Domino Printing Sciences PLC

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Domino Printing Sciences PLC

TECHNOLOGY PIONEER IN 1978

REBUILDING

NEW TECHNOLOGY INVESTMENTS FOR THE FUTURE

PRINCIPAL SUBSIDIARIES

PRINCIPAL COMPETITORS

FURTHER READING

Trafalgar Way
Bar Hill
Cambridge, CB3 8TU
United Kingdom
Telephone: (+44 01954) 782551
Fax: (+44 01954) 782874
Web site: http://www.domino-printing.com

Public Company
Incorporated:
1978
Employees: 1,836
Sales: £208.35 million ($391.2 million) (2006)
Stock Exchanges: London
Ticker Symbol: DNO
NAIC: 333293 Printing Machinery and Equipment Manufacturing

Domino Printing Sciences PLC is one of the worlds top two manufacturers of specialty printing equipment for packaging, product coding, and commercial printing applications. The company has traditionally focused on the continuous ink-jet (CIJ) printing market, a technology that enables printing and coding to irregular surfaces, such as cans, plastic bottles, cartons, and other primary packaging systems and surfaces. Dominos CIJ equipment is used, for example, in order to date stamp eggs. The companys equipment is also used for secondary packaging applications, including adding product identification systems to boxes, trays, and the like. The CIJ market remains the companys single largest revenue generator. In 2006, CIJ equipment alone accounted for 28 percent of the companys total turnover of £208 million ($391 million). In addition, some 34 percent of the companys revenues are generated through the sale of the proprietary, specialty inks required by its systems. The maintenance, including spare parts sales, and service of its equipment is also a major revenue area for the company, accounting for 24 percent of sales.

Despite its expertise in the CIJ market, and that markets continued position as the leading packaging printing technology, Domino has taken steps to position itself in two other emerging printing and coding technologies, those of laser printing, and, further down the road, drop-on-demand (DOD) printing. While the former offers the advantage of solvent-free inks, higher resolution and reliability, and lower ink usage, maintenance, and downtime, the latter provides a high degree of flexibility, enabling packagers to produce variable labels on demand, rather than be required to produce or purchase and stock large quantities of preprinted or prelabeled packaging. Based in Cambridge, England, Domino has operated on an international level almost since it was founded in 1978. England continues to account for 11 percent of group sales, while the rest of Europe, led by the French and German markets, supports 35 percent of the companys revenues. The United States, where the company operates a manufacturing and sales subsidiary, remains Dominos largest single market, at 21 percent of sales. Yet the fast-growing Chinese market, at 11 percent of group sales, is expected to be Dominos primary growth market. Domino is listed on the London Stock Exchange and is led by Chairman Peter J. Byrom and Managing Director Nigel Bond.

TECHNOLOGY PIONEER IN 1978

Domino Printing Sciences grew out of Cambridge Consultants Ltd., a research center that played a significant role in the developing U.K. high-technology sector. Cambridge Consultants had been founded in the early 1960s, as part of Cambridge University, in an effort to use that institutions expertise in order to support the growth of British enterprise. Sinclair Radionics was an example of an early outgrowth of Cambridge Consultants. In 1972, U.S. management consultants group Arthur D. Little acquired 80 percent control of Cambridge Consultants, which nonetheless remained at its Cambridge base.

During the 1970s, an engineer at Cambridge Consultants, Graham Minto, had begun working with continuous ink-jet printing (CIJ) technologies in an effort to overcome a number of the technologies advantages. CIJ was not new. It had originally been proposed in the late 19th century as a means for telegraph printing, and the first commercial applications of the printing technology dated back to the early 1950s. Through the 1960s and into the 1970s, CIJ printing had become a dominant printing technology, at least in the commercial sector, despite its many disadvantages. Indeed, the machinery was very expensive, required a great deal of energy and, because of a large number of moving parts, was often highly unreliable. CIJ printers were also known to be messy to operate, while incapable of achieving high-quality printing standards.

Improvements to the technology began to appear in the 1970s, however, and by the middle of the decade, had come to focus on the use of electrostatic charges to propel and deflect the ink. Minto himself had played a leading role in adapting new technology brought over from the United States, simplifying the technology in order to create a new generation of CIJ printers. By 1978, Minto had led the development of an innovative new CIJ printer, called the Unijet, which featured a single printing head. In order to commercialize his invention, Minto founded a new company, called Domino Printing Sciences, which licensed the technology from Cambridge Consultants.

