A new era for TFF Group, a year of change

2012/2013 will have proved an important year for TFF Group with:

- Substantial gains across the Group's markets, helped by strong fundamentals
- A significant change and a big step:  the passing of the 160 M€ milestone in turnover with continued levels of strong profitability
- A new dimension following the successful consolidation of RADOUX and STAVIN and the optimization of numerous complementarities and synergies both in France and abroad
- A new name and a new logo to unite the many companies that have chosen to place themselves beneath the banner of the world leader in wood products for the maturing of wine and alcohol

An interview with Jérôme François, the Group's CEO and the fourth generation of its founding family.

Tell us about 2012/2013 from your point of view...

Jérôme François: for me the year has been more about evolution than revolution.

There have been a number of significant changes but they are the result of a strategy, pursued by the Group for more than 20 years now, of ambitious but prudent expansion based on the following principals:

Globalization, vertical diversification through organic and external growth, strong R&D, rigorous management and the maintaining of strong margins, an emphasis on performance, respect for the men and women who work to make our brands what they are, and high standards of quality for all our products.

All of which has allowed us in 2013 to surpass, and significantly, the 150M€ turnover forecast last year. Overall we have grown by 42%, of which 11.7% was organic, like-for-like growth: A strong showing on markets that seem to have turned a corner and returned to a growth cycle.

So there has been an important change in scale represented by:

- A turnover of more than 160M€ of which 85 % is achieved internationally
- A workforce more than 700 strong across the world
- A valuation of more than 250 M€

We believe that the family business spirit which is at the heart of all we do must be preserved. Having said that, it is, of course, important to evolve.

The successful consolidations of Radoux and Stavin in under a year have led us to look again at our structures, our organization and our management in order to maintain our ability to look ahead to fresh challenges and acquisitions.

Which is why we believe that the passing of the 160 M€ turnover milestone is not so much an end as a means.

 

What about the new name?

J.F : Once again it marks an evolution, but one that doesn't lose sight of our history.

Tonnellerie François Frères, the « mother company », has become part of a much bigger whole which is far more diverse and far more international.

Hence the natural evolution from « Tonnellerie François Frères » to « TFF Group », in order better to reflect our image in Asia, Australia, the United States and elsewhere; and to create a banner under which all our brands can identify themselves . A banner that is, as we are, more diversified and more global than before.

 

You call the 160M€ milestone a means rather than an end. A means to what?

J.F : I mentioned earlier a strategy that was ambitious yet prudent.

It is ambitious, because we do not intend to stop now. There are a number of veins of potential growth that can be explored both in our traditional fields and further afield, as part of a carefully thought through strategy of diversification and growth.

It is prudent, because any expansion will be carefully examined according to rigorous criteria, without haste, in order that the right acquisitions be made.

Just consider the facts. The Group's fundamentals are solid, our profitability is sustainably high, our debt levels are low, and we have yet to seek capital from the financial markets.

Add to this that our vision is international, our position as world leader undisputed and that our know-how is universally recognized...

I believe that our ability to rise to any fresh challenge that might come along is stronger today than it ever has been.

Which is why growth, in all its forms, remains very much at the heart of what we do, as does transparency.

 

Tell us a little bit about your markets...

J.F : An important point first of all: that all of our markets are on an upward trend that strikes us as sustainably strong.

The wine market, after hitting a historical low in 2012, is overall on the up and seems to have entered a new cycle. The American market, in particular, has kept all its promises and has more than made up for a European market characterized by historically low harvests over the course of the last three years.

The whisky market has lived up to its forecasts of strong growth and the Group now has an extremely efficient site in Edinburgh which will help us to keep up with the market's strong demand. 

Two further points strike me as noteworthy: 

The visit, last September, of our cooperage and cask production site at Brive la Gaillarde by the French President François Hollande, which highlighted the technical innovation and dynamism of this important French site. It specializes in the production of large casks and has seen strong growth over the course of the financial year.

 

The strength shown by the oenological products’ market. The Group's presence in this important and promising sector has been strengthened over the course of the last year by the full consolidation of STAVIN in the United States on one hand, and, on the other, by the acquisition in France of PRONECKTAR, a subsidiary of RADOUX. A company that makes products that are perfectly complementary to those produced by our own subsidiary AROBOIS.

 

Finally what do you make of your stock market valuation?

J.F: As always I will refrain from any substantial commentary as I believe that when you are a part of a regulated market, you must obey its rules.

But I will allow myself two small remarks:

First of all our stock's value had been stable over the course of a number of years at around 30 €, a level that did not seem to take account of a number of important changes to our Group. That's now changed with the value of the stock rising to more than 50 €, a level at which it appears to have settled, for an overall valuation of more than 270 M€, a rise of 40% by July 2013. I'm clearly pleased about this vote of confidence, but again, I believe that this is but a step on the road to further progress.
Over the same period our volumes of trade have virtually doubled proving both the liquidity of the stock and the interest of investors. Once again, I'm pleased about this and, in particular, that those investors who believed in us to begin with and over the course of choppier times should find themselves rewarded. They have all my gratitude.