An unexpected change in leadership is set to accelerate the reorientation of the electricity meter manufacturer. But if Trump keeps his word, there’s a problem.
The investment needed in the American power grid is significant: Street scene in Pennsylvania.
Landis + Gyr is one of Switzerland’s most traditional companies. Its roots trace back to 1896 when Adelrich Gyr founded a company in Zug for the production of electricity meters, which was later taken over by engineer Heinrich Landis. Today, Landis + Gyr leads in Europe with digital electricity meters, also known as Smart Meters. However, the company offers more than that: it also develops devices and applications for managing power grids.
This theoretically positions Landis + Gyr perfectly to benefit from the surge in demand during the energy transition, similar to how ABB’s electrification sector has succeeded. However, the company has struggled to capitalize on this mega-trend. The stock price is lower than at the IPO in the summer of 2017, and revenue has stagnated for years.
The USA is a much more attractive market
This is set to change with a focus on the USA, a large market with significant investment needs. However, with Donald Trump returning as president in the next four years, who is a protectionist and advocate for the oil and gas industry, Landis + Gyr may face challenges if Trump fulfills his promises.
In a move to concentrate on North America, Landis + Gyr announced three weeks ago that it is considering selling its Europe business. Now, with the sudden departure of CEO Werner Lieberherr, who has been in office since 2020, the company has appointed Peter Mainz, a manager with extensive experience in power equipment in the USA, as his successor.
While Lieberherr’s retirement was expected next spring, the abrupt change in leadership came as a surprise. Landis + Gyr had originally planned to take up to 18 months to decide on the form of the realignment, and some observers criticized this vague timeline.
Austrian Peter Mainz takes over the CEO position.
With the leadership question resolved, Landis + Gyr can now focus on developing its new strategy. However, the company faces a potential hurdle with Trump in office: Landis + Gyr operates a plant in Reynosa, Mexico, to serve the US market. Like many other firms, it benefits from low production costs in Mexico and free trade with the USA to supply American customers.
Trump’s tariffs would pose a problem
However, Donald Trump aims to diminish Mexico’s role, not only as a point of origin and transit for immigrants but also as a production location. Similar to China, Trump has threatened Mexico with tariffs on all imports to the USA, specifically mentioning a 25 percent tariff. Even if the future president does not target Mexico directly, a proposed 10 percent tariff on all imports from abroad remains a possibility.
This could impact Landis + Gyr’s calculations. If Trump follows through with his tariff promises, the company may have to consider relocating production to the USA. Currently, the company does not have a plant there. Similar challenges have been a factor in the struggle for survival of solar module manufacturer Meyer Burger, which aimed to import solar cells from Germany to the USA for further processing.
The new CEO, Peter Mainz, brings the necessary knowledge to address the Trump variable. He has been on the board of Landis + Gyr since 2018 and previously served as CEO and President of Sensus, an American electricity meter provider. Additionally, he sat on the board of Itron, the main competitor of the Swiss company in the USA.
The focus on the USA is strategic, as that market is already the primary revenue generator for Landis + Gyr: 60 percent of the total revenue of $925 million from April to September was generated in the American region. The accounting is already done in US currency, and 89 percent of the adjusted operating profit (Ebitda) comes from there. This is partly because Landis + Gyr finds it easier to operate on the other side of the Atlantic.
Former CEO Werner Lieberherr may join the board of directors.
A sale of the Europe business is possible
The power grid in the expansive USA is outdated, with a significant need for investment. Landis + Gyr excels with products and services for power management. While these modernizations are also government-supported, the certainty of future support under a new President Trump is not guaranteed. However, Werner Lieberherr expressed confidence in late October, during a conversation with journalists, that demand will remain high under Trump.
In contrast, the metering business in Europe is national, fragmented, lengthy, and characterized by tight tender criteria – and overall less profitable. Landis + Gyr now needs to decide what to do with it. Besides downsizing, selling parts or all of the activities is also an option.
Landis + Gyr no longer produces in Switzerland. However, even in its new structure, the company could retain its headquarters in Cham in the tax-friendly canton of Zug, although a medium-term listing on the US stock exchange is likely. Similar considerations are currently being made by cement giant Holcim, which plans to divest its North America business.