Duravit discontinues new business in Russia

In the past financial year, the company posted record sales of EUR 604 million, around 28 percent more than in the previous year. In the current year, sales are expected to increase to 725 million euros. “We want to crack the billion in 2025 – and we will crack it, I’m sure of it,” says Tahy.

He is worried about the massive increase in gas prices in Germany. “Precisely because we have given our employees the guarantee that we will remain in Germany, it is particularly important to us that the government does everything to ensure that this location remains competitive,” demands the Duravit boss.

Read the full interview here

Mr. Tahy, given the daily reports from the Ukraine war, can you still concentrate on your work in the company?
The first thing I focus on is my employees, we have two in the Ukraine. At first you don’t think about business, but about how you can help. One family managed to flee to Poland and was taken in by a family from our branch in Warsaw. The other has found shelter in Lviv and is safe there, at least temporarily. We also have ten Russian colleagues who are affected in a completely different way than the Ukrainians. But they don’t feel comfortable in their own skin either.

Are you also involved in refugee aid?
We are already helping with our branch in Poland. All refugees who arrive there are taken care of. And we will also participate in other relief efforts.

How’s the business going?
That’s priority two in situations like this. But of course, as CEO, I also have to take a look at that. And we quickly decided to put our new business in Russia on hold for the time being.

For moral reasons?
I think at the moment it is not appropriate to deliver to Russia. I would not have a good feeling if I said: I would like to deliver a truck with the goods that I have ordered. The trucks are also needed to deliver the refugee aid, which is more important.

What sales are you talking about?
It’s not insignificant, it’s in the high single-digit millions for us, but that’s absolutely secondary for me. I fully support the international sanctions against the Russian government. It’s time to take a stand.

You have set yourself high growth targets for this year. Is that endangered by the global political situation?
Before the war, we experienced very high demand, especially from China, the USA and the Middle East. I see a lot of construction activity there and a very high demand for our products. At the moment I cannot imagine that this will be affected by the war. But of course none of us have a crystal ball and we don’t know what that ultimately means for the global economy.

What gives you courage?
We are in an industry that has so far been feeling an enormous tailwind. I speak a lot with project developers and am always surprised by the construction activity in the Middle East, in the USA, but also in China.

You can report a record leap in profits in the first year for which you are fully responsible at Duravit. What secret switch have you found that everyone missed before?
That’s not just my performance, man and machine worked at full capacity here. And we very quickly adjusted our production capacities to what is currently in demand around the world, that’s in Duravit’s DNA. However, we have also changed the responsibilities of around a hundred managers. And as a result, we got better grip on the road, for example in marketing and sales. And we also took over the Bernstein Group as a secondary brand for e-commerce.

Do such changes require an outside perspective?
You have to ask the owner family. But that was one of the reasons I heard for my attitude. I’m not the job hopper, but I’ve always gone into other industries. The first thing that was usually said was that you come from a different industry, you’ll never get it. But I have noticed that there are similar issues in all sectors.

What are the most important overarching themes?
The most important thing is always cultural change. How do I adapt a company that has grown well for a long time to a changing world and how do I take it to the next level. Another central question is how am I perceived as a brand, how do I best address my target group. And that’s when we kissed Duravit’s potential awake.

Where do you see potential in digitization?
It’s about automation, artificial intelligence in production, about data management. What helps me with data salad in 25 places that I can’t use? All areas of the company are affected by digitization, and it is about much more than just e-commerce.

How difficult is it to push through such changes against resistance from the workforce?
That is the main task, taking everyone along, especially in companies where there is no existential threat. You have to explain why this is necessary, although at first glance things are going well at the moment. I understand that there are also fears. And you also have to explain why it’s important that we grow at double digits.

Where is the pressure at Duravit?
We are a strong family business, but we are surrounded by large corporations. And if we want to stay strong, we have to invest a lot. We are investing more than we are making profit this year.

