Somfy – Opening to the future

Somfy SA is a French company with an international profile that produces motorized openings and closures (such as window coverings, rolling shutters, garages, gates, etc.) and warning and security systems. It serves both private and commercial clients and sells its products worldwide.

Seventy-six percent of sales are made outside France and 22% outside Europe. We can say that Somfy’s business relies on the political stability and economic growth of Europe and on the growth in emerging markets.

Somfy history

The company was founded as a subsidiary of the Carpano & Dons company in 1960. After the crisis of the precision mechanic industry, there was a breakthrough in 1969 when Philippe Zoellner, director of Somfy, decided to transform the company from a supplier of the parent company to a manufacturer of finished products ready to be sold to end-users. This happened by taking a risk and betting on the success of the small tubular motor for blinds and roller shutters, launching its first product to the market in 1968.

Since its founding 57 years ago, Somfy SA has grown to become one of the world’s major players in its industry.

Somfy financial summary

From 2007 to 2016 revenue has risen from €720 million to €1.132 billion with a CAGR of 5.16%.

The company’s acquisitions in 2016 demonstrate its decision to bet on the development of the global domotics market.

The company is controlled by the Despature family through J.P.J.S. and J.P.J.2. Free float is only about 18%.

Somfy stock price

As we can observe from the chart above, Somfy stock has outperformed the CAC industrials in the last two years. In fact, the stock has risen by about 49%, whereas the CAC industrials has only risen about 27%.

In the last few years, the company has managed to pay a constant dividend. The stable dividend is proof of the solidity of the business. The dividend policy was tested in 2014 when, after a one year fall of EPS, management kept the dividend per share in line with the previous years in order to please shareholders. Having a shareholder with a controlling share that oversees the work of management usually helps to keep objectives clear and performance steady.

Conclusions

The acquisitions of MYFOX and IHOME in 2006 show the company’s will to fuel its constant growth with both organic growth and through the acquisition of other companies. The company is well positioned in the domotics (home automation) sector that can continue evolving in the future, becoming a bigger industry.

What do you think about this stock? Let me know in the comments below.

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