Strategy and business model

Continuing to focus on the long term, the Lectra 3.0 strategy initiated in late 2009 demonstrates, year after year, its relevance and further strengthens the company’s business model. In six years, Lectra has renewed almost all of its entire offer, bolstered its premium positioning, increased its lead over competitors and won market share. Through the company’s 2012-2015 transformation plan, which was supported by €50 million in investments for the future, Lectra is ready to seize opportunities resulting from the new global economic balances

 

 

A STABLE ENTREPRENEURIAL SHAREHOLDER STRUCTURE FOR SUSTAINABLE AND PROFITABLE GROWTH 

Lectra is a great entrepreneurial adventure. The clear vision of its executive directors—who hold 36% of its capital—and the energy deployed to constantly reinvent the company allow Lectra to seize opportunities while keeping risks under control. This determined, committed management approach ensures strong growth and high profitability over the long term. Lectra’s strong financial fundamentals and stable shareholder structure enable it to allocate significant investments to R&D, infrastructure, and human capital each year.

 

CREATING VALUE FOR CUSTOMERS 

Lectra supports its customers’ growth and their quest for operational excellence in a highly competitive global environment. Companies must today respond to a continually evolving demand, differentiate themselves by favoring creativity, improve productivity, and reduce both cost and time-to-market, while guaranteeing quality. To satisfy these many imperatives, Lectra is called upon to intervene at increasingly strategic levels in major global accounts and to support customers’ change strategies on the strength of a combination of expertise in their businesses, advanced technologies and change management.

 

LECTRA'S strength: SYNERGY BETWEEN EQUIPMENT, SOFTWARE AND SERVICES 

Lectra’s positioning is unique. Its capacity to combine equipment, software and services—rather than merely juxtaposing them—has enabled the company to create a global offer which exceeds the value of that of single solutions. This approach is built around the implementation of lean strategies through proven change management methodologies, while integrating best practices of its customers’ businesses into its offer. Mastering the integration of these components is the foundation of Lectra’s ambitious industrial strategy.

 

 

INNOVATION, At the service OF EXCELLENCE

Innovation is an integral part of Lectra’s genetic code, a daily passion for Lectra teams. Innovation is what enables the company to transform complex challenges into opportunities, reinvent its offer to further strengthen its premium positioning and increase its technological lead. The geographic proximity of its R&D teams, the main Call Center and production teams is a genuine accelerator of innovation. Their close cooperation improves all processes that combine to ensure customer satisfaction. Innovation drives Lectra’s competitiveness.

 

DNA PRESERVED BY KEEPING R&D AND PRODUCTION IN FRANCE

The decision taken in 2005 to keep R&D and production in France has enabled Lectra to develop both a unique offer and improve its competitive position thanks to innovation, while protecting its industrial property. While its main competitors chose to manufacture in China and now face continuously rising wages and social charges, which, together with inflation and the appreciation of the yuan, have increased their production cost, Lectra has achieved its highest-ever gross profit margins on equipment, thus confirming the relevance of its strategy.

 

A TRANSNATIONAL COMPANY

Based in France, Lectra has built up a major worldwide presence since the 1980s. Today the company has 33 subsidiaries and more than 1,500 employees with 50 different nationalities. The density of its international network enables Lectra’s teams to deliver its value proposition throughout the world by adapting it fully to each local market and by relying on the real time interventions of its experts in its five international Call Centers. Lectra is always close to its customers and can accompany them wherever they are located. 

 

A SOLID, PROVEN BUSINESS MODEL 

Lectra’s business model is based on three pillars:
1. A balance of risks, which benefit from natural hedging by the distribution of business activity over market sectors and geographical markets with cycles that are different from each other, and by the very large number of customers throughout the world.
2. A balanced revenue mix between revenues from new systems sales, the company’s growth driver, and revenues from recurring contracts, consumables and spare parts, a key factor in the company’s stability, that provides a cushion in periods of difficult economic conditions.
3. The generation of annual free cash flow exceeding net income(1).

 

(1) Assuming utilization or receipt of the annual research tax credit and the competitiveness and employment tax credit applicable in France.

A LONG-TERM STRATEGY

The world is witnessing a redistribution of positions in all geographical and industrial markets and changes in companies’ business models. To build its future, Lectra has undertaken vital reforms since 2009. At the end of 2011, it decided to accelerate its transformation by devoting the requisite financial and human resources to enable the company to fully realize its growth potential. 

 

A WILLINGNESS TO ACCELERATE GROWTH 

Among Lectra’s five growth accelerators, three will drive most of the company’s development in the coming years, while the two remaining will play a role over the medium term. Firstly, China, due to the unprecedented growth of its domestic market, which is becoming increasingly upscale, and the United States, as a result of its industrial revival. Secondly, the automotive market, boosted by China’s and emerging markets’ strong growth, as well as the increase in demand for leather interiors and the increase in the number of airbags. Thirdly, PLM (Product Lifecycle Management) for fashion and apparel, due to the increasing complexity and number of collections.

 

CLEAR AND AMBITIOUS FINANCIAL GOALS

The main goals of the 2013-2016 roadmap are founded on purely organic growth. They were initially based on February 1, 2013 exchange rates, notably $1.35/€1. In light of turmoil in the macroeconomic environment and the complex effects produced by the sharp fluctuations in currency parities, Lectra’s ambition is now to reach its objectives at actual exchange rates rather than like-for-like.

 

 

(2015 Annual Report)