Camera Magica - Kaufmann and Leica

Over on Manager Magazine Online is an article called "Camera Magica" (in German - see below for English). It starts off by talking about the M Monochrom, how it took one and a half years of development and devouring "tens of millions of Euros" to bring to fruition. Hoping to sell 3,500 units - turns out, it was triple that. It goes on to talk about the near-bankruptcy of Leica Camera AG, the Blackstone investment, the new factory in Portugal as well as the new Leitz Park in Wetzlar (which cost €65M, financed by Kaufmann - Leica is a tenant!). Apparently the dream is to have 300 stores worldwide (with 150 currently). Plus mention of a new series of cameras and Internet services... A lengthy, interesting read.

Translation into English (via Google:

A few years ago the cult brand Leica was on the verge of bankruptcy. Can the former Waldorf teacher and visionary Andreas Kaufmann transform into a global company, the camera manufacturer now?

Andreas Kaufmann (59), the majority owner of the camera manufacturer Leica has, its employees often surprises with unconventional proposals. But with his idea to bring a camera on the market, which makes only black and white images, he pushed himself in his own house with incomprehension. Who should be because, many wondered Leica people, just buy a camera in the age of color photography? And at a price of 6800 euros - no lens.

Leica Chairman Kaufmann remained stubborn. The black and white project devoured tens of millions of euros and tied one and a half years, a large part of the development team - a daring undertaking for the small company. In the end, the visionary was right.

In May 2012, Leica presented Show Chart the digital "M Monochrome". Since then, amateur photographers and professionals tear to the model that brings forth a fascinating range of gray tones and shades. Kaufmann had hoped to 3500 units per year to sell, in fact there are about three times as many.

Whether the "M Monochrome", the compact camera "D-Lux" or the SLR system "S2" - the cult products from the Middle Hesse Solms are just as popular as in the United States or Russia in France. The fans did not hesitate to pay hundreds and thousands of dollars as a premium surcharge, and they take months-long delivery times out.

"An incredible myth"

"The name Leica," says Kaufmann, "brings an incredible myth." He says this with pride, after all, he has a great tradition, which was the mid-2000s the verge of insolvency, transformed back into a prosperous enterprise. This is also the reason why a merchant and Leica CEO Alfred Schopf in September to the " entrepreneurs of the year "(organized by the accounting firm Ernst & Young) were chosen - they were also as German representative for the international competition" World Entrepreneur of the Year 2014 nominated ".

After the successful restructuring Kaufmann is now pursuing an ambitious growth strategy. The production capacity will be nearly doubled in Wetzlar, the foundations are laid for a new headquarters, and in many places open Leica stores. In addition, the expansion of the product portfolio and the purchase of companies are planned.

The former Waldorf teacher businessman who has come through a rich heritage wealth will not make less than "a global company," from Leica. But what if the cost of the expansion overwhelm the company and Leica device end up back in a lopsided?

2 Part: From the Fast bankruptcy for an alliance with a financial investor Blackstone

In its hundred-year history Leica has experienced many ups and downs. The company was in the 50s and 60s of the largest camera manufacturers in the world, but then fell further and further behind. In fiscal year 2004/05, sales plummeted to 92 million euros, the loss after tax amounted to 18 million euros.

The main cause of the trouble lay in the outdated technology. SLR, autofocus, digitization - almost all the areas where the competition reüssierte, yellowed as a concept in the drawers of Hesse. It simply lacked the resources to implement the plans.

Merchant who had acquired the first shares of Leica in the summer of 2004, risked everything. He increased its stake in the listed company within two years to 96.5 percent, took out a deep cut in capital, stopped the share capital to and made sure that there is enough money flowed into the development. 2009, the feat was done: Leica had redesigned the entire website and presented three innovative model series.

Just one year after the product offensive, the Solmser rewritten profits. Meanwhile, revenues have soared to 325 million euros, the return on sales after tax for the financial year 2012/13, more than 12 percent (see chart, "The Legend Lives").

Alliance with financial investor Blackstone

In parallel with the revival of Leica is looking businessman with a financial partner to and eventually allied himself with the private equity house Blackstone Show Chart . The two owners thronged 2012, the last independent shareholders of the company and took Leica then by the Exchange. Kaufmann still holds 55 percent stake in Leica. For the remaining 45 percent of his Blackstone paid more than 140 million euros - about the sum he had invested in the company.

