“We Have Focused On Europe For Profits”

Andrea Merloni is one of the representatives of the second generation of the Merloni Family. He says that their turnover has contracted by 20 percent as a result of the crisis. He plans to increase their market share from 8 percent at present to 12-14 percent within 5 years. We spoke with Indesit Company Deputy Board Chairman Andrea Merloni about their targets for Turkey, their management secrets as a family company and their strategies for Europe.

* White goods have been severely affected by the crisis. How has the crisis affected Indesit in terms of turnover and profitability?
In 2007 our turnover was €3.4 billion. I estimate that it will be €2.6-2.7 billion in 2009. That means we shall have lost €800 million as a result of the crisis, which represents a decline of 20 percent. In terms of profitability, we shall close 2009 with EBITDA of €90 million.

* On which markets have sales declined the most?
Russia is the market which has been hit the worst. There has been a contraction of 12-15 percent on the Italian and French markets and a decline of 35-38 percent in the sector in Russia. This is a serious problem for us. Because we were the leader in Russia. But I believe that the market will recover over the next 6-7 months.

* What global strategy is Indesit pursuing?
We are the second largest company in our sector in Europe. In terms of volume, we have a market share of 15 percent. In fact, I can say that we don’t have a global strategy. Our strategy is more focused on Europe.

* How did you change your strategy to ensure profitability in a time of crisis?
What was most difficult for us was transferring our area of profitability from eastern Europe to western Europe. A large proportion of our profits was coming from eastern Europe and, when this declined as a result of the crisis, we focused on more developed western European countries such as Britain, Italy and France. One of the branches of our strategy is innovation. If we take 2009 as an exception, we have been investing over €100 million a year in innovation. Last year we were able to allocate €50-60 million.

* What are your predictions for 2010?
2010 will still be difficult but it will be better than 2009. The financial situation will be a little more reliable. But it will still be a difficult year. We shall continue to invest this year. In 2009, we cut back on our investments in innovation and advertising and we shall also continue with this in 2010.

* There is very intense competition in Turkey. How are you positioned in Turkey?
At the moment we have a share of 8 percent of the Turkish market but of course we want to increase this still further. In fact, we have done a lot of business in Turkey but the competition here is very difficult. But there is not only price competition but distributor competition. We shall continue to grow on the Turkish market. I think that we shall have a market share of 12-14 percent within five years.

* Are you thinking of making Turkey an export base?
We already use Turkey as a production and export base. Only 20 percent of our production here goes to the domestic market. We export the rest to European countries. In 2008 we had exports of $196.6 million and domestic sales of TL 220 million. Of course, in the future we can use it as a center for the countries of Asia and the Middle East.

Elcin Cirik
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