Source: Forbes Date: 05.01.2023
Iron and steel. Materials that are hard to find in the office of one of the biggest Czech engineering magnates. Colourful, positive pictures hang on the walls and even the furniture has warm shades rather than cold steel. Perhaps the only reminder of the business that goes on between these walls is the shelf opposite the door with a small model of a locomotive that Jaroslav Strnad recently received for his 50th birthday.
Jaroslav Strnad is the founder of the Czechoslovak Group (CSG), which, among other things, took over the failing Tatra company and many other engineering companies. He handed over the holding, which he gradually built up over almost 30 years, to his son Michal four years ago, making him the youngest Czech billionaire.
But you won't find Jaroslav Strnad on the beach of his private island. He doesn't rest. Instead, he is building a new empire - the industrial holding CE Industries (CEI), which currently consists of 20 companies with a turnover of over nine billion crowns. What does such a business look like business by business?
"Billionaire Strnad Sr. finalizes takeover of another Czech company"
"Strnad takes control of MICo's bankrupt engineering plants"
"Strnad circles Vítkovice Steel"
"Tatrovs take control of key Croatian industrial brand."
Something like that. At least according to the headlines. "We're definitely not bored," he smiles as he talks about how he and René Matera recently took control of Đuro Đaković Group (DDG), Croatia's largest engineering company.
The two shareholders have the same shareholdings as when they jointly entered Tatra in Kopřivnice in 2013. Jaroslav Strnad's CE Industries Group has 65 per cent, while Rene Matera's Promet Group has 35 per cent. "We have known each other for a long time and we know what to expect from each other," the Czech industrialist points out.
DDG is mainly involved in the production of freight wagons, but it also has activities in the defence industry. It consists of three subsidiaries. The Special Vehicles Division produces rail wagons, but also military equipment. "In the future, we want to split it into two companies, one for wagons and the other for the defence industry," says Jaroslav Strnad.
Orders for the Croatian army are increasing at DDG, and sales of wagons alone in 2022 increased to more than double the previous year's sales. And production is set to continue to grow significantly, according to Strnad's plans.
Waste, energy and fabric softener
"We are also looking at other interesting projects in the Balkans. We are looking for opportunities that would fit into our portfolio," reveals Jaroslav Strnad's future plans. Some of them are surprisingly sticky and fragrant: last year, his holding bought the Serbian manufacturer of washing powders, avivaziæ and household products Beohemija, recently took over the consumer chemicals manufacturer Solira Company and has just completed the acquisition of the Czech company Kaumy - importer and manufacturer of chicory syrup and health food.
"We are building the food and drugstore division from scratch. It is an area I have never done, but I have smart people in my team who understand it and we see a lot of potential in it," says the arms industry icon.
He also sees potential in other key areas of his holding, which are waste and recycling of raw materials, rail transport as well as energy and engineering. "The energy sector has been underfunded for a long time. In recycling, there will still be a need for better sorting and better processing. Rail, on the other hand, is green, there are big efforts to get goods off the roads and onto the rails, and there will need to be a renewal of the fleet," he explains his vision.
No, he's certainly not losing energy. Nor is he losing his appetite for taking over promising companies in trouble. For example, the Trebic engineering company MICo, which specialises in servicing and supplying components for nuclear power plants.
"Power plants are getting older and we may see the construction of a new one. Of course, we would like to be there. But we also went into this acquisition because MICo also does work for other sectors of the energy industry and for the chemical and petrochemical industries. We want to put the company in order so that we can handle bigger projects in the future," Jaroslav Strnad plans.
Bypass for Vítkovice Steel
He began to build a new empire on the companies bought out of the bankrupt Vítkovice, together with Martin Ulčák he tried in vain to save Vítkovice Heavy Machinery. "We didn't succeed, but we still have three companies left in Vítkovice that are working very well," he says.
He is currently keeping a close eye on the situation surrounding Vítkovice Steel, the third-largest Czech smelter. He is helping to finance the company with blocked assets. "We provide them with tolling financing. We buy the material, Vítkovice Steel rolls it over and we sell the sheets on," he explains.
"Without that, they wouldn't stand a chance. Tolling is such a bypass for the company to survive. So that employees are not laid off and skills don't go with them, which are then difficult to get back," adds Jaroslav Strnad.
After all, Vítkovice was the main reason why he handed over his first empire to his son Michal four years ago. "I saw other investment opportunities. And I went to deal with Vitkovice," he confirms.
Confidence in successors
At that time, Michal Strnad had already been chairman of the CSG board for three years. I wouldn't give it to someone who didn't enjoy it. And most importantly, I trusted that he could handle it. It wouldn't have worked without trust," Strnad Sr. notes.
"Since then, I've had a lot of people come to me for advice on how I made the handoff. But I don't have the recipe! You just have to trust that the new generation can do it and give it maximum support. Above all, they have to want to do it," he adds.
His son Michal is the 18th richest Czech, according to the current Forbes ranking, and his CSG is currently involved in large military contracts. Overall, the companies in CSG's holding company reported EBITDA of CZK 2.7bn in 2021.
"My sons have been involved in the business since they were young. We weren't afraid to let them do something, whether it was driving a forklift or then running companies," Strnad illustrates.
He has two sons. The younger one, Jaroslav, recently joined his brother at CSG, where he works in sales and is gaining experience. Is his father building CE Industries for him? "If he enjoys it, we'll definitely work something out," Jaroslav Strnad leaves this question unanswered and open.
There will be no third holding
And what happens after that, when they get the new group going strong? Will he rest or succumb to other challenges? "We'll see. But I will definitely not build a third holding. I've got a few years of fun now. We're a young group and we need to put it together and make it work as well as possible. We are completing the team and gaining experience. Today we have companies in the group that we have mostly taken over in some kind of trouble. This requires attention and a lot of work. Once we stabilise them, other worries will come, because we have the investment appetite," he says.