Daniel Harari’s vision Chief Executive Officer

A year marked by the COVID-19 crisis and its consequences

2020 will be remembered as the year of the COVID-19 crisis. As the situation emerged, our first priority was to take whatever measures were required to protect the health of our employees, our customers, our suppliers and everyone involved in Lectra’s operations. Immediately thereafter, Lectra’s teams in France and many other countries volunteered to contribute to manufacturing face masks and protective medical coats.

Furthermore, we decided not to put in place short-time working arrangements (under the partial activity scheme), and not to benefit from any financial support from the French government, considering that our own resources would enable us to weather the crisis and that such support should be reserved to those in need. These decisions and the dedication of our teams provides ample evidence of Lectra’s commitment to its social, environmental and societal responsibilities, and to the fundamental values that underlie these responsibilities.

A business model that has once again demonstrated its robustness – a very strong balance sheet

This crisis has again demonstrated the exceptional strength of our business model, which has attenuated the impact of the crisis on our results, while confirming Lectra’s capacity for resilience.

Despite a 14% decline in revenues, income from operations before non-recurring items totaled 25.6 million euros and the operating margin before non-recurring items came to 10.9%. Free cash flow amounted to 25.2 million euros, exceeding net income by 7.6 million euros. Finally, thanks to the improved performance in the third and fourth quarters, growth in revenues from recurring contracts in 2020 despite the crisis, and an even stronger balance sheet, with consolidated shareholders’ equity of 192.2 million euros and a net cash position of 134.6 million euros, we can look forward to 2021 with confidence.

An acceleration in the implementation of our Lectra 4.0 strategy

Launched in February 2017, the Lectra 4.0 strategy aims to position Lectra as a key Industry 4.0 player in our market sectors between now and 2030. So far, the strategy has been implemented through two strategic roadmaps, the second of which covers the 2020-2022 period.

Despite the consequences of the economic crisis caused by the COVID-19 pandemic, most of the roadmap’s objectives remain unchanged. Significant progress was made in 2020, particularly in the growing adoption of Lectra’s offers for Industry 4.0, with almost 150 new customers in 2020, bringing the total number of customers who use these offers to 270.

A strategic acquisition adding a new dimension to Lectra

On February 8, 2021, Lectra announced plans to acquire the entire capital and voting rights of its largest competitor, the US-based company Gerber Technology. The acquisition, if and when consummated, would occur at an opportune time for both companies and their customers.

The current uncertain economic climate and unprecedented challenges that fashion, automotive and furniture companies are facing due to the COVID-19 pandemic make it more important than ever for them to transform, digitalize and optimize their operations. This combination will create for customers of the new group a premier advanced technology partner able to deliver even more value through seamlessly integrated solutions. Together, the two companies will have a large installed base of product development software and automated cutting solutions in operation, with a worldwide presence and a long list of prestigious customers.

The acquisition is also expected to create significant value for Lectra’s shareholders, given each company’s individual financial performance and the synergies resulting from their combination. While the year 2021 remains uncertain, due to the evolution of the pandemic and its consequences on the macroeconomic environment and on the financial situation of the Group’s customers, it should nevertheless provide Lectra with the opportunity for a rebound in revenues and earnings. I hope that you will find this report of interest and trust it provides the information you require.