro­ducts are very tech­ni­cal and require a lot of explana­tion. But now that the topics of energy tran­si­tion and
elec­tro­mo­bi­lity are gai­ning so much impor­t­ance, I believe that many inves­tors are also loo­king at our markets.

wallstreet:online: What growth are you aiming for in the com­ing years?

Chris­tian Hen­ner­kes: We want to grow at a clear dou­ble-digit rate every year. We have many exci­ting projects
in the pipe­line. But the appro­val cycles for our cus­to­mers until they are ready for the mar­ket are often lengthy.
So new pro­jects will only be reflec­ted in sales in one to three years’ time.

The Von Roll share is the­re­fore a stock that requi­res a little pati­ence. In return, inves­tors have the chance to get in early.

wallstreet:online: In recent years, the share has become a penny stock and thus also a kind of plaything for investors.
How would you like to make the share pala­ta­ble to investors?

Chris­tian Hen­ner­kes: The stock is also highly vola­tile because of the low free float of around 20 per­cent. However,
in the von Finck family, which holds around 80 per­cent of the shares, we have a strong anchor inves­tor who is interested
in the long-term suc­cess of the com­pany. In principle, there is also the pos­si­bi­lity of com­bi­ning shares in order to get
out of the penny-stock area.

wallstreet:online: Are acqui­si­ti­ons also plan­ned for future growth?

Chris­tian Hen­ner­kes: Abso­lutely! We are debt-free, in good health and inten­si­vely loo­king for take­over targets.
But in recent years it has often not been pos­si­ble to find take­over tar­gets at rea­son­able pri­ces. With the tur­naround in
inte­rest rates and the eco­no­mic slow­down, we hope that con­di­ti­ons and thus pri­ces will return to some degree of normality.

wallstreet:online: So how are the inte­rest rate tur­naround, the com­mo­dity cri­sis and the threat of reces­sion affec­ting Von Roll?

Chris­tian Hen­ner­kes: Com­mo­dity pri­ces have also incre­a­sed signi­fi­cantly for us. But we have been able to pass on a large part
of this to our cus­to­mers thanks to our strong posi­tion in the mar­ket. In view of the dis­rup­ted sup­ply chains around the world,
many car­ma­kers are once again rely­ing more hea­vily on local sup­pliers. Here we can score points with our glo­bal presence
and have a clear advan­tage over low-cost sup­pliers from Asia.

Des­pite the glo­bal poli­ti­cal tur­bu­lence, we have so far not felt any decline in demand due to the boom in the energy transition.
If, on the other hand, there were to be a deep reces­sion and our cus­to­mers were to stand still, we would cer­tainly not be com­ple­tely spared.

wallstreet:online: Thank you very much for the inter­view, Mr. Hennerkes.


The inter­view was held by Julian Schick, wallstreet:online Cen­tral Edi­to­rial Office.