“Service can do much more than repairs”

Mr Frentzen, we are speaking a good six months after our last meeting at Ceramitec 2024. The ink on the takeover agreement was not yet completely dry. How has Lingl SOLEAD fared since then?

Hermann Frentzen (HF): Overall, we are satisfied with the our results this year. At the end of the year, we will stick the landing in terms of earnings. In terms of equity, we are a few percentage points above plan.

We will almost achieve the total operating performance we set ourselves for the year. Despite the tense situation for the industry, there are customers who are taking advantage of the lull and investing proactively. Projects are underway. Personally, I wouldn’t join the general lament. Every crisis is also an opportunity. I also believe that we are now positioned, overall and in terms of our attitude, in such a way that we will be back in the saddle when things really get going again.

The biggest problem with the old Lingl was the company’s financing structure. Have you been able to resolve this?

HF: We have now succeeded in building up a portfolio of guarantee line providers with various partners from the banking and insurance sectors that suits our business. We are thus well and broadly positioned.

We were also able to separate collateralisation and day-to-day business. The guarantees are backed solely by directly enforceable guarantees from the shareholders. The cash payments flow entirely to the company. This allows us to conduct our day-to-day business without interruption. This separation was very important to me and I am satisfied that it has worked out so well. The banks don’t think it’s a bad thing either.

I am also in constant dialogue with the stakeholders in this regard. I think I can say that we did a good job so far in this new beginning. This also means that we have submitted realistic sales and business plans and planned with realistic case scenarios.

The next task now is to quickly prepare and report the balance sheet for 2024 so that our guarantee line providers can build on this.

In our last conversation, you emphasised that Lingl is “well positioned in terms of substance”. Has this impression been confirmed?

HF: That is the case. I told you at the time that I wouldn’t do anything that would come close to a financial tightrope walk.

The group’s opening balance sheet, which we drew up, clearly shows this. Lingl SOLEAD started with an equity ratio of 45 per cent, which is excellent for the industry, and a very good cash position of 24 per cent of the balance sheet total. This gives us, the employees and customers, the confidence that we are making a new start under very favourable conditions.

This balance sheet also includes the four consolidated subsidiaries. However, I must qualify that the subsidiary in Russia is dormant due to the embargoes and we only have a minority stake in the one in Algeria. Foreigners are not allowed to hold more company capital there due to government regulations.

What does the order situation look like?

HF: We are fully occupied until well into the first half of 2025. We have several orders in the USA, some in Germany and a few more in the pipeline. The decisive criterion for accepting an order is that it has to make commercial sense. I won’t dip into the red with my eyes open. That is why we have not accepted some orders that we could have had.

I would like to take this opportunity to emphasise once again the basis for this positive development at Lingl SOLEAD. The management with Dr Eibel, the managers and the division heads did a very good job of restructuring and developing the company during the insolvency. Without this achievement, our situation would be far less enjoyable today.

As you just mentioned the USA - what are the plans abroad?

HF: In some cases we are evaluating the markets, in others we now have a clear idea of what market share we can gain there and are stepping up our activities there. We have had our own company in Kernersville, North Carolina, since 2000. We are now ramping it up in the area of troubleshooting in control systems and installations with our own service unit in order to cover the North American market. Other markets that we are looking at are, for example, the Turkic states, North Africa and Saudi Arabia.

How do you want to re-establish and strengthen contact with customers?

HF: We need to network and proactively approach potential customers. It used to be that people came to Lingl. We have to turn that around and I believe we will succeed. I have already had some good experiences. I have been and still am travelling a lot to introduce Lingl SOLEAD and myself as the majority shareholder. My age is an advantage; customers have more confidence in a 65-year-old family entrepreneur than a 30-year-old.

One key point is the way we communicate. I have experienced through workshops how enthusiastic customers have been about the expertise and attitude of Lingl SOLEAD employees.

I then realised that we needed to publicise our strengths more. We have to move away from our former image as the global market leader. We are now simply a service provider and must be prepared to change sides and put ourselves in the customer’s shoes. If they want to talk about hydrogen, we have to be able to talk about hydrogen. The same with gas, electricity, digitalisation, sensor technology, etc. We have developed these disciplines in recent years and have not addressed them enough.

Finally, we are focussing on the service business. Service can do much more than repairs. On the one hand, service can mean the spare parts business, but it can also pave the way for project business. It is about permanent customer contact. In order to achieve this without being too annoying, we offer training courses in control systems, mechanics, etc. at our premises in Krumbach. However, we will also be able to organise external training courses in future using portable devices. These permanent contacts bring added value to both sides. The customer benefits in the area of training, predicted maintenance with health checks and professional presentation of the findings. This is useful for the business and plant management. Regular health checks every two years create a roadmap for the company for maintenance, plant management and the planning of investment and operating expenditure. We are now working on this and will involve our employees, who are out in the field and generally have very good and close contacts with customers, to a greater extent.

What is the situation among the employees at the Krumbach site?

HF: The core team has largely remained the same. I think three people have left us. For one of them, receiving his first salary from the insolvency administrator was not quite a confidence-building measure. Two other employees were justifiably worried because they were in the phase of starting a family and building a house.

I would like to get these people back. I am in contact with them and will let them know when we are safely back on track. But I don’t want to lure anyone into a social adventure.

When I’m in Krumbach, I walk through the company every day, talk to everyone and am present. That is very important. Due to the company’s recent history, many of our employees have lost their sense of security. We are now giving that back and that is also a pleasure. This also includes regular employee updates on our progress in the market.

Overall, the team has developed in the right direction and now forms a functioning mix of experienced and new colleagues. My colleagues with power of attorney, Frank Staudenmaier, Karl Liedel, Bernd Braun and Markus Martl, bring the technical expertise that inspires the customer and put it into practice. That works very well. We also have the next generation in the company with many good and young people who are also on fire. I think that’s great and I also look after the 17 trainees and dual students myself.

Behind this whole issue is the question that we had to answer at the beginning of April. Do we halve the workforce and stick to the existing sales expectations? Or do we keep the workforce, including trainees, and redefine the sales vision? I have decided in favour of new sales visions.

Do you still think this was the right decision?

HF: Yes, we will prove this with our 2024 balance sheet and our plans for the coming years. In 2025, we want to generate between 40 and 44 million euros in total operating revenue. In 2026, we want to exceed 50 million euros again. We feel that we are very well prepared for these plans with the people we have in place now. In the coming years, we will also gradually send more and more of these young people into the field. Creating this atmosphere, dovetailing old and young, is a pleasure.