Domino got off to a strong start: in the same year of its founding, the companys Unijet printer had captured the attention of both the printing and packaging industries. Even before its official launch, the Unijet had received its first industry award, winning the £10,000 TDC Innovator Award, sponsored by Technical Development Capital, a wing of the Industrial and Commercial Finance Corporation. The company had also lined up its first sales agents, marketing separately to the printing and packaging industries.

The Unijet proved highly reliable, while also less expensive than its largely U.S. counterparts, and these features enabled the company quickly to develop sales beyond the United Kingdom. Orders for the companys printing equipment rapidly spread to the European continent, and by the middle of the decade, Domino claimed the leadership in the CIJ market in the United Kingdom and in Western Europe. The company had also extended its reach into other high-growth markets, including Japan, where it launched sales through a distributor in 1981. By 1983, the company had entered the U.S. market, signing a manufacturing and sales agreement with American Technologies, part of American Can. American Technologies also handled distribution of Domino systems and ink for the Australian and New Zealand markets. Exports rapidly became the driving force of the companys revenues, and by the end of the decade, Dominos equipment, inks, and services were available in 60 countries. Fully 80 percent of the companys revenues were generated outside of the United Kingdom.

COMPANY PERSPECTIVES

Our mission is to become the leading supplier of equipment and services to industrial companies and commercial printers worldwide, meeting their diverse requirements to identify, code, mark, number, address or personalise products and packaging with variable data, to provide customers and ultimately all consumers with value, security and peace of mind.

REBUILDING

By then, Domino had grown from a four-person company into one of the worlds leading printing equipment suppliers. The company had also prepared itself for future growth in 1985, listing its stock on the London Stock Exchange in an offering oversubscribed some 43 times. The public offering enabled the company to make a new series of investments, and especially in building up its specialty inks business. Indeed, while printer sales remained an important source of revenues, the companys margins remained relatively low, and the finite nature of the purchase precluded future earnings potential. In contrast, the use of specialty inks developed by the company and delivered via proprietary cartridge systems provided the company with an important source of locked-in, ongoing, and high-margin revenues. In order to expand its ink capacity, the company created a dedicated research and development team, which worked on developing a variety of colored inks, edible inks, and other specialty inks, such as those capable of being read with ultraviolet lights.

In 1985, the company moved to form a true ink subsidiary, called Domino Amjet. That subsidiary began its operations in Liverpool. By the end of the year, Domino Amjet had been supplemented through the purchase of Chemelectron, at a cost of £596,000.

Yet Dominos growth hit a major hurdle in the second half of the 1980s. Flush with success, the company acquired its U.S. distributor in 1987, raising the purchase price through a new rights issue that year, and taking on some £23 million in debt to finance the purchase. The American Technologies acquisition, however, nearly broke the young British company. Soon after the purchase, the company realized that its new American subsidiary was rife with problems. For one, American Technologies had been producing Dominos printing systems under license for the United States and other markets. Yet the company had made a number of changes to Dominos manufacturing specifications; as a result, the equipment became prone to frequent breakdowns, and caused serious damage to Dominos reputation in the worlds single largest CIJ printer market.

The investment community, already skittish due to a number of other soured acquisitions made by British firms in the United States, reacted swiftly, and Dominos share price all but collapsed. Dominos future appeared clouded. In 1989, Minto resigned from his position in the company and was replaced by Managing Director Howard Whitesmith.

Whitesmiths own background was in manufacturing engineering, and by the late 1980s the Wraysbury native had extended his own experience from engineering to purchasing and materials management. Whitesmith was particularly interested in the Japanese kanban system of manufacturing, and especially its insistence on placing a great deal of individual responsibility on employees. As a result, the company rapidly gained greater manufacturing efficiency, while simultaneously raising its quality levels.

Whitesmith also set out to restructure the companys ailing American operations. The company took over direct managerial control of the subsidiary, restructured its manufacturing processes, and raised production to the same quality standards as its British plant. The company also worked hard to restore its reputation in the U.S. market, changing the subsidiarys name to Domino Amjet, and by the early 1990s was able to offer an industry leading five-year guarantee on its systems.

These efforts played a major role in helping the company gain a number of high-profile customers in the early 1990s. In 1992, for example, the company received an order for 500 printers from the British Post Office, the largest ever CIJ printer order placed in the United Kingdom at the time. By then, the companys sales topped £60 million.

Dominos position as the leading European producer of industrial ink-jet systems played a role in its strong recovery throughout the 1990s. A major boost for the company came when the European Commission instituted a new directive requiring that all food and beverage items sold in the European Union be labeled with sell by or use by dates. The new directive created a suddenly vast new market for the company. As a result, Dominos expansion was dramatic; in France, for example, the companys sales jumped by 80 percent in just one year. The company responded to the increase in business by expanding its production capacity on the European continent, establishing a new ink production headquarters near Frankfurt, Germany, in 1992.