What can you do against the big corporations?
As a brand, Duravit is incredibly positively anchored worldwide, almost even more strongly with architects and project developers abroad than in Germany. And we have a competitive advantage in design.

How important are large orders to you?
Globally, the project business is around 25 percent. But that varies. In China, for example, the project business is 70 percent. But also in Europe and the USA there are always large orders, such as stadiums or hotels. Our aim is to supply the complete equipment for every project. I see us in pole position with the range of fittings that we have just launched. The conditions are definitely good.

In which markets do you see the best growth opportunities?
China is now the largest market and it is not foreseeable that growth there will weaken and demand for our products will fall. With our fittings in particular, we will go one step further. In the US we have a new country manager who comes from the industry and believes we can grow the business five to sevenfold. And in Europe, too, there is nothing to prevent us from increasing our market share from less than ten percent today to 15 or 20 percent.

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How important is it for the economic development to continue?
We had really good support from the strong construction sector. But if that wears off, the changes we have initiated over the past two years will still give us a good basis for achieving our goals.

Does that mean you don’t skimp on the bathroom fittings?
No, we don’t see that. Take Egypt as an example: Four or five cities are springing up out of nowhere, plus leisure facilities and hotel complexes. One might think that they are now taking providers from the entry-level price segment. The opposite is the case. They tend to want middle and upper class products, and we benefit from that. And it’s the same in other countries.

What growth do you have planned for this year?
We want to increase our turnover by 20 percent to 725 million euros. We want to break the billion in 2025 – and we will break it, I’m quite sure.

In all important regions worldwide you are on site with your own productions. What is the benefit?
A lot of people envy us for that, we intuitively set it up correctly in the past. This is the right strategy from a business point of view and it makes you independent of supply chain problems. And this is also the best way from a sustainability point of view.

They have set themselves the goal of becoming carbon neutral by 2045. At first glance, that doesn’t sound very ambitious. It was so long ago that you are no longer CEO.
With our industry, we are simply among those who have a particularly difficult time there. I don’t want to whine, but the facts are like that. When ceramics are fired, you need gas or oil, and a lot of CO2 is produced. Similar to the cement or steel industry, this poses a major challenge. But we want to solve that.

Business talks in the Handelsblatt:

How far are you on the way?
There, too, we intuitively did some things right, but now we want to dramatically improve that. We got Porsche Consulting as a partner and first did a status survey. What we do, we do right, we don’t want to create fakes here.

What does it mean exactly?
It’s not about compensation. The actual burning process accounts for around 75 percent of our CO2 footprint. And we have the ambition to set up the first ceramics production facility in the world that is actually climate-neutral. No stone is left unturned. We’re doing everything we can, but it’s a big step. And if we get there sooner, so much the better.

Do you see it more as a duty or as an opportunity?
I see it as an opportunity. As a company, we don’t see ourselves as driven. It’s not just the good feeling of doing something for your children’s future. It is also in demand from consumers.

Does that only apply to Germany or worldwide?
That’s a good question, and I always ask it. We have different speeds. I can already see Europe ahead, but this awareness is also growing in Asia. The trend is going in this direction everywhere.

The pressure has increased for you at the moment. The war in Ukraine is again accelerating the rise in energy costs. Does that scare you?
We are indeed worried about Germany as an industrial location, because it is already being hit enormously by the high energy costs – not only as a result of the current crisis, but also as a result of taxation. The gas prices are not going up slowly, but with the catapult. Precisely because we have given our employees the guarantee that we will remain in Germany, it is particularly important to us that the government does everything to ensure that this location remains competitive.

There are already voices demanding that gas imports from Russia be stopped. Are you at all sure that you will soon get enough gas?
At the moment we don’t expect to have a gas shortage. We assume that liquid gas can be delivered via European ports and that we can compensate for most of it. But then, of course, the costs will skyrocket again.

Mr. Tahy, thank you very much for the interview.

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