First the trade is also cyclic is air transport

Maurice Mallet began his career on a net suspended under a huge balloon. Guy de Maupassant, pleased passenger, tells of his adventure in a delicious article of July 16, 1887. "In a second, we left." You feel nothing: it floats, you climb, flying, on plane. Our friends shout and cheer, we did hear almost more; We see them only barely. We are already so far, so high!

It was the blessed time of the junior science and benefactor; the beginnings of air transport, under the sign of lightness, optimism and the vagaries of the weather. Ten years later, Maurice Mallet based his lighter-than-air manufacturing company, which will be later known as "Zodiac".

The memory of the glorious founder was quickly convened for welding the shareholders of the firm in July, when Safran, the first French aeronautical equipment manufacturer, has expressed its intention to "discuss" a rapprochement with Zodiac, four times smaller than him. But the company family shareholders, who control more than 32 of the capital (and 44 of the voting rights), quickly closed the door.

As the excellent results and flattering forecasts announced two weeks ago showed the financial community that the firm could largely dispense with a big brother to continue to prosper. Olivier Zarrouati, the President of the Director, promises a sales growth of 40 over the three years to come and, more importantly, an increase of the profit margin of three points, when it is already far superior to that of Saffron. That is to say, whether Saffron is in need of Zodiac, he did not need big brother!

How is it therefore that a relatively small company - a little more than EUR 2 billion of turnover - in a world of Giants changing can display such a claim The answer, refined over the past thirty years, lies in two words: dominance and recurrence.

It is a little chance that led Zodiac in this way. Post-war, the airship specialist is ruined and should his salvation to the invention of one of its engineers, a canoe made of two inflatable sponsons connected by a floor of canvas. The famous Zodiac was born. But this business is highly seasonal. About 80 of the turnover realized between March and August. When the young engineer Jean-Louis Gérondeau takes the reindeer of the family company in 1973, the company is on the filing of balance. A drastic restructuring and a Libyan contract will save the setting.

The Prévert inventory

To diversify, the firm buys its oldest competitor in the 1920s, Aerazur, meanwhile has become the specialist of the inflatable textile for Aeronautics, including the famous evacuation slides. The firm holds the French monopoly of this gear and parachutes of any kind. Yet these licensed materials must be changed regularly in the life of an aircraft. Jean-Louis Gérondeau, heard of maritime adventure which he leaves in 2007, includes that multiply the effects of this French dominance by putting his hand on the American counterpart of Aerazur. Everything is there. Toboggans for aircraft world market is small, EUR 200 million, but Zodiac owns half. He therefore control the selling price and ensures that recurring revenues.

In thirty years the firm has applied this recipe to a considerable number of aviation equipment. With always the same criteria: a niche market, near technologies from those he knows already, international domination and, especially, recurring revenues, made by a very lucrative after-sales service.

Thirty years and twenty acquisitions later, the firm is at the head of an inventory to Prévert, where alongside jackets, fuel tanks, wipers, electrical systems, piping, seats, and even the food trucks. The bric à brac is classified into three sets: equipment related to security, those related to the operation of the aircraft and all those relating to the Interior of the aircraft. This last area represents him only half of the turnover, mainly worn by the seats which is global co-leader with 35 of the market. The firm holds 80 of the market of the aircraft toilets and finalized this week the acquisition of a competitor in the kitchens of aircraft, where it is already leader.

King on its small territory

This dominance of small niches has two advantages. On the one hand, as the total is not more than 2 of the price of an aircraft, constructor (for security equipment) or the airline (for the Interior equipment) will be less looking on the price and on standardization and quality more. On the other hand, the firm does not have to be a global giant, with powerful technological means to be the King on its small territory.

This strategy is particularly suited to aeronautics, industry of small series. It sells everything confused less than 4,000 aircraft a year in the world against 60 million cars. And as these aircraft have a life of thirty years, the money is on the spare parts, whether the engine or the seats. At the time, in contrast to the automobile, are equipment suppliers positioned on trades with a high content of maintenance, such as engines, brakes (two specialties of Saffron), the seats or safety equipment that capture the largest part of the value. The operating margin of Zodiac is between 11 and 14, the Saffron between 6 and 8 when the Airbus or Boeing fluctuates between losses (in 2009) and 4 to 6. Result, Zodiac recurring revenues represent 40 of its turnover and, according to analysts, between two thirds and three quarters of its profits.

A pool of prey

This extraordinary martingale still has its limits. First, the trade is also cyclic is air transport. Then, she asks a perfect control of costs, since the synergies are almost non-existent between trades. History of Zodiac resourced it a culture economics and science of management of procurement, including in the United States (50 of employees) who are the admiration of the profession. The company follows permanently one hundred companies that constitute his "pool" of prey. It's no wonder that it enters in turn the radar of larger predators and for growth and profit.

SAFRAN sees a way to reduce its dependence on aircraft engines and the risk of exchange rate to the dollar. According to Deutsche Bank analysts, three quarters of the costs of Zodiac are outside the euro, against a third party only for Safran area. As the scheduled end of the Boeing-Airbus duopoly with the arrival of the Chinese, Brazilians, Canadians, Russians or Japanese is great news for the manufacturers, who see their potential market explode. Hence the desire for a lot of hands on the Zodiac nugget. The race is launched. Maurice Mallet, who was 8,000 metres in his balloon with a simple fur coat, would have liked this kind of challenges.

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