Pagnossin S.p.A.



Via Noalese 94
Treviso I-31100 TV
Italy
Telephone: +39 0422 2916
Fax: +39 0422 435005
Web site: http://www.pagnossin.com

Public Company
Incorporated: 1919
Employees: 923
Sales: EUR 46.10 million ($55 million) (2004)
Stock Exchanges: Borsa Italiana
Ticker Symbol: PAG
NAIC: 327112 Vitreous China, Fine Earthenware and Other Pottery Product Manufacturing; 327123 Other Structural Clay Product Manufacturing

Pagnossin S.p.A. is a leading name in the Italian porcelain and ceramics industry, and has established an international reputation for its products. Pagnossin itself specializes in ironstone ceramics-based tableware. The company is also a leading Italian producer of terracotta flowerpots, vases, and other products, primarily through subsidiary Vaserie Trevigiane. Another major part of the Pagnossin S.p.A. stable comes through its controlling share of Richard Ginori 1735, which produces fine china and porcelain tableware, and which represents as much as 50 percent of the group's total sales. Other brands in the Pagnossin brand family include Rio, Smalti, Giuletta & Romeo, Amitis, Elisir, and Giove. Pagnossin has long been an internationally focused company, distributing its products in more than 70 countries, and international sales still account for more than half of company revenues. The wedding gifts market is the company's bread and butter, providing some 70 percent of the group's sales. Pagnossin fell on difficult times into the mid-2000s, with its sales falling to EUR 46 million ($55 million) in 2004, and its losses mounting. The company is listed on the Borsa Italiana and is led by Chairman Carlo Rinaldini.

Brick-Making Foundations in the 1920s

Although Italy had established a reputation worldwide for its quality porcelain and china production, Pagnossin's origins lay in a more mundane area. The company, later to become a major name in Italian tableware, in fact began operations at the turn of the 20th century as a manufacturer of bricks. By 1919, the company had formally incorporated as Pagnossin S.p.A.

Pagnossin's interest in ceramics operations beyond bricks came only in 1950, when the company launched production of ironstone dinnerware. The company's diversification also demonstrated its willingness to adopt and or develop new technology, and for its new line of products the company added kilns capable of heating its ceramics to more than 1,250 degrees Celsius.

The company's ceramics production gradually became its central operation. By the 1960s, Pagnossin decided to specialize in ceramic tableware. The company then abandoned brick making altogether. Over the next decade or more, Pagnossin became a leading name in Italian tableware. As part of that process, the company launched a marketing effort that included the sponsor-ship of a number of sporting events, notably Formula 1 racing, which had long enjoyed immense popularity among Italians. These efforts played an important role in building Pagnossin's brand name both in Italy and abroad.

Nonetheless, the company's growth stagnated somewhat into the mid-1980s. The company, described as "sleepy" by some analysts, had grown inefficient in its production techniques, and its development of new designs and technologies also had slowed. In 1986, however, the company acquired a new major shareholder, financier Carlo Rinaldini, who launched the company on a new period of expansion.

Rinaldini placed Dal Bo' in charge of the company in order to lead a thorough restructuring of its operations. Under Bo', Pagnossin went through a recapitalization, enabling it to invest in developing more modern and efficient production capacity. This restructuring effort continued into the early 1990s, and by 1994 the company boasted near total automation of its production, as well as improvements in its raw materials. Pagnossin also renewed its investment in technology, and by the early 1990s had succeeded in developing an innovative coloring technique that permitted this process, as well, to be automated—a first in the industry.

The new process, based on xeriography, enabled Pagnossin to paint directly onto the surface of its tableware products. The process also allowed the company to paint in up to five colors simultaneously. This compared with the industry standard decalcomania process, which required color to be applied to a separate overlay, only one color at a time. Pagnossin's new and more efficient coloring technique had a number of other advantages. With the color brought on directly to the surface of objects, Pagnossin was able to offer customers a five-year guarantee against fading. Meanwhile, the process also enabled the company to produce shorter and smaller runs of new designs, and more quickly, enabling the company to respond to a growing industry trend toward faster design turnover in the 1990s. Last, the process gave Pagnossin an advantage with department store and other large-scale buyers, permitting the company to prepare prototypes of designs within a matter of hours.

