Rofin responds to critical open letter to shareholders
A UK-based group of private investors, Silver Arrow Capital Advisors, has published a scathing indictment of Rofin's management in an open letter to the company’s shareholders. Silver Arrow owns 9 per cent of Rofin-Sinar Technologies.
Rofin released a statement in response to the criticisms pointing to a doubling of year-to-date net income for 2015, increased gross margin to nearly 40 per cent, and strong sequential sales growth in fibre and ultrashort pulse lasers.
‘The board and management team of Rofin-Sinar Technologies Inc. are committed to executing on our strategic plan to drive growth and profitability. This effort is gaining momentum, as evidenced by our very strong financial results for the most recently reported fiscal quarter,' the statement read.
Silver Arrow criticised what it called ‘Rofin's misguided strategy, poor board oversight and ineffective management’ as reasons for what Silver Arrow felt was underperformance in Rofin’s stock over the past five years.
Silver Arrow intends to nominate three directors at Rofin in the 2016 annual meeting of shareholders.
Rofin reported strong growth in quarterly earnings this year – 78 per cent in Q3 2015 and 95 per cent in Q2 – but net sales dropped in 2014.
Thomas Merk, who was appointed CEO earlier in the year replacing Günther Braun, commented on the Q3 2015 results: ‘The continued strong demand for our high-power fibre lasers – resulting in 29 per cent sequential growth in unit sales – show that our technological advancements and vertical integration are paying off.’ He also added that ultrashort pulse lasers are Rofin’s second growth focus, with sales increasing by 50 per cent sequentially.
However, Silver Arrow said that Rofin had missed opportunities, both in the Asian market and also by entering the fibre laser market late in its growth stage. IPG Photonics, a leading provider of fibre lasers, has posted strong growth in materials processing over the last two years.
Silver Arrow had previously asked for minority representation in Rofin’s board of directors but the request has so far been refused.
Rofin's statement in response to Silver Arrow’s letter concluded: 'We remain confident that our existing growth strategy will continue to deliver attractive value to all shareholders. We also welcome input from all shareholders towards our common goal of enhancing shareholder value.’