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Mutares AG: High Transaction Activity Adds Momentum

Published 09/28/2017, 06:25 AM
Updated 07/09/2023, 06:31 AM

Mutares (DE:MUXG) continued to add new investments to its portfolio in H117, in particular enlarging the STS Group through add-on acquisitions. H117 earnings were supported by the disposals of EUPEC Germany and Fertigungstechnik Weissenfels (FTW). Consequently, portfolio NAV went up by 3.7% ytd to €319.4m as at end-June. Despite the positive FY17 outlook for key holdings and upward potential associated with ongoing restructuring projects, Mutares’s shares trade at a 36% discount to NAV.

Significant top-line contribution from M&A deals

Mutares reported an EBITDA increase to €15.5m in H117 from €4.0m a year ago and 37.8% y-o-y growth in group sales to €428.1m, with several of last year’s acquisitions (Balcke-Dürr, STS Plastics, Cogemag and Cenpa) adding c €126.7m of incremental sales in H117 (excluding acquisitions made by Artmadis). The company’s M&A activity so far this year was also high, with two add-on acquisitions for the STS Group and the takeover of Aperam Stainless Services & Solutions Tubes (renamed La Meusienne). The bottom line was assisted by €17.1m of deconsolidation proceeds in H117 related to the disposals of EUPEC Germany (consideration of €19.5m plus potential earnouts of up to €12.5m) and FTW.

Positive outlook despite some pockets of weakness

Management reiterated the positive outlook highlighted in the FY16 report and continues to target significant y-o-y growth in sales and clearly positive EBITDA, as well as a higher operating cash flow within the existing portfolio compared to FY16. There were some downward revisions in expectations for selected portfolio holdings (Norsilk, Cenpa, BSL Pipes & Fittings), but Mutares’s largest (in terms of revenues post recent M&A) segment, Automotive, is performing well, with both STS Group and Elastomer Solutions expected to double their operating profits in FY17. Mutares continues the negotiations related to the outstanding litigation with Diehl.

To read the entire report Please click on the pdf File Below:

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