Delachaux S.A.

BP 152, 119 Avenue Louis Roche
Gennevilliers
F-92231 Cedex
France
Telephone: 33 01 46 88 15 00
Fax: 33 01 46 88 15 01
Web site: http://www.delachaux.fr

Public Company
Incorporated: 1902
Employees: 2,045
Sales: $505.9 million (2004)
Stock Exchanges: Euronext Paris
Ticker Symbol: DELX
NAIC: 332999 All Other Miscellaneous Fabricated Metal Product Manufacturing; 238910 Other Specialty Trade Contractors; 335311 Power, Distribution, and Specialty Transformer Manufacturing

Delachaux S.A. is a diversified industrial company grouped around three primary divisions: Railroads; Conductic; and Special Products. The company, based in Gennevilliers, France, is one of the world's leading producers of railway equipment, primarily through subsidiary Railtech. The group's railway operations include welding, track maintenance, and electrification systems, and, since the group's acquisition of Pandrol in 2004, is the world's leading producer of rail fastening systems. Following that acquisition, Delachaux's Railroad division represents nearly 65 percent of the group's total sales of EUR 400 million ($500 million) in 2004. The Conductic division produces systems and equipment for transferring energy and data for applications such as cranes and other lifting equipment, "people movers," including trams, trains, amusement rides, and the like, as well as equipment for the production of fiber-optic cables and other special cables. Under Special Products, Delachaux groups its production of chrome (the company is the world leader in this segment) as well as magnets and magnetic systems, specialty steels, and plastic injection systems. Delachaux has long had an international presence, and foreign sales account for 82 percent of the group's total revenues. The company is listed on the Euronext Paris Stock Exchange. The founding Delachaux family, through its holding Sogrepar, nonetheless controls nearly 67 percent of company shares, and nearly 80 percent of the group's voting rights. Francois Delachaux, grandson of the founder, is the group's chairman.

20th-Century Industrial Success

Clarence Delachaux founded a business in Saint Ouen, France in 1902, based on an aluminothermic welding process developed in Germany. Delachaux adapted the process for the production of overhead electrical lines for tramways. The company's production played a role in the boom of the tramway market in France in the early years of the century. Most of the country's major cities developed their own tramway system, using aerial electrical lines as an energy source.

Delachaux soon recognized the opportunity for diversifying the company's operations. As the aluminothermic welding process required special metals and alloys, Delachaux itself launched production of not only pure metals, but also alloys, into the years leading to World War I. Delachaux supported this operation by building its own foundry. The company developed its own specialty metals, including its "Infatigable" (Tireless), which remained a core company product into the next century.

As World War I drew to a close, Delachaux began preparations to lead the company into new directions. In 1917, the company purchased a 20-hectare lot in Gennevilliers, which became the company's base of operations by 1920. The company built a new factory and foundry and began producing special high-resistance steels.

The growth of the French automobile industry, then in its first expansion phase, encouraged Delachaux to adapt its production to enter the new market. In 1925, the company launched production of molded steel wheel hubs and centers. In the meantime, the company had successfully extended its other operations, adapting its production for the railroad industry—which became a core industry for the company—and also for use in construction cranes and related equipment. These activities formed the basis for the company's Conductic division. At the same time, the company continued to add to its range of railway expertise, adding the production and welding of railroad rails, as well as the production of overhead supports and rail attachment systems, and the production of rail welding machinery and other rail maintenance equipment.

In the years leading up to World War II, Delachaux also became a major producer of chrome, among its other specialty steels operations. The company became a prominent supplier of chromium metals to the United States, playing a significant part in enabling the country to build up its strategic metal supply prior to the war.

Clarence Delachaux died in 1941. The company remained in the family, however, as son Philippe Delachaux and his brothers took over the business. By the end of World War II, the company had shifted much of its production to focus on providing traction systems for industrial equipment, as well as the production of wheel hubs for the agricultural market. The company also had taken its first steps into the international market, establishing a factory in Barcelona, Spain in 1942. By the 1950s, the company had added operation producing systems and equipment for injection molding, which, with the development of the plastics industry, represented a strong area of growth.

