WELT Online, 11 April 2019. Axel Springer SE
PDF of original article (German)
Business at Otto Bock, the holding company of the world market leader for artificial limbs, is not going as well as one would expect from a candidate on the stock exchange. Is main owner Hans Georg Näder living beyond his means?
It was one of those moments that make one expect the extraordinary: The mayor, decorated with the emblems of the city authorities, complimented the “wonderful day” and the “moving ecumenical service with depth”; Lower Saxony’s Prime Minister Stephan Weil (SPD) praised the “outstanding example of German Mittelstand” and the “great business success” of the entrepreneur, for which they gathered, and Chancellor Angela Merkel, who had rushed to Duderstadt from Berlin for the second time since 2007 , raised the occasion of your visit to the national question: “Thank you for what you are doing for Germany!” All that was missing was salute and flourish and the thunder of cannons.
Even the much-vaunted could not avoid going into the big picture: He recalled war and catastrophes and the fact that the mother in the Orlog survived the bombardment with grenades that “whistled” over the streets and roofs. But “courage, confidence and trust in God”, yes “reliability, Christian and humanistic values”, all the good and right in a sense, have always held his family high and valued. He himself will now even “make a billion in sales for the first time”. One billion, the magic number.
February 18 of this year was, by God, not the day on which Hans Georg Näder (57) and the 350 invited honorary and festival guests heard or expected to hear complaints or reprimands. Because the anniversary of the 100th anniversary of his prosthesis, orthopedic technology, IT and yacht construction company Otto Bock Holding GmbH & Co.KG, which he has the pleasure of managing in the third generation, is celebrated.
Complaints would of course have run counter to the patriotic elation and happiness that those present in the town hall of the small metropolis in Lower Saxony were entranced by that day and would have been completely out of place. But there would have been a reason for it, more reason than the baroque connoisseur and founding grandson “HGN” would like. But bad news does not fit the man, of whom there is hardly a photo without an O. W. Fischer-like (silk) scarf, not at all into the calculation. Because his family business with almost 8,000 employees in more than 50 countries wants to bring the core business with artificial limbs, wheelchairs, orthopedic technology and medical services to the stock exchange.
The department has been called Ottobock SE & Co. KGaA for some time and comprises the bulk of gross income with 927 million euros and perhaps one billion in the near future. An exact date for the dance on the floor has not yet been set: Näder’s new company manager Philipp Schulte-Noelle (42), son of the former Allianz premier Henning Schulte-Noelle (the one with the smack) and successor to Oliver Scheel, who has only been in office for ten months ( of the first stranger from the family at the top of the company), indicated a few weeks ago that this would “not happen before 2020”, so not this year, but, who knows, in the end already next.
For HGN, however, this means that he still has a lot to do: for investors to develop a real Jieper on Ottobock papers, he will have to clarify his company, get it in order and get it in good shape. Doubts are appropriate about the “great economic success” for which the Lower Saxony was praised by his father. In any case, this conclusion is suggested by the company’s most recent mandatory publications in the “Bundesanzeiger”.
The 2017 figures approved by Hans Georg Näder in November 2018 cast anything but a flattering light on the stock market candidate. Certainly, a cursory reading of the bundle gives the impression that " Otto Bock " is a synonym for reliability, prosperity and prosperity. The profit before taxes, interest and depreciation increased in 2017 compared to the previous year from 162.1 to 435.9 million euros, it is said, and the final consolidated annual result grew by a similar magnitude, namely by 263 million euros.
But if you do not look at the increase, but rather the absolute numbers and break them down, you will be taught worse. In 2017, the family-owned company essentially only earned so much more than in 2016 because it sold substantial parts of its plastic production and a fifth of the core division intended for the IPO, which was based on an alleged goodwill of 3.15 billion euros, to the Swedish investment company EQT had sold.
Both sales made a decisive contribution to the fact that the bottom line was that an almost oversized 339 million euros had thundered into the group’s coffers like coal over a chute. Without this “income from special influencing factors”, as it is brittle and brittle in the publication in the “Bundesanzeiger”, Näders family company only posted a plus of 91 million euros before deducting interest, taxes and depreciation.
But even this profit is not an indication of entrepreneurial artistry, but rather an indictment: On the one hand, it is almost 40 percent below the previous year’s result, and on the other hand, it is only a kind of gross profit, of which 46 million euros for interest and 98 Millions of euros for the wear and tear of the machine park and other depreciation.
Less these costs, the core business selected for the IPO, including a few peripheral activities, posted a loss of a whopping 54 million euros in 2017. The profit and loss account paints an even more unpleasant picture, in which HGN quantifies what his family-owned company was after deducting further costs and taxes in 2017 as consolidated net income: On paper this was a good 268 million euros, actually quite a small sum.
But without the “other operating income”, which essentially comprised the company sales and, according to the annual report, totaled almost 436 million euros, Mr Näder would have been left with a loss of almost 168 million euros in 2017.
The shortfall was neither an isolated case nor an exception: 2016 also ended (after deducting other operating income of 31 million euros) with a minus of almost 26 million euros.
BILANZ presented all these figures and the calculations to HGN and asked why Otto Bock’s normal business was in deficit in both 2016 and 2017. Mr. Näder declined a personal conversation, as well as a statement on the business figures and on the past 2018 financial year.
Instead, he explained: The “entry of the Swedish private equity company EQT Partners after a detailed examination of the economic situation and the strategy” in 2017 speaks “for itself”. The “value of the transaction”, which Mr. Näder refused to quantify, reflects “the enormous potential of the health care group of companies recognized by EQT”. Against this background, he sees “no reason” to answer the questions posed by BILANZ.
