Transformation programme to strengthen the Dormakaba company
Dormakaba is launching a transformation programme to further drive customer focus and strengthen the company for the future to achieve its medium-term goals. As a result, the company expects to achieve cost savings of approximately CHF 170 million and a net reduction of up to 800 full-time positions by 2025/26. The programme aims to further consolidate the global production structure, reduce the number of suppliers, improve procurement capabilities and refocus product development through a single global planning. In addition, dormakaba will optimise its general and administrative functions by establishing shared service centres for human resources and finance. The transformation will be supported by the consolidation of IT initiatives to drive standardisation and further enhance customer satisfaction.
As part of dormakaba’s Shape4Growth (S4G) strategy, the transformation programme represents an important step towards achieving better profitability and sustainable volume growth. It is designed to ensure that the medium-term financial targets are achieved: annual organic revenue growth of 3% to 5% for each future financial year, an adjusted EBITDA margin of 16% to 18% achieved in financial year 2025/26 and a return on capital employed (ROCE) of over 30% from financial year 2025/26 onwards. The transformation programme is expected to result in estimated combined cost savings on a run-rate basis of approximately CHF 170 million per year by the end of 2025/26. One-off costs of approximately CHF 225 million and one-off additional capital expenditure (CAPEX) of approximately CHF 100 million (IT, Operations) will be incurred from 2023/24. The main impact on items affecting comparability (IAC) will occur in the same year. For 2022/23, dormakaba expects IAC to increase to approximately CHF 60 million, of which CHF 30 million is related to transformation. The implementation may impact up to 1800 positions, with an expected net reduction of full-time equivalents of around 800 positions.
The programme aims to increase network and production efficiencies and expand sourcing improvement measures. It also includes the establishment of shared service centres for finance and human resources. With the help of the new organisational structure, all research and development (R&D) activities will be bundled and time to market will be shortened. This will be supported by nearshoring and the consolidation of development resources, including newly established dedicated R&D centres. To support all initiatives, dormakaba will reduce IT system complexity and costs while increasing process efficiency and standardisation across the business.
All organisational changes will come into effect gradually from 2023/24, once negotiations with the respective employee representatives have been completed in a socially acceptable manner.
Jim-Heng Lee, CEO dormakaba, says: “We are intensifying our efforts to become a leading supplier in the industry that achieves above-market growth. These efforts will free up capacity for further growth investments and strengthen our innovation capabilities. We are convinced that this is the right approach and will continue on our path of successive improvements. Ultimately, we need to get better before we get bigger.” Beyond the programme, dormakaba remains committed to implementing strategies that create scope for further investment in sustainable growth initiatives and innovation capabilities. As announced on 30 March 2023, dormakaba has been operating under a simplified organisational structure since 1 July 2023. The new structure will increase the company’s focus on its core markets where it has a strong competitive position.