KEY DATES

1978:
Graham Minto founds Domino Printing Sciences as part of Cambridge Consultants and launches first CIJ printing system.
1985:
Already the European leader, Domino goes public on the London Stock Exchange.
1994:
Company adds laser printing technology with acquisition of the Direct Digital Coder system from the United States Directed Energy Inc.
2001:
Canadian Inkjet Systems is acquired.
2006:
Company acquires Mectec Elektronik and Enterprise Information Systems.

NEW TECHNOLOGY INVESTMENTS FOR THE FUTURE

Part of Dominos success lay in its customer service-driven model, as opposed to its competitors technology driven operations. As a result the company succeeded in developing strong relationships with its customers, as well as a reputation for its service commitment. In the early 1990s, Domino extended its concept of customer service by adopting a new strategy of diversifying its variable printing technologies. This diversification was also seen as an important hedge against the eventuality that the market would abandon CIJ technology in favor of a rival technology, such as laser or the newly emerging DOD technology.

Acquisitions played an important role in Dominos diversification strategy. An early purchase was that of British company Packtrack, for £500,000 in 1992. That company specialized in a relatively low-tech, mimeographic technology that was nonetheless highly prized by certain customers, and served as a precursor of sorts for the DOD market.

Domino added laser technology in 1994, buying the Direct Digital Coder system that had been developed by Directed Energy Inc. That acquisition enabled the company to roll out its own laser systems, which, because they featured nonsolvent-based inks, were prized by the bakery and cereals sectors. The company launched its first laser system in 1994; by 1996, the companys active investment and development program enabled it to launch a second laser printer system. The extension into lasers played a role in the companys expansion into the fast-growing mainland Chinese market, where it established a joint-venture distribution subsidiary. The company then began marketing its laser printing systems to that countrys tobacco industry, among others.

Domino also strengthened its international network, adding operations in India and Mexico. In 2001, the company acquired Canadian Inkjet Systems, which was renamed as Domino Printing Solutions. That year, also, the company acquired Alpha Dot, based in the United Kingdom, paying £3 million to acquire that companys expertise in coding and marking products. The company then unveiled its own DOD printing system, called Domino On Demand, in 2003.

New acquisitions toward the middle of the decade helped the company expand both its range of market and technologies. In 2004, the company boosted its presence in Germany, buying CIJ printer systems developer Wiedenbach Group. That purchase in particular provided Domino with enhanced capacity for printing on wires and cables. The following year, the company added new operations in the United States with the acquisition of Texas-based Citronix, which had developed its own CIJ printing systems.

Domino expanded again in 2006, buying Enterprise Information Systems, based in Dallas, Texas, and Swedens Mectec Elektronik. That purchase marked Dominos entry into a new market, the print and apply labeling equipment sector. As it entered 2007, Domino had grown into a world leader in its industry. The companys diversified technological capacity provided the base for its future growth in the new century.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Domino (Australia) Pty. Ltd.; Domino Amjet BV (Netherlands); Domino Amjet GmbH (Germany); Domino Amjet Ibérica S.A. (Spain); Domino Amjet. Inc. (U.S.A.); Domino Coding Ltd. (China); Domino Deutschland GmbH; Domino Korea Pte Ltd.; Domino Printech India; Domino Printing Mexico; Domino Printing Solutions Inc. (Canada); Domino SAS (France); Domino UK Ltd.; Domino UK Ltd. (Dubai).

PRINCIPAL COMPETITORS

Videojet Inc.; RWE AG; Heidelberg USA Inc.; MAN AG; Xerox UK Ltd.; Metso Corp.; Heidelberger Druckmaschinen AG; Stork N.V.

FURTHER READING

Domino Denies Takeover Rumours, Printing World, January 6, 2005, p. 10.

The Domino Effect, Food Trade Review, January 2007, p. 66.

Domino Moves into Print and Apply, Packaging Today International, November 2006, p. 6.

Domino on Demand Brings New Focus, Print Week, July 17, 2003, p. 20.

Dominos Milestone, Food Trade Review, January 2007, p. 9.

EIS Deal Strengthens Dominos Technology, Label & Narrow Web, JulyAugust 2006, p. 42.

Ferry, Jeff, Domino Jets Ahead, Management Today, June 1992, p. 62.

Gimbel, Florian, Domino Acquires Alpha Dot, Financial Times, July 12, 2001, p. 19.

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