When asked, he merely drew attention to an almost two-year-old declaration, according to which the core division Ottobock , which was planned for the IPO, was going on an “ambitious growth path” and was working “highly profitable”. Barely a year later, however, the man couldn’t avoid a hint that everything wasn’t going well in the core business: In May 2018 it became public that the wheelchair division in Königsee, Thuringia, had to cut 50 jobs “because of losses in the millions”, 40 of them through redundancies for operational reasons.
The number of products had to be reduced from 120 to 75 and production and administration had to be “professionalized”, said the managing director Christian Stenske at the beginning of this year. “The turnaround”, ie the overcoming of the crisis, is however “not yet achieved”. Now it is a matter of “turning a previously lossmaking business into a profitable business”. According to the commercial register dated October 23, 2018, Näder is still almost entirely owned by the family company. His daughters Georgia (22) and Julia (28) only hold small shares.
The millions lost in ordinary business did not, however, prompt the majority owner to restrict himself personally. In 2016, according to the annual report, the “withdrawals” from his company amounted to just under 45 million euros, 43 million euros more than the miserable annual result of around two million. A year later he used the profit from the company and share sales: This time the withdrawals were about twice as high - almost 89 million euros.
Confronted with the numbers, Mr. Näder refused to testify. Nor did he want to put a figure on what amount of it went to him and what to his co-partners, the two daughters, and what the funds were actually used for.
The question of how high the withdrawals were in 2018 also remained unanswered. It must be added: Silence is the right of every private entrepreneur. Anyone who knows Lower Saxony is of course not surprised by the generous use of company assets. HGN is not a member of the Federal Association of Ascetics. A private jet, an estimated 50 million euro sailing yacht named “Pink Gin VI”, including other fine and noble boats, plus expensive art, an art gallery named after him in his birthplace Duderstadt, six-figure donations to the FDP and CDU, one or the other on top of that Social project: Life as a bon vivant and patron may sometimes demand more than the construction of prostheses and wheelchairs throws away.
Strategically, things do not necessarily run smoothly for the otherwise extraverted and not unsympathetic corporate heir. He recently failed in an attempt to sell his IT company Sycor from neighboring Göttingen. This should succeed through the merger with the Munich heavyweight Allgeier and a subsequent IPO. Hans Georg Näder sold the plan to the public last November in the “Göttinger Tageblatt” as “great news for southern Lower Saxony”. But at the beginning of February the trade broke. Now the “family wants to hold on to our majority stake in Sycor in the long term” and provide the means for the “sustainable implementation of the growth targets”, Näder explained in a letter to his employees.
At the same time he announced there that he would be launching an “employee and management participation program”. Whether this is now there and to what extent the people affected should help finance Sycor in this way - Hans Georg Näder also failed to answer this question. It also seems unclear what will become of the US prosthesis manufacturer Freedom Innovations , which was taken over in September 2017 for an unknown amount.
Hans Georg Näder wanted to integrate the rival company into his prosthesis, wheelchair and service business, which is to be listed on the stock exchange under the company name Ottobock. But three months later, in December 2017, at the request of the American competition and consumer protection authority FTC, a US court prohibited the merger because it would reduce competition in the market for microprocessor-controlled knee prostheses and Otto Bock would become the dominant supplier.
The consequences for Nader’s stock market candidates are grave, as he admits in his latest annual report. The US court ordered “that all activities” to integrate Freedom Innovations should “be stopped immediately”. Yes, the Lower Saxony were “forbidden” “any direct contact” with Freedom Innovations. As a result, Ottobock has “no control” over the acquired group of companies and can also “not consolidate” it, in other words: manage it in the books as a new part of the company. Rather, Ottobock is called “to submit a proposal for a solution that ensures that competition in the USA is not restricted”.
When asked, Näder did not want to comment on any of the points. In the annual report he only stated: “Until the time the consolidated financial statements were drawn up”, that was on November 10, 2018, “there was still no amicable agreement with the FTC and Ottobock”.
Nevertheless, the situation worsened at the end of last month: On March 22nd, the American competition and consumer protection authority decided to obtain an injunction from a federal court in order to maintain the legal capacity of Freedom Innovations , as it was called - in other words: They want to prevent the Duderstädter may create irreversible facts for the acquired company. The failures and shortfalls relativize the image of the successful person that Näder has spread of himself to the public in recent years. Here HGN, the supermanager, who sails over the seas “at least eight weeks a year” and still successfully manages a global company - for him “it’s all a question of organization”, because: “There is no such thing as impossible.” There the indestructible, who allegedly drank the Rolling Stones guitarist Ron Wood under the table in the bar of the London five-star hotel “Blakes”.
Here is the record addict who had an amphibious vehicle built in 2008 just to cross the English Channel faster than the British icon Richard Branson. There the desirable one who posed for the “Bunte” as a hippie blend in flowered trousers with Cuban women in bikinis.
The only defeat that HGN has so far made public appear to be the broken wedding with a 31-year-old young lady, to whom he got engaged in Sardinia in the summer of 2017. Näder made the love and hormonal frenzy known in the Berlin “Tagesspiegel” in a pink advertisement, with a heart in the form of a tattoo. The wedding was scheduled for Whitsun 2018 in Ibiza, flights, ferries and rooms for 500 guests were booked, as were the music and the clergy. But then the “love at first sight” broke up, as Mr. Näder said, and he suddenly called off the marriage with his acquaintance in Berlin. He let those invited know that the latter “misinterpreted” his trust.
Nevertheless, he did not cancel the party and celebrated the wedding, albeit without a bride: “Nader’s wedding to himself,” wrote “Bild”. There is no better way to express it.
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