Groupe PGS, a leader in the manufacture and reconditioning of wooden pallets posted consolidated turnover of 139.2 million Euros for 2011, an increase of 26.7%, despite an unfavourable business context.
The Group, which is wholly-owned by its co-founders, achieved consolidated turnover up by 26.7%, reaching 139.2 million Euros for the financial year completed on 30 September 2011 (compared to 109.9 million Euros for the previous year). While its business depends heavily on industrial activity, which is currently depressed in France, the Group cites several factors for its continuing success:
• Organic growth through broader services to its existing customers and the development of new markets
Both major accounts and SMEs renewed contracts and broadened the scope of their partnerships with the Group. Sales increased for the entire range of PGS products and services: new and reconditioned pallets, packaging (Palox, Bulk Bags, box-pallets, etc.) and also collection (mainly for Euro-pallets) and flow management services with the pool of environmentally-friendly EcoPGS pallets. The greatest growth was achieved in the Bulk Bags sector, which increased by 35%, with 700,000 units sold.
PGS also signed new contracts with companies in the chemicals, glass, pharmaceuticals and agricultural sectors, as well as in promising markets such as e-commerce and recycling. Lastly, as a result of substantial investment (more than 10 million Euros in 2011), PGS has acquired the latest technologies to allow it to expand in existing markets where it previously had little penetration, such as construction, cement, tiles and bricks.
• Outward growth in its sawmill and pallet-construction operations
This was achieved through the acquisition of two other companies, Scierie et Palettes Blanc (Gard) and Scierie et Palettes de Camarès (Aveyron).
• Boosting the sales force and the customer service departments in France
Two Sales Departments were set up, one for the north and the other for the south of France, in order to be closer to customers and to improve the quality of customer service. Ten new people were recruited, as customer advisers and sales assistants. “PGS Group’s sales strategy is based on paying attention to customer needs and providing them with efficient service. Some major accounts conduct an annual audit of their supplier’s performance. We must strive to be constantly among the best,” states Jean-Louis Louvel, President and Founder of PGS.
• Automatic growth due to an increase in the price of wood as a raw material.
OUTLOOK FOR 2012-2013
The founders and senior management of PGS decided to make a significant increase to the company’s share capital, raising it from 8 to 13 million Euros. Jean-Louis Louvel explains that “We are increasing the share capital in order to show our confidence in the company’s future: PGS is a private, independent and growing company, with the confidence to invest in its future and the financial robustness to be able to offer customers long-term partnerships.” As a mark of this confidence, the Group intends to speed up its development in France and abroad.
In France, PGS has plans to complete its network by opening new centres for its historic core activity, pallet reconditioning. The Group is also studying the possibility of making other acquisitions in sawmilling and the construction of new pallets.
Michaël Modugno, Vice-President of PGS, has been made responsible for the Group’s international development: “PGS will be celebrating 20 years of existence in 2013 and intends to develop further in other countries, especially in Spain, where the Group has been operating since 2006.” PGS already has a substantial customer base in that country: “There are more than 2500 French companies with branches in Catalonia, Madrid, Saragossa or Bilbao, and we wish to boost our activity over there.” PGS Group is setting up a country-wide network with local partners. [...] The goal is to be able to offer our pallets and services throughout Spain, and even Portugal as well,” explains Michaël Modugno.
PGS will create local partnerships with both large and small companies specialising in the construction or reconditioning of pallets. Pre-contract audits have already been carried out to assess the companies’ technical capabilities. Michaël Modugno is convinced that this will be a win-win situation for all concerned: “These companies have very high levels of skill in their own fields. This partnership contract will allow them to benefit from all aspects of PGS’s offer. At the same time, it will enhance the services we can offer our French customers in Spain.”
In fact, the Group is currently applying this business model throughout Europe “to enable us to propose a full range of services including sawmilling, construction, reconditioning and pallet collection,” states Michaël Modugno. “We want to become a key partner for the major players in every sector, by acting as a link between them and the available offers on the new and reconditioned pallet market, which is currently highly fragmented.” PGS may decide to make further acquisitions to offer customers broader geographical coverage.
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