Rolex is No Ordinary Company
I was watching a program regarding companies owned by non profit foundations and what is interesting to note is they don't pay taxes on their earnings. This means that these companies don't really care about profit like other businesses have to as they only have to cover their operating expenses.
I find this refreshing to see as it must be a pleasure being involved in something that is not driven by profit. So many companies cut corners reducing their quality for the sake of profit as that is and always will be the most important factor driving the company. Shareholders and the dividends they will receive at the end of the financial year is pushing for more sales and finding cheaper solutions.
Rolex is one of these companies who is owned by the Hans Wilsdorf Foundation set up in memory of the owners wife. When Hans Wilsdorf died the foundation took ownership of the company meaning they can never be publicly traded as a stock. The foundation has been in charge for over 60 years and why the company will never be broken up and will always remain a legacy to the owner and what he stood for.
90% of their profits are given to charity each year as they do not pay any taxes. Rolex have been a status symbol for decades for the elites in society and remains the number one watch maker in the world today. They manufacture roughly 1 million watches every year and the demand is still there for quality.
What this means as a business is they can focus on quality as the profit margins are never the main core of the business unlike all their competitors and this gives them the edge over their rivals.
It must be difficult to compete against such a brand knowing they have such a huge advantage over whatever you are manufacturing. The company is valued at $8 billion and what is driving them is to be the best at what they do and not driven by profit.
There are no figures on their profits earned and is kept secret but the general thought is the company works on a 20% profit margin. In 2020 sales topped $8.5 billion suggesting they are making north of $1.5 Billion per year.
The charity foundation supports everything Geneva from bailing out the Servette (Geneva) Football Club from bankruptcy in 2015 to building bridges and universities. Obviously the original owners nephews and nieces are taken care of within the foundation, but it is all about giving back to society.
I worked for a company many years ago that handed out a fair chunk of profits to Universities and projects like the Kruger Game Park but never on this sort of scale that Rolex do. It would be great if we could see more of this type of thing happening in the future as this is very rare.
IKEA is another non profit business that I had no idea was one as it is a hard concept imagining that they give everything back. You just expect that they are in it for the money as they are there to make money which is an odd thing to wrap your head around thinking otherwise.
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