The issue for Odiot, like that of any ultra luxury firm, is to manage non-value-destructive growth. Brand stretching is always a tempting quick fix, but can come at a cost to the brand. When craftmanship is the underlying manufacturing process (8 craftsmen in all to be grown to 15), capacity cannot be expanded overnight. As it is out of the question to subcontract, striving for extra volumes can only be achieved through more expert staffing, training, modernised tools and processes. The balance between new volume gains and actual net returns is expected to be immediately positive after such changes.
Odiot has started to update its industrial base (introduction of laser welding machines, internalisation of gold and silver baths) and increase recruitment. Funding has been raised to that effect (see Debt section). Higher capex and opex may not even be a margin problem, as the small company is capacity constrained. Management growth plans are essentially held back by the difficulty of bringing together new craftsmen and new tools in a tight calendar.
The pricing element matters too when it comes to top line expansion, as Odiot will pass on the rising cost of precious metals as well as introduce price hikes, notably on one-off pieces of art. Prices are not the issue especially when some biggish decorative units are turned into storage of value by some owners.
The group does, however, see a profitable growth path with its Ebitda margin projected to shoot from 16% in 2024 to 24% in 2026. Via more staff (+7) and renewed plant, the aim is to contract production times. The figures used in this report are provided by the company.
Note the legal set up, whereby Odiot SA, the listed company, is effectively owning 52% of Odiot SAS, the operating company. Odiot SA’s consolidated accounts thus are bound to reflect significant minority interests, which are currently not highlighted in the company’s projections. Odiot SA has a number of intragroup contracts with the SAS (cancelled in consolidated accounts), but this need not matter over time, if and when Odiot SA gets comprehensive control of Odiot SAS.
