Károly Orbán, Chairman of the Board of Directors

“We started working for the company as employees, as CODEX was founded in 1988 by two institutional investors”, says Károly Orbán, Chairman of the Board of CODEX Értékpapírnyomda Zrt. “Success requires failure, and failure may have to come first. This is what happened in our case.”The initial publishing projects did not lead to a breakthrough; it was the rapid recog- nition of the market demand for the production of securities that led the company to change its profile and start producing securities, remaining within the printing industry. The business quickly boomed, printing securities 24 hours a day, in three shifts, in millions of copies, continuously. In the 1990s, a new market demand for depository services for securities emerged in connection with the production of securities. The success story continued and, six years after the company was founded, it set up a separate company for this activity, the investment company CODEX Értéktár Zrt.

However, the owners of the printing house had other ideas,   as printing capacity had to be utilised. Securities production is expensive due to strict requirements, so horizontal expansion, i.e. broadening the range of printed products, has been a major headache. As a result, security labels became increasingly important in the company’s life, and later CODEX started to develop and produce a completely new printing product in Hungary: the multi-page self-adhesive label that can be folded out as a leaflet or turned like the pages of a book.

The major customers for these special labels are mainly in the pharmaceutical, food and chemical industries, where the product is typically small in size but requires a lot of information. The CODEX range of self-adhesive labels with an increased information-carrying surface area of up to 72 or more pages is the ideal solution.

CODEX was the first company in Hungary to make these products, which are now produced on five production lines; the company is still developing special labels according to the needs of its customers. In addition to these, of course, the production of securities and cheque books, as well as other security and special printing products, continues. In this way, CODEX preserves its traditions but is also committed to innovation.

The ownership structure of the company has also changed significantly since its foundation. Five years after the company was set up, the employees decided they wanted to take own- ership. “We saw that we were kick-starting things, the company was doing very well, but we still stayed as employees.”They were first given employee shares, but soon faced the paradox: “we realised that the more and better we worked, the harder it would be to buy the company”. This led to the management buying 100% ownership of the company. There are currently three main shareholders, who are also currently involved in the day-to-day running of CODEX as members of the Board of Directors and as operational managers. These three shareholders hold more than 91% of the shares. The remaining ownership is held by some current and former employees of CODEX.

They have financed the company from their own resources and bank loans from the very beginning; last year they completed an HUF 800 million investment. They have created a stable and well-capitalised company that allows them to think about acquisitions, so they are constantly looking at opportunities, both in Hungary and abroad. The company’s value is significantly increased by the fact that it has a number of utility model patents, thanks to its own product developments, and is currently working on several patent registrations. A significant proportion of the products manufactured based on them are exported, so the idea was born that foreign, Western European production could be expanded, especially in the area of safety labels. Potential acquisition targets are mainly sought in Germany and Austria.

While the company had 5-6 employees in its early years, it now has 80. “We could still improve on sales revenue per capita, about 60% of our capacity is utilised. If the revenue growth rate of recent years continues, a double-digit growth rate is achievable in the future, even without major investments.”The pandemic has not had a significant impact on business, and in fact the security labels market has continued to strengthen, for example thanks to an explosion in disinfectant sales. In the longer term, five years, if the foreign acquisition does not succeed, the aim is to develop the domestic production base, with an investment of around HUF 1.5-2 billion.

They are not afraid of competition. There is a lot of competition for products protected against counterfeiting, with a wide range. such as official documents, cards, banknotes, passports, etc. “We don’t deal with them. However, we have found a niche in the security labels market in Hungary that affects a wide range of users.”

CODEX has been generating profits for all but the first two of the last 33 years.

“We see luck as necessary but not sufficient. This is important everywhere in life, but it is only one option. I believe that for everyone in life there comes a chance, a great opportunity. Often this can happen more than once. Some people consistently pass it by, not seeing the opportunity. Others almost consciously seek their fortune and find it several times in their lives. In business, without hard work, luck is wasted; it remains untapped”: this is how Károly Orbán, Chairman of CODEX Zrt’s Board of Directors, defines the recipe for success.