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Strategy

Recticel’s strategy is to sustainably position the Group as the leading supplier of high value added solutions in the Group’s key markets.

Priority will be given to:

• innovation in the areas of applications, products and materials, in combination with high quality and service levels, and to brand awareness among end consumers wherever applicable;

• international expansion outside Europe; and

• the overall simplification of the Group and the rationalization of the manufacturing footprint.

 

Continuous improvement in the development of its human resources, as people and teams are key to success. Likewise, meeting sustainable development criteria in all business decisions is considered to be a mandatory contribution to long term success.

 

The building blocks of the Group’s strategy can be illustrated as follows:

Business Line Positions and Strategic Views

The Group’s strategy is defined on the basis of its core competences of transforming PU and other polymers and materials in value-added applications, the relative attractiveness of the markets in which it operates and the competitive strengths of the Group in each of these markets. The strategic plan prioritises resource allocation to the various business segments.

The Group assessed the attractiveness of the markets in which each Business Line is operating, based on criteria such as size, growth, profitability and capital intensity. In addition, the Group’s competitiveness in each of these markets was evaluated. On the basis of this analysis the Group concluded that the Business Line Insulation is the most attractive, followed by Bedding and Flexible Foams. Given the positioning of Recticel’s Business Line Automotive, both divisions of this Business Line are considered non-core for Recticel in realising its strategy going forward.

On the basis of the above illustrated Business Line positioning and looking forward, the Group has defined specific strategic actions. In some cases these actions are common to all Business Lines, in other cases the Group will pursue Business Line specific actions. As a result, each Business Line has its own strategy, which can be summarized as follows:

Insulation: Grow through international expansion, innovation and the introduction of new products, modules and distribution channels, supported by capacity expansion, selective growth initiatives and acquisitions.

Bedding: Improve its profitability through operational efficiency and selective growth initiatives. Organic growth will be based upon a strong marketing strategy, product innovation, the right Brand/Private Label strategy, and an optimised network of production facilities.

Flexible Foams: Improve its profitability through operational efficiency and selective growth initiatives. This will be realised through rationalisation and modernisation of the manufacturing footprint. Selective growth initiatives will be based on new products and further geographical expansion in the Technical Foams Division.

Automotive: Fully capitalize on the existing production capacity. This is envisaged to be realized through tight investment control. Both Divisions are envisaged to be stabilized through the introduction and support of innovative products and the continuous optimisation of their industrial footprint and capacity utilisation.

Supporting Strategies

To support the execution of the different Business Line strategies, Recticel believes that each should be further supported and guided by the following three action pillars:

Simplification

The Group intends to further simplify its structure, organisation and processes in order to increase its operational efficiency and to reduce fixed costs. This should allow the Group to react even more quickly on market evolutions, increase its profitability and better manage its people and processes.

The Group has taken actions in different fields such as the reduction of headcount, the decrease in number of plants, joint ventures and legal entities, but also a reduction in the number of product ranges and optimisation of the customer portfolio. In addition, the Group aims to foster on its synergies via further centralisation, standardisation and optimisation of common processes and administrative tasks.

Although significant progress was made in the past four years, the Group will continue to strive for further streamlining and optimisations. Over the last five years, the Group has reduced the number of plants from 128 to 99. At the same time, the workforce has been reduced by about 2,300 employees to approximately 7,578 employees and the number of joint ventures has been scaled down from 22 entities to 12. In the same context, the number of subsidiaries has been reduced from 119 legal entities to 90. Also the number of product references has been brought down. Over the last five years, restructuring costs amounted in aggregate approximately EUR 51 million.

International Expansion

Holding strong market positions in various European markets, the Group intends to further pursue growth via international expansion, inside as well as outside Europe. In this respect, the Group defined a clear strategy per Business Line.

Insulation Via its Business Line Insulation, Recticel is today a market leader in the PUR/PIR segment in Belgium and has leading positions in the United Kingdom, France and The Netherlands. Furthermore it is selling in Germany and Poland. The Group is determined to expand its presence further in Europe in the first instance via continued development of its activities in existing markets such as France (where a new plant was launched in 2013) and the United Kingdom, as well as through potential expansion into new markets. In addition, the Group wants to expand its insulation activities outside Europe to play an active role in the development of high growth markets.

Bedding The Business Line Bedding is currently mainly present in European countries such as Austria, Belgium, Germany, Poland, Scandinavia, Switzerland and The Netherlands. A small fraction of the business is done through export to France, Italy, Eastern Europe, China and Australia. Europe will remain the focus market for the Business Line Bedding where it will further develop its presence in existing and new markets.