Divisional Structure in the 1960s

By the early 1960s, the company had become a successfully diversified industrial operation. The growth of each of its core production areas encouraged the company to restructure in 1963, regrouping its production operations into dedicated divisions. These included Railway, including the company's various operations for the railroad industry, not only in France but in foreign markets as well. Other divisions were formed for the company's electrical energy transfer systems and magnetic lifting and conveyance systems operations, and for its metals production, primarily focused on the production of pure chrome metal and specialty steels business.

Into the mid-1970s, Delachaux sought further growth, especially on an international scale. A major step forward in the group's ambitions came in 1976, with the acquisition of Insul 8 Corporation. Based in California, Insul 8 had pioneered the market for protected conductor systems for use in cranes and similar equipment in the 1950s. By 1961, Insul 8 had added a production subsidiary in the United Kingdom. By the 1970s, Insul 8 was also present in Canada and Australia. The addition of Insul 8, and then, in 1979, of U.K.-based Protected Conductors Limited, established Delachaux as a leading producer of these systems.

Francois Delachaux, the oldest grandson of the company's founder, took over as CEO in 1977. The younger Delachaux prepared to lead the company into a new period of expansion in the mid-1980s. As part of that effort, the company went public in 1985, listing on the Paris Stock Exchange's Secondary Market. The Delachaux family nonetheless maintained control of the business. Into the mid-2000s, the family's shareholding remained at nearly 67 percent, while controlling nearly 80 percent of the company's voting rights.

Delachaux began expanding through acquisitions in the late 1980s and through the 1990s. In 1987, for example, the company acquired Enrouleur Electrique Modern—Matérial Industriel Cefilav, which specialized in producing electrical power supply and transfer systems for mobile engines. The company also boosted its rail welding business by acquiring Aluminothermique, also based in France.

Acquisitions formed a part of the company's continuing effort to branch out internationally. In 1989, the company entered Portugal, buying a minority share in that country's Porsol. The group also moved into Germany that year, establishing a distribution subsidiary for that market. In 1991, the company reinforced its presence in Spain through the purchase of Fecoinsa.

International Industrial Company in the 2000s

As it entered the 1990s, the company carried out a new restructuring of its businesses. In 1991, the company created Railtech International as the holding company for its railway-related operations. The following year, the company continued its restructuring, creating its Conductic Division, including the Insul 8 business and the company's other industrial conductor systems businesses.

The company's acquisitions continued into the mid-1990s as well. In 1992, the company acquired 85 percent of Italy's MEC, a specialist in magnetism systems. The following year, Delachaux merged MEC with its Italian distribution subsidiary, Sofint, creating MEC Delachaux Italie. The company next acquired Godderich International, a conductors specialist, in 1994, and then returned to Italy in 1995, buying up majority control of that country's Comes, which specialized in conductor and connection systems.

Through the end of the decade, Delachaux maintained an interest in expanding its international operations. The company targeted growth in the Asian region, particularly in the railway sector in markets such as India and Thailand. In 1995, the company also entered China, forming the Han-Fa joint venture to begin production and distribution of conductor systems. Delachaux's share of that joint venture stood at 50.5 percent.

Delachaux continued to build up market share into the mid-2000s, particularly through a regular series of acquisitions. In 1999, for example, the company bought Stedef, a maker of flexible fasteners for railways, and then Drivecon, which produced electronic controls for electric motors. In 2002, the company bought Métal Forme Technologie (MFT), based in France, a specialist in the production of high-pressure iron and steel.

Company Perspectives:

Resolutely focused on its business of strong technological competence, the Delachaux group has confirmed itself year after year as a leading international player in its markets and has a presence on five continents.

For the most part, the company's acquisitions had remained relatively minor; the MFT purchase added just EUR 15 million to the group's sales. At the end of 2003, the company launched a more ambitious takeover, paying EUR 242 million in cash and assumed debt to acquire Pandrol. Based in the United Kingdom, Pandrol had captured the world leadership position in the production of rail fastening systems. Pandrol was especially strong in the elastic fastenings segment, claiming some 40 percent of the world market.

The integration of Pandrol into Delachaux represented a significant step in the company's development. The addition of the new operation boosted Delachaux's annual revenues by more than one-third, topping EUR 387 million (pro forma) for 2003, and EUR 400 million by the end of 2004. The company's railway division, historically at the group's core, once again became the major part of the company's business, accounting for more than 64 percent of sales. The company also had become firmly international in focus, posting more than 80 percent of its sales from outside of France. After more than a century, Delachaux had established a prominent name as an international industrial player.

Principal Subsidiaries

Comes—Italia S.R.L.; Csa Italia; Delachaux Conductique; Delachaux Conductique; Delachaux GmbH (Germany); Delachaux Metal Inc. (United States); Delachaux Metaux; Delachaux Systemes D'injection; Ets Raoul Lenoir; Han-Fa Electrification Co. Ltd. (China; 50.5%); Insul 8 Australie Pty. Ltd.; Insul 8 Corporation Canada; Insul 8 Corporation (United States); Matweld Inc. (United States); Mec Delachaux S.R.L. (Italy); Railtech (UK) Ltd.; Railtech Australia Ltd.; Railtech Boutet USA Inc.; Railtech Calomex (Mexico); Railtech China; Railtech Contracting Corporation (United States); Railtech International; Railtech Porsol (Portugal); Railtech Schlatter Systems (Rss); Railtech Slavjana (Czech Republic); Railtech Stedef (Usine De Douai); Railtech Stedef Thailande Co. Ltd.; Railtech Sufetra-Tranosa; Railweld (Canada); Railweld; Tamaris Industries.

Principal Competitors

Robert Bosch GmbH; Unio S.A.; Seiko Epson Corporation; Faurecia; Egyptian Company for Metallic Construction / Metalco; Metalurgica Gerdau S.A.; MAN Nutzfahrzeuge AG; W.C. Heraeus GmbH; Revdinskiy Steel and Wire Works Joint Stock Co.; Hydro Aluminium A.S.

Key Dates:

1902:

Clarence Delachaux founds a business using the aliminothermic welding process to produce overhead lines for the tramway market.

1920:

Delachaux moves to a new production site in Gennevilliers and adds production of specialty steels.

1925:

Delachaux begins producing wheel hubs.

1942:

The company opens a factory in Barcelona, Spain.

1963:

The company reorganizes into a divisional structure.

1976:

The company acquires Insul 8 in the United States, as well as production facilities in the United States, Canada, the United Kingdom, and Australia.

1985:

Delachaux goes public on the Paris Stock Exchange's Secondary Market.

1987:

The company acquires Enrouleur Electrique Modern—Materiel Industriel Cefilav and Aluminothermique in France.

1991:

Delachaux restructures its railway operations under Railtech International.

1992:

Delachaux restructures its conductor businesses under Conductic Divison; MEC in Italy is acquired.

2003:

The company acquires Pandrol, the world's leading producer of elastic fastener systems for the railway market.

2005:

International sales account for more than 80 percent of Delachaux's sales.

Further Reading

"Delachaux Integrates Pull Recognition," Port Development International, March 2000, p. S13.

"Delachaux monte en puissance dans le ferroviare," Les Echos, May 3, 2005.

"Delachaux se recentre sur le ferroviare avec Pandrol," Les Echos, May 4, 2004.

"Delachaux: acquisition du Groupe Pandrol," Boursier.com , July 7, 2003.

"Pandrol Sold to Delachaux," International Railway Journal, December 2003, p. 2.

Salak, John, "Delachaux Eyes Chrome Foothold in US," American Metal Market, May 8, 1984, p. 3.