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Massimo CANDELA - chief executive FILA - Fabbrica italiana lapis e affini
Almost a hundred years of history, all of it dedicated to producing pencils, marker pens and crayons. Now, it has also landed on the Stock Exchange. This is the story of Fila, Fabbrica italiana lapis e affini. The company was founded in Florence in 1920 by two enterprising noble Tuscan families, the Antinori and the Della Gherardesca, and was taken over by the Candela family in the fifties. The Candela family has now steered the company for three generations. In 2014, the group increased its turnover from 220 to 233.6 million euros and net profits rose from 15.9 to 20.1 million. At the same time its debt fell from 61.7 million to 58.4 million. It became a listed company on the strength of these figures, via a business combination operation with Space, a special purpose acquisition company (Spac), which was already listed. What's more, as the chief executive, Massimo Candela, explains in this interview, they have no intention of stopping there.
Fila was founded in Italy and that's where it grew and developed there but over time it seems to have decided to be a pocket-sized multinational. How did this come about and how are you pursuing this goal?
By the mid-nineties, this was a choice that had to be made. At that time Fila was only operating on the Italian market, with factories in Pero and Florence. The importation of stationery products was not subject to any duty in Europe and transportation costs were very low. Thus, only selling to the Italian market was extremely risky and, in fact, the company's profitability had been suffering a lot since the early eighties. Fortunately, despite its difficulties, the company had always invested in the quality of its products and in research and development. When I took over the management, I decided that the people involved, the employees and the shareholders, deserved a leading Italian company which also played a leading role in international markets. Today, after 20 years of hard work and a lot of travelling, Fila benefits from a major competitive advantage. This is because of its integrated production structure and its business policy which is based on developing its own brands through strong promotions directed at our customers: the children, and the purchase decision makers, their mothers and teachers.
Given that you are making pencils, pens and crayons in a time of PCs and tablets, the company is operating in a sector which is often considered the 'old economy'. Yet sales are increasing. Do you see this as a contradiction?
It should be emphasized that twenty years ago Fila decided to invest solely in colours for children and to cease investment in writing. I believe digital development did have and will continue to have an impact on writing but it did not and will not have any impact on colouring. Not only is it an essential activity for the healthy development of the brain, and of manual and motor skills, but it still remains one of a child's most significant pastimes up to the age of 6-8.
Fila has a large international presence and half of its revenue comes from outside Europe. Which markets do you consider the most interesting globally? And in this context, what do you expect from Italy?
Thanks to the consolidation process, we are extremely happy with the Italian market at the moment. However, the markets on which we are focusing most, and which will have the highest growth rates over the next few years, are India and the US.
Fila has eleven production sites distributed around the world. What does production abroad mean for you? And what effect did production abroad have on Italian factories?
Italians factories have basically been breaking even for many years thanks to the fact that we invested in more capital intensive products given the high labour costs. Foreign factories perform a dual function for us: they are closer to the end markets (India, Mexico and China) and they can help manage problems with import duties. These vary widely from country to country depending on the product's origin.
Fila, was listed on the Stock Exchange through its business combination with the spac, Space. What are the priority destinations for the resources amassed?
For Fila, the merger with Space was a great opportunity, beyond even my rosiest expectations. We were able to give the company the financial resources it needed at a time when, because of sector consolidation, there were great opportunities. It operated in a very stable environment, and it was not affected by any of the disturbances inflicted by the market. The first operation which we will try to conclude will be the acquisition of a larger share of our Indian partner company. In addition, we have several ongoing discussions, in Europe, in America and in the BRIC countries, about possible acquisitions or partnerships in the core colour business. It is true that Fila has grown significantly internally in recent years. However, if we wish to give this company, its personnel and its shareholders an even more important position in the world market we need to identify new acquisition operations. We hope that this will, in time, create a strong Italian leadership.