Letter to the Shareholders
I am very pleased to share with you the results achieved by Datalogic in 2018. Growing results achieved in a macroeconomic context characterized by uncertain scenarios, in which Datalogic has demonstrated great strength and dynamism, especially thanks above all to forward-looking actions implemented in the recent past, regarding both the organizational side and investments in new products and their development.
The implementation phase of our strategy, which was defined in 2017 and led to the adoption of a new organizational model, continued in 2018. We believe that there are still many benefits to be gained through excellent execution of the Group’s strategy, particularly in terms of acquiring new customers, cross-selling and improving the level of satisfaction and service for our customers. In 2018, we made significant progress in terms of R&D investment, a key component of our strategy. As a high-tech company, Datalogic focuses on continuous innovation, investing in both “core” and emerging technologies in order to develop new products and solutions that meet the current and latent needs of its customers. Consequently, in 2018 we approved a 12% increase of investment in innovation, with a 9.8% ratio to revenues, in order to promote the creation of new products and platforms, as in the case of the new PDA Android™ Memor™ 10 full touch, a unique, high-performance device that can support a multitude of applications in various environments, demonstrating our company’s ability to offer the market increasingly advanced and versatile solutions. Further evidence of the validity of the new PDA was its inclusion, in September 2018, in the “Android Enterprise Recommended” program, a recognition that Google™ attributes to the best-performing devices developed by companies that require the use of the Android operating system. This result further convinced us of the importance of focusing on innovation and investment in order to attract staff dedicated to research and development and to improve their expertise.
In 2018, we made significant progress in terms of R&D investment, a key component of our strategy.
In 2018, we hired almost 100 engineers to support research and development in line with the new product plan based on our customers’ requests. Every effort in this regard is aimed at the achievement of major results in the coming years, which we expect to be significant both in terms of creating new patents and inventions and with regard to penetrating key markets and expanding our customer base. The latter, fundamental goal was pursued in 2018 by increasing the financial commitment intended to improve the turnover generated by our presence in strategic foreign markets, such as the United States and China. Also in this case the plan, not only in investment terms, translated into a strengthened sales force dedicated to these markets, which has increased by over 100 people. These numbers reveal the company’s significant momentum in relation to the expansion of the workforce, which in 2018 reached a record overall level of nearly 250 new hires, leading to a total of 3,157 employees. This investment plan did not however impact the profitability of our business in the year just ended, thanks to major efficiency improvements. 2018 saw an increase in revenues, up 4.1% and 6.4% at constant exchange rates, thanks to the double-digit growth of results reported in China, in particular in the manufacturing industry, and in the United States in the retail and transportation and logistics industries. We are particularly proud of the results in the United States where we have signed new supply contracts with companies listed in the top 500 by Forbes. North America, which a high-tech company like Datalogic must necessarily continue to focus on, contributed almost 25 million to the growth of the Group’s turnover, while the results achieved in the European markets were less impressive, particularly in Italy, hampered by an economic context that is still characterized by uncertainty and poor growth.
Despite significant investment in innovation and in the consolidation of commercial networks, profitability in 2018 remained substantially in line with the previous year. EBITDA was 105.5 million, amounting to 16.7% of revenue, thanks to improvement of the gross margin, which amounted to 48.5% of revenue, up from 47.6% in 2017, mainly due to cost-cutting in relation to materials and to control of administrative and general expenses. Net profit was 62.2 million, a 3.5% increase over 2017.
2018 was also a memorable year in terms of our presence abroad. The 40th anniversary of our presence in overseas markets provided an opportunity to open a new sales office this year in Las Colinas, in the Dallas area, Datalogic’s sixth branch in the United States. Considerable effort was also invested in preparations for the celebration in early 2019 of the 10th anniversary of the establishment of our most important production site in Vietnam.
In conclusion, for Datalogic 2018 was a year of major investments necessary for continuing along the path that it embarked on in early 2017 with the definition of our new customer centric organizational model. At Datalogic we are aware of the value of our skills, of the results we can achieve and of our corporate responsibility. This awareness has always been central to the company’s approach and it is evident throughout the entire workforce and all its functions. I would firstly like to thank all our employees for their achievements, as well as our customers, who every year confirm their confidence in our ability to always be one step ahead of our limits, offering products and solutions for their most advanced fields of application. I would also like to thank our suppliers, all the other stakeholders and our shareholders who support our development. We are ready to continue, with the strength and enthusiasm of our founder and president, on our successful path towards achieving even more ambitious goals.
*Google and Android are trademarks of Google LLC.