This Swiss Appliances Company Is Gathering Steam on Chinese SmogBy
Metall Zug exports closets that remove smoke odors from suits
Maker of dishwashers and microwaves wants to expand abroad
At 11,000 Swiss francs ($11,300) a pop, Metall Zug AG’s “Refresh Butler” is no ordinary steam cleaner. But it may be key to the Swiss maker of luxury household appliances’ big leap into China.
The Zug-based company is counting on the steaming closet that can rid business suits of the lingering smells of smoke and smog to increase its foothold in Asia’s biggest economy as it takes steps to sell more of its household appliances abroad.
“It’s a door opener,” Chief Executive Officer Juerg Werner said in a May 16 interview at the company’s headquarters in Zug. To the company’s surprise, the product is proving popular in China, where airing clothing can be difficult in cities due to smog and poor air quality, Werner said.
“People in China smoke a lot,” he said. “I spent some four to five hours in thick smoke when I was there -- it stank like crazy.”
Better known abroad for its wire-cutting machines and hospital sterilization equipment, the 130-year-old manufacturer sells more than 90 percent of its household appliances -- from washing machines and refrigerators to steam ovens -- in its home market. A 2 percentage point increase in foreign sales to 8 percent of the total last year is a first step toward its plan to export more from this division, Werner said.
“We’re not selling our whole collection abroad, only our premium range,” the CEO said. Targeting an increase in international sales to 100 million francs in the medium-term, Metall Zug is focusing on select markets like China and Australia as it plans its assault. In 2016, its household appliance business generated net sales of 46.7 million francs outside of Switzerland.
“It’s a narrow segment we’re serving here, in China, too,” Werner said. “The top end is relatively thin. Nevertheless, we managed to win some top projects in China recently,” he said, declining to provide details.
Since Werner took the helm in 2012, Metall Zug has increased its net cash position by more than 50 percent to 543 million francs at the end of 2016. That’s almost one-third of the company’s total market capitalization of 1.8 billion francs.
The strategy is paying off for shareholders. The stock is heading for a third straight year of outperformance relative to the Swiss Performance Index, up 30 percent since the start of the year compared with a 15 percent increase in the gauge of more than 200 stocks traded on the electronic bourse system. Of three analysts who rate the shares in a Bloomberg survey, two recommend buying the stock and one advises holding Metall Zug.
Werner said the company is open to using its cash pile to make acquisitions to grow abroad, as well as on internal investment. While the household appliance division has a factory in China for components, much of the appeal of a luxury product like “Refresh Butler” comes from its assembly in Switzerland, according to the CEO.
“The Chinese don’t want a locally made product, they can buy that just as cheaply from Chinese companies,” Werner said. “It’s important in China that the appliance is ‘Swiss Made’.”
— With assistance by Cecile Vannucci