That is a private equity house with a minority stake satisfied, is unusual; just like the fact that Blackstone funded the purchase price alone with equity and Leica aufbürdete no debt. Both merchant had set as a condition.

The shrewd negotiator went even two steps further: Firstly, Blackstone had to commit, nachzuschießen capital if the own funds of Leica for expansion are not sufficient. On the other hand demanded Kaufmann, a longer-term commitment. "Five to ten years, I will accompany Leica in internationalization," says Blackstone-Germany-Chief Axel Herberg (55). Only then an exit is provided. Among the various exit scenarios is also an IPO.

3 Part: "Treated like the last idiot"

Businessman wants to drive Under no circumstances the company's growth with bank loans. He still remembers with a shudder, as he did when Leica was 2005 before ruin, by representatives of the Commerzbank Show Chart was summoned. They would have him "treated like the last idiot from the province."

In order not to be again bully of bank managers, Leica has received a promissory note loan of 50 million euro in November 2012. The money, however, is already largely exhausted. Alone, 30 million euros were it to build a new plant in Portugal, next to Solms the second manufacturing site of Leica.

Plant in Portugal, new factory in Wetzlar

The factory near Porto was inaugurated in the spring. There are more Components can be produced than in the old halls. However, the delivery time is in particularly high-quality lenses still five to six months. "We are already operating three shifts and do not come with the production anyway after," says Alfred Schopf (56), CEO of Leica.

The situation will probably relax until 2014, when Leica Show Chart moving into the Leitz Wetzlar Park. At 28,000 square meters will besides offices and a much larger factory in Solms as a photo museum, a Leica shop and a visitor center.

Already come a week for two to three buses with Leica fans after Solms, to marvel at the objects of their desire. In the future, expects Schopf annually with 60,000 people passing through the glass corridors.

4 Part: million euros for research - back to the Olympus of Photography

The expansive complex in Wetzlar cost around 65 million euros. Leica would have had to borrow more to shoulder such a high sum. Or the owners could increase the capital. Because Kaufmann neither wanted, he financed the investment from his personal assets. Leica will move into the Leitz Park as a tenant.

More beautiful building, modern factories, attractive products - like a man possessed works Kaufmann sought to tap again to Olympus Leica photography. Well twelve million Euros are the company annually on research and development. A new series of cameras will be offered soon, also various Internet services are planned.

In addition to a paradigm shift in marketing the business accelerate. Previously Leica sold mainly on classic dealer, but of this species, there are not too many more - few can even withstand competitors such as Media Markt and Saturn.

Kaufmann's dream of 300 exclusive stores worldwide

Therefore, the Hesse sell their goods now increasingly shops and stores that are operated either by Leica themselves or by franchisers. On the shelves of stores exclusively cameras, lenses and accessories from Leica are.

The approximately 150 small shops are mostly located in the best locations of big cities like Berlin, Shanghai and Moscow. Will come across hundreds of square meters offered for sale - There are also two flagship stores in Los Angeles and Solms, where the expensive products - particularly exclusive cameras can ever cost up to 40,000 euros.

Merchant would like to expand the network quickly. He dreams of 300 and more stores around the world, but still hands him are bound. "What bring us many new shops," he asks, "if we have too few products that we can sell?"

5 Part: internationalization in 2014 - also in view of China

It was not until 2014, when finally enough supply comes from the factories to the internationalization be clearly in focus again. 88 percent of its sales abroad at the controls already, especially America. China, however, is still largely broke.

For the development of the country Blackstone Show Chart help. The private equity house, which was also a Chinese sovereign wealth fund is involved, has good contacts in Asia and Leica can stand aside with the logistics or legal issues.

Kaufmann and his junior partner Herberg spur each with their apparent optimism at each other. Until fiscal year 2015/16 they want to increase sales of 325 million euros to 500 million euros.

The profits stay within the company

The financing of growth seems assured. Hostel can be implied that all profits would be reinvested for the foreseeable future, and if they lacked capital, the owners could reloading.

To do homework, it is still within the company itself, the capacity expansion works only if more highly qualified staff is trained, the production in the old Solms factory buildings is not very organized efficiently and cost structures must be optimized.

"Leica does have the awareness of a global brand," says Kaufmann, "but we are not yet as a global corporation set up."

This, however, he pushes hastily after, "is going to change soon."