Interview with Yves Belegaud, Chief Executive Officer of EXEL Industries

What is your assessment of 2021-2022, which was marked by a triple geopolitical, energy and inflationary crisis?

— Yves Belegaud: We had an unusual year, with first of all, a supply crisis that occurred just after the lifting of Covid-19 health restrictions. This was succeeded by a double energy and agricultural shock following the Russian invasion of Ukraine, which resulted in a surge in the price of raw materials. While the more favorable financial returns from which farmers benefited led them to invest in the purchase of agricultural equipment, our production rate was unable to fully meet demand, due to a lack of sufficient supplies. As a result, part of our revenue and margins have been delayed against the backdrop of unfavorable changes in our purchasing costs.

The Garden activity saw a return to the situation that prevailed in 2019, resulting in a decline in activity of around 15% to 20%. The industrial spraying activity suffered from the decline in automotive sales in Europe but our diversified global footprint helped us to overcome this difficult environment with more favorable market conditions in North America and Asia. Finally, concerning the nautical industry, which remains a minor source of revenue, we are gradually returning to the race with the release of a new WAUQUIEZ model, the PS48e. We have also revitalized our distribution network and made our return to the major boat shows in order to become more attractive. To better face these various crises and adapt to these new market conditions, we have adjusted our organizations and created genuine task forces in order to share best practices within the Group. In order to improve our level of performance, we have also strengthened our Purchasing and Design Office organizations and decided to adjust the selling price of our equipment in a differentiated manner, as many times as necessary during the year.

In this context, how do you see the Group’s performance?

— In 2021-2022, we achieved record revenue of €977 million, which is fully in line with our external growth and the evolution of our selling prices. Our net income, which amounted to €28.6 million, was nevertheless penalized by various factors including the supply crisis already mentioned, the laborious launch of our management software package in the Garden activity and the trajectory of our working capital requirement, which was not optimal. We suffered the consequences of incomplete supplies that prevented us from delivering our machines. This increased our inventories of raw materials and components for which the value is also higher than expected due to the increase in our purchase prices. As a result, the inventory effect in our net income is significant and weighs on the available cash, although only temporarily.

What are the initiatives and advances that marked the year for EXEL Industries?

— The Group celebrated its 70th anniversary in 2022. We designed this anniversary as a time of celebration and mobilization by inviting our partners to Épernay and by organizing a seminar for our 100 Top Managers. The year was also marked by positive progress in CSR. For the second time, we took out impact financing by backing our medium-term financing lines to sustainability objectives. We also decided to completely rebuild our SAMES plant in Stains, Seine-Saint-Denis, France. This is a large- scale project, spread over three years, which will enable us to take a step forward in terms of CSR as this plant is aiming for both BREEAM and HQE certification. Finally, on the sales and marketing side, we continued to innovate by proposing new products to the market and launching the marketing of EXXACT Robotics solutions, which have been successfully tested in the field.

What are the main challenges now facing the Group?

— First of all, we must regain control of our working capital requirement trajectory. This means bringing our cash culture back to the forefront and optimizing the management of our inventories and supplies, which will make it possible to reduce our financial expenses. We also need to continue to improve our operational efficiency. We aim to reach a new level in terms of safety by reducing our frequency of workplace accidents. Lastly, CSR continues to be at the heart of our actions. At SAMES, we have thus replaced air freight with sea freight, although this requires greater working capital requirements. Production for the Garden activity, which was previously subcontracted in Asia, will be brought back in-house and we now use recycled polymers for manufacturing our hoses. As for our agricultural equipment, it is equipped with “stage 5” engines, which are the least polluting on the market. Similarly, via our Group grant fund, we finance CSR investments in our various companies. Another major event was the launch of the first prototype of the hydrogen-powered TRAXX, our autonomous high-clearance tractor. Lastly, we are continuing our efforts to reduce our carbon footprint with the deployment of targeted actions in scope 3.

In this world of uncertainty, what course do you set for EXEL Industries?

— In addition to optimizing our operational performance, we intend to continue our progress in terms of innovation, a key factor of success and differentiation, capitalize on our dual business and geographical diversification, and finance our development policy with our own resources.