Turning Ducati around
When Invest Industrial invested in Ducati, it was on the verge of bankruptcy. Six years later, the firm was sold to Audi with more than double the market share and roaring profits. Invest Industrial’s Carl Nauckhoff explains how the iconic motorcycle marque was transformed.
When did Invest Industrial get involved with Ducati?
We invested in two steps. In 2006, we acquired 30 per cent less one share, in order to get into the company with a large enough stake to control its future strategy. At that time, the company was publicly listed and was in a weak financial state. Two years later, after confirming our key assumptions, we took the company private. Looking back, it was the right moment, given how markets were doing at that time.
You sold Ducati to Audi in 2012 for €860m. How did Invest Industrial turn Ducati around?
We did what we always do – adopt an industrially-driven approach. First we strengthened the management by appointing a new CEO and executive team, which is very important if you want the company to be able to grow. More experienced people are capable not only of taking the right decisions but of implementing them. We happen to have a deep bench of managers we have worked with over the past 20 years. For example, they teamed up with Porsche Consulting, because we thought their experience in the SUV market had parallels with the cruiser market Ducati was trying to develop. In a second step, we provided additional capital and industrial solutions to enable the company to really do what it ought be doing – developing fantastic premium motorbikes through a powerful R&D department. Most of the time our industrial approach delivers real progress. It is very rare that we have to cut costs or jobs. The final step involved speeding up the internationalisation of the company. When we invested, there was only one manufacturing facility, in Bologna. Now there is a second plant in Thailand and a third in Brazil. We also expanded the dealer network in Asia.
What is Ducati’s situation today?
The company produced around 42,000 motorbikes in 2011, of which 80 per cent were sold overseas. Asia in particular is a highly promising market where sales are growing at a fast pace. During our ownership, EBITDA quadrupled to 19.7% of turnover in 2011. We are always trying to acquire business that happen to be located in Italy or Spain but have a global potential. Gucci, Prada and Versace are great brands as well as ambassadors for Italy! But investors like us need the right project: a mature company with a proven brand and identifiable problems such as management failures, weak R&D or ineffective retail marketing. And Ducati is now back on the right track.