Flexible Foams The Business Line Flexible Foams is currently already globally active, but the majority of its operations are based in Europe. Via its Division Technical Foams, Recticel is also present in North-America, Asia and North-Africa. It aims to further grow these activities in the United States besides India, China, and Morocco.

Automotive Via its Division Interiors, Recticel is present mainly in (Eastern) Europe, but also in the United States and increasingly China. The geographical expansion of Interiors follows the end customers, the Original Equipment Manufacturers (OEMs). By setting up its activities physically in the customer plants (plant-in-plant concept) the business can obtain the required customer proximity whilst limiting the investments needed.

The Division Seating has a strong presence in Europe via its plants in the Czech Republic, France, Germany, Poland, Spain and the United Kingdom. Going forward, the Division aims to grow further within Europe as this is the territory agreed with its joint venture partner.

Innovation

Market-driven innovation is at the heart of Recticel’s success. In order to successfully capture future opportunities, the Recticel Research & Development department has been organized in order to increase the pull effect by the different Business Lines. Also the flexibility in the Group’s resource utilisation has been upgraded with the goal of providing successful innovation.

The following important innovations have been brought into the markets:

In the Business Line Insulation, several new products have been introduced, including a higher performance product with an insulation factor (lambda) reaching 0.021 W/mK. This is a new generation of PIR panels offering a 10% improvement in thermal insulation by its improved chemistry. This can create savings up to 1cm in living space. The product was launched on the Belgian construction fair Batibouw in 2014.

For the Business Line Bedding, an innovative new product, branded as GELTEX® inside has been created. In this application area it is the Division’s largest and most important innovation of the last decade. The product differentiates itself through its combination of optimal pressure distribution, ideal support and maximum permeability/climate control properties. The development of the GELTEX® inside brand has already been translated in effective and growing sales.

In the Business Line Flexible Foams, new generation of acoustic foams have been introduced. In this context Recticel’s Technical Foams Division won new contracts for Boeing. Also new products and solutions have been developed and marketed for acoustic insulation for the building sector. The Group has further developed a new comfort foam angelpearl® for its third party bedding customers.

In the Business Line Automotive, an important innovation has been marketed as from 2013. The product is branded under the name Colo-Sense® Lite. It is a high performance skin for automotive interiors applications enabling a weight reduction of 25% responding to the OEM’s constant search for lighter products. The product is not only lighter, but has premium optic and haptic characteristics, with the same quality and durability properties as its predecessor Colo-Fast®. This innovation attracted the attention of several premium OEMs and resulted in a series of new contracts.

Human Organisation

Next to the strategic action pillars (simplification – international expansion - innovation) Recticel believes that the successful execution of its strategy can only be realized by a professional human resources process.

In the present rapidly changing business environment, the ability to learn quickly and to rapidly acquire new competencies can be a key competitive advantage for the future growth of the Group. All employees should therefore be able and get the chance to continuously develop and learn new competencies. To reach this objective, the Group has implemented a wide set of policies, programmes and actions.

In addition to the training programmes, Recticel has also implemented a Group performance management process which should help employees to focus on results and promote key behaviours and success attributes. The Group aims to reward performance. The annual performance review helps managers to coach and to develop the employees in the best possible way.

The performance reviews make the performance visible and assign accountability for business success to each and every employee. The performance standards also create alignment; hereby ensuring that all employees and departments are working on the implementation of the Group’s strategy.

In order to strengthen the implementation of the Group strategy, the Management Committee was reinforced by several new appointments in the last few years including three new Business Line Managers and the introduction of two new important positions: Chief Procurement Officer and Chief Sustainability Officer.

Sustainability

The Group has put sustainable innovation at the center of its strategy to create a competitive edge and value for all its stakeholders. For all new investments, sustainability will be taken into consideration

Recticel is committed to prioritise investments in segments and/or products contributing to the sustainable development of society. This includes additional investment to optimize and expand its building insulation segment. The Group manages its production processes and supply chain to minimize raw material, energy and water consumption and takes initiatives to reduce waste and transports. In its constant strive for innovative solutions, the Group intends to develop solutions enabling proper re-use or re-cycling of products after their end of life. This is supported by the introduction of R&D development programs for processes and chemistry. In addition, Recticel operates to the highest standards of safety and environmental protection which is carefully monitored and continuously reviewed for improvement by its department for Health, Safety and Environment.

The Group has launched its sustainability report 2015 in September 2016.