Lectra’s Chess Move In the Turkish Market: Closing Ranks With Glengo Teknologji, Istanbul
By Dipl.-Ing. Yvonne Heinen-Foudeh, Senior International CorrespondentAt the end of April, the Lectra Group announced its next strategic step: the merger of Lectra's direct business activities in Turkey with Glengo Teknoloji, the exclusive representative of Gerber Technology. With clothing exports to the EU alone now worth more than USD 10.5 billion p.a., Turkey ranks third after China and Bangladesh in that respect. Turkish apparel exports into the US lately (2020) augmented to a value of US$540 million. Worldwide, apparel exports by the "geological interface between Asia and Europe" in 2021 amounted to around US$16.8 billion. With that position in the global market, Turkey represents one of the most important sales markets for technology providers and their local partners. With more than 1,000 customers in the Turkish apparel market alone, Glengo Teknoloji Ticaret Ve Sanayi A.Ş., headed by Aykut Vural, has been able to secure a key position in this scenario over the decades as Gerber Technology's exclusive and highly competent partner for sales, installation, training, equipment maintenance, and provision of spare parts and consumables. And thus, Glengo manifested leadership in CAD/CAM for the leading US tech brand in Turkey and beyond in the Central Asian markets from the very beginning of Glengo's founding in 1986. The merger of Glengo (currently around 120 employees), with headquarters in Istanbul and branches in Adana, Ankara, Bursa, Denizli, Izmir, Kayseri, Malatya, Ordu, Urfa, Sivas, and Tokat Erbaa, with Lectra's direct business is the logical next step for the world market leader after the takeover of Gerber in June 2021. The press release from Lectra states: "The merger of Lectra Turkey and Glengo offers both companies the opportunity to expand their presence in Turkey, Central Asia, and the Middle East to better serve their customers. In the process, Lectra Turkey will become Glengo Lectra Teknoloji and will distribute the Lectra Group's entire product portfolio. De facto, the transaction consists of the acquisition of Glengo's business assets by Lectra Turkey for approximately US$4.2 million and 25% of the shares in Glengo Lectra Teknoloji, according to company sources. All signs point to the solid potential for further growth in the Turkish apparel industry: With logistics bottlenecks from the Asian region, transportation costs are becoming a crucial cost factor. Upcoming regulations with the EU supply chain law about to be ratified will further influence sourcing strategies with the closest possible proximity to point-of-sales in the European fashion market. Apart from diversified manufacturing and quality competence, the geographical proximity to the EU market plays favorably into the hands of the Turkish apparel industry. Lectra Business Performance Q1 2022: Further Growth At the April 29 shareholders' meeting, Lectra put first-quarter 2022 revenues at US$128.3 million, up 83 percent compared with the first quarter of 2021. EBITDA before non-recurring items was US$22.7 million, up 90 percent. Income from operations before non-recurring items increased by 71 percent to US$15.1 million. This includes the amortization of approximately US$2.8 million on intangible assets from the acquisitions of Gerber Technology, Neteven, and Gemini. The company emphasized to shareholders and analysts that business development in the first quarter was undoubtedly impacted by the outbreak of the Ukraine war. The Group's sales in Russia and Ukraine in the comparative period (Q1 2021) amounted to less than 1 percent of total business. Nevertheless, the climate of uncertainty surrounding the conflict caused some customers to postpone investment decisions from late February, particularly in Europe, according to Lectra's statement. The war has also accelerated price increases, energy shortages, and shortages of some raw materials. At the same time, the Chinese government's lockdown measures, which were tightened even further at the end of March, had a negative impact on orders in China, according to Lectra. Uncertainties regarding the development of the pandemic and its impact on the macroeconomic environment (inflation, difficulties in the automotive industry, and transportation costs) persisted and could weigh on further customers' investment decisions. Immediately after the start of the war, Lectra ceased its activities in Russia.
"We are proud that more and more customers are benefiting from our 36 years of experience in providing world-class solutions, technical assistance, and support. Being part of the Lectra organization will help Glengo customers accelerate the digital transformation of their operations." - Aykut Vural, Glengo founder, now CEO of Glengo Lectra Teknoloji.