Mainz On Wednesday morning, the chairman of the board, Frank Heinricht, presented good figures for the Mainz-based foundation company Schott. The sales of the special glass manufacturer rose by 13 percent to 2.5 billion euros in the staggered 2020/2021 financial year (until September 2021). The operating result before interest and taxes even went up by 35 percent – to 390 million euros. “It was a very successful business year for Schott, we are very satisfied,” said Heinricht in the video conference.
A closer look shows, however, that not everything is running smoothly at the Mainz-based company.
Schott is benefiting from the pandemic. The glass manufacturer, which is 100 percent owned by the Carl Zeiss Foundation, manufactures pharmaceutical tubes. The Mainz-based company and other customers use this to produce the small bottles for vaccines. The corona booster vaccinations ensure a sustained high demand here. In 2021 alone, the company delivered vials for five billion vaccinations.
However, this business accounts for only a small proportion of the growth. “Of course we achieved additional sales as a result, but it’s only one to 1.5 percent of total sales,” said Heinricht. The much larger growth came from the household sector. During the pandemic, people withdrew more into their private lives, the so-called “cocooning effect”. Schott benefits here above all from its glass ceramic hobs – the brand name “Ceran” is a synonym for the product, like “Tempo” for paper handkerchiefs or “Föhn” for hair dryers. “In the meantime we have sold over 200 million cooking surfaces,” says the company boss.
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However, the pandemic also has negative effects at Schott. The prices for raw materials and energy have risen, and the Mainz-based company is also feeling problems in the supply chains. Although there are currently no bottlenecks in the company’s own raw materials, mainly lithium and boron, there are sometimes problems with the delivery of the products, said Heinricht. And if the customers themselves cannot deliver the goods, there will also be less demand at Schott.
Rising energy and raw material prices weigh on the result
Heinricht therefore expects moderate growth of three to five percent for the current fiscal year. Earnings are burdened by rising energy and raw material costs. “This is a high double-digit million amount that we have to finance,” said the Schott boss.
Heinricht has been managing Schott since 2013, he will be 60 on March 2nd. The company employs over 17,000 people, 6,000 of them in Germany. In addition to the ceramic hob, the pharmaceutical business also plays an important role.
For example, the company has developed a carrier made of glass substrate and plastic that is intended to facilitate laboratory diagnostics. Blood can be dripped into up to 130 small wells, and a device can then analyze this for up to 130 parameters at the same time.
The physicist and engineer Heinricht has been relying on innovation in his growth plans for years. He intends to invest 450 million euros in the current financial year after Schott set a new record of 350 million euros in the past fiscal year. “We are thus laying the foundation for profitable growth in the coming years,” said Heinricht.
That is why the company boss wants to focus less on the glass vials for the Covid vaccines, which are currently in high demand, and more on innovations such as ultra-thin, flexible glass. Special machines draw layers with a thickness of 30 to 40 micrometers from liquid glass at a temperature of 1400 degrees. That’s roughly the diameter of a human hair.
Glass the thickness of a hair can be bent a lot. This enables new products, such as foldable cell phones with a large screen.
(Photo: Schott)
The glass remains flexible, it almost feels like foil. Schott researchers have now been working on the product for twelve years. With Samsung, there is also a first major customer. The Korean company uses the glass for its foldable smartphones. But Heinricht can imagine a whole range of other applications, such as laptops with large foldable screens: “It’s a great success story that’s emerging here.”
Heinricht speaks passionately about the technology. Before joining Schott, he managed the Hanau-based family company Heraeus. Even there, he drove the business forward with innovations like today at Schott, back then with precious metals.
It is not always the so-called breakthrough innovations, i.e. revolutionary ideas, that Heinricht has in mind. He is also interested in small ideas, things that are developed further from existing technology or that are modified for new applications. In the future, Schott is expected to grow by an average of six percent annually. This is what the long-term strategy that Heinricht presented in 2020 says.
Schott is solidly financed
But it won’t be a sure-fire success: ideas like flexible glass still only make up a small part of sales. Many of the new markets have yet to be developed. Twelve years of work and money does not make an innovation like flexible glass a bestseller. First of all, the company takes the risk.
In this context, Heinricht speaks of the three Is: the innovations, the ideas have to be there first. “Then comes the integration, we have to convince our customers to introduce the new product.” Then the investments would follow, for example for the construction of production.
It helps if you know the shareholders behind you and don’t have to constantly justify yourself to a large number of shareholders and investors. The Carl Zeiss Foundation should be very happy with Schott at the moment. “With net liquidity of 79 million euros and an equity ratio of 41 percent, we are in a robust position,” emphasized CFO Jens Schulte on Wednesday.
But Schott is not without competition either. Rivals such as the US company Corning are also working on glass innovations. The Americans have developed the so-called Gorilla Glass, a thin, particularly hard glass that is also used in smartphones. “It’s a head-to-head race,” said Heinricht. “But with our ultra-thin glass, we are one to two years ahead. I think that hurts the competition.”
In addition, Schott has just developed a new cover glass for smartphones that is twice as strong, even compared to the competition.
More: Zeiss boss: “We have ten or even 20 golden years ahead of us”