After reporting c €9m of adjusted EBITDA in H118, Mutares AG (DE:MUXG) expects FY18 earnings to reach €20–30m. This should be assisted by successful turnarounds and organic growth of portfolio entities, beneficial M&A activity and the deconsolidation of Zanders and Artmadis, which are currently being liquidated. Management expects one or two additional transactions (either acquisitions or divestments) to be initiated and completed in the remainder of 2018, on top of the Knorr-Bremse deal which is already in progress. At the current share price of €9.54, Mutares is trading at a 40.5% discount to last reported NAV.
H118 results confirm organic growth
Mutares reported H1 EBITDA of €21.6m, down 31% y-o-y, primarily as a result of the income from bargain purchase booked in H117 (at €54.7m). Adjusted EBITDA for the period reached €9m on the back of a 14% y-o-y revenue increase, driven by organic growth in the automotive segment, along with a number of acquisitions completed throughout FY17. Mutares improved its net cash position to €41.4m as at end-June 2018, assisted by €28m proceeds from the STS Group IPO.
Extending portfolio of platform investments
Mutares remained focused on broadening its portfolio of platform investments, which now contains five entities. In addition to STS Group and BalckeDürr, the company has purchased La Meusienne in FY17 and is now finalising the acquisition of Knorr-Bremse RailServices. Recently, Donges SteelTec, originally acquired as an add-on investment, was reclassified as an independent platform. Mutares continues to reduce its exposure to the wood & paper and consumer goods & logistics segments through exits and deconsolidation of liquidated entities to focus on the core sectors.
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