Pagnossin renewed its growth through the 1990s. The international market became particularly receptive to the company's designs, and by the mid-2000s, Pagnossin boasted sales in more than 70 countries. The company's international marketing and distribution network included subsidiaries in Japan, Switzerland, and the United States, among other markets.

Diversifying for a New Century

Pagnossin also sought external growth in the 1990s. In 1992, the company made its first effort to diversify its business when it absorbed the operations of Vaserie Trevigiane. That company was a leading producer of terracotta pots and vases for interior and exterior gardens, noted for its high-quality products. Pagnossin at first leased the Vaserie Trevigiane works, which, due to overspending, had gone into receivership. By 1994, Pagnossin bought the terracotta works outright, paying ITL 3.8 billion.

Following the acquisition, Pagnossin began an investing effort in Vaserie Trevigiane, spending some ITL 2.4 billion on the company's production infrastructure. This effort enabled Vaserie Trevigiane to double its production and its sales by the mid-1990s.

Pagnossin also invested in its own production capacity during this time. In 1996, the company brought a new and innovative gas furnace online. Entirely designed by Pagnossin's own research and development team, the furnace was the first in the world to produce heat levels consistent with electric furnaces. The new oven allowed Pagnossin to boost its production by some 20 percent. It also allowed the company to produce both cups and plates on the same production line, something that had not been possible with the group's earlier equipment.

Pagnossin continued to target expansion as it approached the dawn of the 21st century. In 1997, Pagnossin made its next major move, when its holding company Retma Holding acquired Richard Ginori 1735 for ITL 65 billion. Richard Ginori 1735 represented one of the oldest and most respected names in Italian bone china and porcelain, tracing its origins back to its founding in 1735 by the Marchese Carlo Ginori.

Until the early 1800s, China had been the major source for porcelain in Europe. The material became highly prized, and even coveted. Yet the Europeans had not yet discovered the formula for producing local versions of porcelain. In the early 1800s, the first successful recipes for producing porcelain based on raw materials found in Europe had been developed, and factories now began to appear across Europe.

Ginori set up his factory in Doccia, in the then-kingdom of Florence. Ginori originally produced porcelain featuring designs by Giovan Battista Foggina. Associated with a number of noted artists and architects of the day, Ginori became known for his large-scale objects. Yet the business proved a money-loser up until Ginori's death in 1757. Son Lorenzo then took over the company's operations, reorienting its production to smaller objects, and transforming the business into a profitable and thriving enterprise.

Through the 18th and 19th centuries, the Ginori works developed its reputation as one of Italy's foremost producers of porcelain and, later, bone china, and the company became a supplier to Italy's royalty. Under management by Carlo Benedetto in the late 1870s, Ginori installed new electric ovens, which greatly increased the company's production capacity.

In 1896, the Ginori family sold the company to Milan's August Richard. The more industrialist-oriented group had been founded in 1873 by Giulio Richard in order to produce ceramics products for the northern Italy market. That business grew quickly, and in the late 1880s had begun to expand elsewhere in Italy, notably with the purchase of Palme, based in Pisa, in 1887, and the establishment of a warehouse in St. Giovanni. Following the purchase of the Ginori company, Richard, or Richard Ginori as it later became known, maintained its production in Milan, as well as in Doccia, and also operated a number of its own shops in Naples, Turin, Rome, and Bologna.

Richard Ginori established its reputation as one of Italy's master porcelain makers, working with a number of noted designers, especially with architect Gio Ponti starting in 1923. Richard Ginori grew again in the 1960s, when it acquired Laveno-based SCI (for the Italian Ceramic Society) in 1965. Richard Ginori itself went through a succession of owners through the 1960s and the 1970s, becoming owned by Italian businessman S. Ligresti, who then sold Richard Ginori to Pagnossin in 1997.

