Mutares increases consolidated revenues by 14% in the first nine months

• