De'Longhi S.p.A.

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De'Longhi S.p.A.

Via Ludovico Seitz 47
Treviso
I-31100 TV
Italy
Telephone: ( +39) 0422 4131
Fax: ( +39) 0422 413652
Web site: http://www.delonghi.it

Public Company
Incorporated: 1903
Employees: 5,870
Sales: EUR 1.28 billion ($1.54 billion)(2003) Stock Exchanges: Milan Ticker Symbol: DLG
NAIC: 333415 Air Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing; 333414 Heating Equipment (Except Electric and Warm Air Furnaces) Manufacturing; 335221 Household Cooking Appliance Manufacturing; 335224 Household Laundry Equipment Manufacturing

Multi-faceted De'Longhi S.p.A. is a world-leading manufacturer of domestic appliances. Historically a major producer of portable heaters and air-conditioners, the company has expanded to include nearly every category of small domestic appliances in the food preparation and cooking, as well as household cleaning and ironing, segments. The company's products include microwave ovens—De'Longhi is one of Europe's largest manufacturers of microwave ovens under its own brands names and as an OEM (Original Equipment Manufacturer) supplier—as well as table-top and built-in electric and gas ovens, coffee machines, indoor grills, food processors, irons, and vacuum cleaners and other floor care products. In addition to its small domestic appliance production, De'Longhi also designs and manufactures central heating and air conditioning systems for the home, institutional, and industrial sectors. Brands under the company's stable include De'Longhi, Kenwood, Ariete, Elba, Radel, Simac, Supercalor, Superclima, Ariagel, Climaveneta, and Vetrella. Acquisition has played an important part of the group's growth, notably with the purchase of U.K.-based Kenwood in 2001. That acquisition also enabled the company to shift part of its production to Kenwood's manufacturing site in China. In all, De'Longhi operates 13 production facilities and 30 international subsidiaries supporting sales to 75 countries worldwide. International sales account for nearly 75 percent of the group's total revenues, which topped EUR 1.25 billion ($1.5 billion) in 2003. De'Longhi has been listed on the Milan Stock Exchange since 2001. Guiseppe De'Longhi has led the company since the mid-1970s.

Creation of an Appliance Giant: 1970s–80s

De'Longhi SpA celebrated its centenary in 2002—and its transformation from a small parts supplier to one of the world's leading appliance brands. De'Longhi started as a craftsman's workshop in Treviso, in the north of Italy, in what was to become one of the country's most important industrial regions. The De'Longhi family-operated shop began supplying parts to other area manufacturers, developing a specialty in providing components for heating systems. In the 1950s, the shop converted its status, formally incorporating as De'Longhi as it expanded its production. Nonetheless, the company remained a component supplier.

The arrival of a new generation in the form of Guiseppe De'Longhi began the company's transformation in the 1970s. De'Longhi decided to use the company's technical knowledge to develop its own, branded products. As part of this effort, the company stayed close to its historical core of heating systems, and in 1975 De'Longhi debuted its first product, an oil-filled, portable electric radiator.

The success of this product, which carved out a new niche in the home heating sector, set the tone for the company's rapid growth into the next decade. De'Longhi quickly built up a list of products, at first clinging to the heating sector, developing a full range of heating products. As part of this effort, the company made its first acquisition, of Supercalor, in 1979. The success of the company's line quickly took it beyond Italy as well, as sales developed throughout much of Europe in the late 1970s. By 1980, the company had grown sufficiently to attempt to conquer a new and important market—the United States.

By the mid-1980s, De'Longhi's revenues had reached the equivalent of EUR 80 million. Its range of products included oil-filled heaters, fan heaters, and gas-fired and kerosene heaters as well. OEM manufacturing, for such well-known brands as Black & Decker, helped the company establish itself as a world leader in portable heaters by the end of the 1980s. In this, the company was aided by its willingness to innovate and to seek out new niche product areas. Such was the case with its launch of the Plus Heat Multi System, the first to combine the advantages of oil-filled, electric and fan heater systems. Yet by then De'Longhi had undergone a dramatic expansion.

The company's true transformation took place in the second half of the 1980s through a series of acquisitions that not only brought it an extended range of brand names but also the technological expertise to make it a leading innovator in a number of new product areas. In 1986, the company acquired Elba, a maker of free-standing ovens and built-in ovens and stove tops. That purchase helped boost the company's own newly introduced oven line, launched with the highly successful "Sfornatutto" tabletop oven in 1985.

The success of the Sfornatutto oven in Italy was assured by De'Longhi's quick recognition of the new product's potential. After learning the Italian consumers were reluctant to use their traditional built-in ovens because of the perceived high energy costs of these units, De'Longhi began marketing as a low-cost alternative the Sfornatutto, which, because of its small size, required far less pre-heat time than conventional ovens.

De'Longhi added to its heating technology with the purchase of Radel in 1986. This acquisition gave the company new operations in developing central heating systems based on water-circulating heaters. De'Longhi also sought to extend its operations into another area, that of air conditioners, in the mid-1980s. Confronted by the relatively small market for air conditioners in Europe on the one hand, and by the presence of a number of large players in the more well-developed North American market on the other, De'Longhi decided to call upon its growing tradition for innovation. In 1986, the company introduced the first portable air conditioning system, the Pinguino. That product quickly became one of the most popular air conditioning systems in the world. Following the launch of the Pinguino, De'Longhi acquired Ariagel, adding that company's air conditioning expertise in 1987.

De'Longhi's extended its range of ovens in 1988 with the launch of its first microwave ovens. Despite heavy competition from the growing number of low-cost appliance producers in Asia, De'Longhi managed to carve out a significant place for itself in that sector as well, producing microwave ovens under its own brand name, and as a key OEM supplier as well. This position was reinforced with the creation of a new 60,000-square-foot facility, the largest facility for the production of microwave ovens in Europe.

The company's next acquisition came in 1989, when it purchased Vetrella. That purchase enabled De'Longhi to add production of vacuum cleaners and other floor care systems. In the meantime, the company had another hit product on its hands with the launch of the Friggimeglio, also known as the Roto Fryer, in 1987, the first deep-fat fryer to feature a revolving basket. As one company executive told Appliance magazine in 1991: "We understood we couldn't participate in that category with just another me-too fryer. Instead, we developed a fryer with a rotating basket. It uses 50 percent less oil than any other deep fat fryer. It offers a significant health advantage as well as economy."

International Leader in the 1990s and Beyond

In the late 1980s and into the 1990s, De'Longhi began solidifying its international presence by opening a number of foreign sales and manufacturing subsidiaries. The company established subsidiaries in Spain and offices in France, Germany, and Belgium. In 1988, the company launched its U.S. subsidiary. The U.K. became another significant market for De'Longhi in the mid-1980s, a trend crowned by the opening of its U.K. subsidiary in 1989. The company moved into head-to-head competition with France's Moulinex in 1990 when it established a full-scale French subsidiary. Three years later, the company opened subsidiaries in the Netherlands, Germany and Japan as well. These were followed by the opening of representative offices in Moscow in 1995, in Shanghai in 1996, in Canada in 1997, and in Belgium in 1999. By the beginning of the 2000s, De'Longhi operated 13 manufacturing plants and subsidiaries in 30 countries, with sales to more than 75 countries around the world.

De'Longhi continued adding to its range of products during the 1990s and into the 2000s. Acquisitions once again provided the motor for part of the company's new product development. In 1995, De'Longhi acquired Simac Micromax, an acquisition that enabled it not only to begin producing irons and ironing systems but also extended its range of food preparation products. Also in that year, De'Longhi launched production of its first coffee maker designs.

The kitchen became a clear company target at the beginning of the 2000s. In 2001, the acquired the U.K.-based Kenwood Appliances Plc, one of the top makers of food preparation equipment and other small appliances both in the United Kingdom and in the global market as well. The Kenwood purchase gave De'Longhi a second strong international brand—next to its own—ensuring it a place among the world's top small appliance companies. Kenwood also brought the company the Ariete brand and line of ironing and floor care systems.

Company Perspectives:

The De'Longhi Group operates in two business segments that are linked by the concept of well-being: air treatment products, which bring fresh, pure, and dehumidified air into the home and create optimal well-being conditions for the whole family, and products for food preparation and cooking, house cleaning and clothes ironing that simplify domestic living, providing more quality leisure time.

Kenwood, which had been struggling into the 2000s, operated three production plants, including a new facility in China. The addition of this facility gave De'Longhi the opportunity to transfer parts of its own production, which remained heavily concentrated in Italy, to the Chinese plant.

Following the Kenwood acquisition, De'Longhi launched a public offering, listing its shares on the Milan Stock Exchange. The De'Longhi family nonetheless remained in control of the company. Under the guidance of Guiseppe De'Longhi, the company had expanded strongly since the middle of the 1980s, topping EUR 1.25 billion in revenues in 2003.

Yet the company was far from resting on its laurels and continued to seek out new product niches. This commitment to innovation enabled the company to introduce a new coffee maker, the Café Duo, in 2003. Launched in the United States, the product was part of De'Longhi's plan to focus on U.S. growth, with hopes to quadruple its sales there during the decade. At the same time, De'Longhi remained true to another important part of its history of growth, planning to seek out new acquisitions in the 2000s.

Principal Subsidiaries

Ariete S.P.A.; Climaveneta Deutschland GmbH (Germany); Climaveneta S.P.A.; De'Longhi America Inc.; De'Longhi Australia Pty Ltd.; De'Longhi Canada Inc.; De'Longhi Clima Polska Sp.Zo.O; De'Longhi Deutschland GmbH; De'Longhi Electrodomesticos Espana S.L.; De'Longhi Finance S.A. (Luxembourg); De'Longhi France S.A.R.L.; De'Longhi Japan Corp.; De'Longhi Ltd. (United Kingdom); De'Longhi Nederland B.V.; De'Longhi New Zealand Ltd.; DL Radiators Franc S.A.R.L.; DL Trading Limited (Hong Kong); Kenwood Appl. (Malaysia) Sdn.Bhd.; Kenwood Appl. (Singapore) Pte Ltd.; Kenwood Appliances plc (United Kingdom); Kenwood International Ltd. (United Kingdom); La Supercalor S.P.A.; On Shiu (Zhongshan) Electrical Appliance Company Ltd. (China; 67%); Promised Success Ltd. (Hong Kong; 67%); Tricom Industrial Co. Ltd (Hong Kong).

Principal Competitors

Siemens AG; Samsung Electronics Co. Ltd.; Sibtyazhmash Joint Stock Co.; Sanyo Electric Company Ltd.; Whirlpool Corp.; Energiya Joint Stock Scientific and Industrial Concern; Aisin Seiki Company Ltd.; Sony Electronics Inc.; BSH Bosch und Siemens Hausgerate GmbH; GE Appliances; Liebherr-International AG; Siemens PLC; Maytag Corporation; LG Electronics Investment Ltd.

Key Dates:

1902:: The De'Longhi family sets up a workshop supplying parts to local industry in Treviso, Italy.
1950s:: De'Longhi incorporates, with a specialty in supplying components to the heating appliance industry.
1975:: The company's first branded product, an oil-filled portable heater, is launched under Guiseppe De'Longhi.
1979:: Supercalor is acquired and the company extends its range of heaters.
1980:: Sales begin in the United States.
1986:: The company acquires Elba and expands into free-standing, table-top, and built-in ovens.
1987:: Ariagel, an air-conditioning specialist, is acquired.
1988:: A U.S. subsidiary is created; the company begins production of microwave ovens.
1989:: A U.K. subsidiary is created; The company acquires Vetrella floor care appliances.
1990:: A company subsidiary opens in France.
1993:: Subsidiaries are opened in the Netherlands, Japan, and Germany.
1995:: The company launches coffee makers and acquires Simax Micromax, a maker of kitchen appliances and floor care systems.
2001:: The company acquires U.K. firm Kenwood Appliance, along with its Ariete brand.
2003:: Café Duo coffee maker is introduced.