Company Perspectives:

The high technology behind Pagnossin dinnerware manufacturing is designed to deliver extremely reliable products. The continuous selection and research work on glaze materials allow us to obtain an ever wider "Pantone" colour range and special effects such as the gleaming of glazed surfaces that are extremely durable in time.

In 1998, Pagnossin listed part of Richard Ginori's shares on the Borsa Italiana. Nonetheless, Pagnossin maintained majority control of its new subsidiary. In that year, as well, Richard Ginori began its association with designer Giovan Battista Vannozzi. That collaboration resulted in the well-received Iubilaeum 2000 Collection, launched for the dawn of the 21st century.

Richard Ginori also became a vehicle for the acquisition of new brands for the Pagnossin stable. In 2001, the company acquired TTT-Trequanda, a producer of terracotta pots. Other brands added to Pagnossin included Laure Japy, based in France.

Pagnossin's fortunes fell into the mid-2000s, however. The company saw its sales slip, while its profits collapsed into losses. By 2004, sales had dropped some 16 percent from the previous year, reaching slightly more than EUR 46 million. Yet the group's losses had grown even larger, reaching some EUR 36 million for the year. With a long history as a top Italian ceramics producer, Pagnossin faced an uncertain future in the early years of the new century.

Principal Subsidiaries

Casa Italiana 3 S.R.L.; Editrice L'Italia a Tavola S.R.L; Gruppo Italiano Tavola S.R.L.; Laure Japy France et RG S.A. (France); Museo Richard-Ginori della Manifattura; Retma Holding B.V. (Netherlands); Richard-Ginori (Svizzera) S.A. (Switzerland); Richard-Ginori 1735 Inc. (U.S.A.); Richard-Ginori 1735 S.p.A.; Richard-Ginori Japan (Japan); Vaserie Trevigiane International S.p.A.

Principal Competitors

Elkem ASA; American Greetings Corporation; Waterford Wedgwood PLC; Villeroy und Boch AG; Noritake Company Ltd.; Mikasa Inc.; Rosenthal AG; Royal Doulton PLC; Lladro S.A. Grupo; Josiah Wedgwood and Sons Ltd.

Key Dates:

1735:
Carlo Ginori founds a porcelain production plant in Doccia, near Florence.
1896:
August Richard acquires Ginori, and the combined company becomes Richard Ginori.
1919:
Pagnossin S.p.A., which had begun manufacturing bricks in Treviso at the beginning of the century, is incorporated.
1950:
Pagnossin launches production of ceramic table-ware, which becomes its sole product in the 1960s.
1986:
Carlo Rinaldini acquires Pagnossin and institutes restructuring.
1992:
Pagnossin diversifies into terracotta, leasing Vaserie Trevigiane.
1994:
Pagnossin acquires Vaserie Trevigiane.
1997:
Pagnossin acquires Richard Ginori.
1998:
Richard Ginori lists on the Borsa Italiana.
2001:
Terracotta producer TTT-Trequanda is acquired.
2005:
Pagnossin announces that sales are down by 16 percent and losses amount to EUR 36 million.

Further Reading

"KPMG Refuses to Certify Pagnossin Accounts," Europe Intelligence Wire , June 16, 2005.

"Pagnossin: A fine arzo posizione finanziaria netta," Finanza.com , May 2, 2005.

"Pagnossin: Perdita 2004 sale a 36.2 mln euro," Borse.it , June 1, 2005.

"Richard Ginori e Pagnossin a velcita' sostenuta," Finanza.com , June 15, 2005.

The Richard-Ginori Factory , Milan: A. Mondadori, 1988.

"Un 2003, 'horribilis' per il gruppo Rinaldini," Trend-online.com , May 27, 2004.

—M.L. Cohen



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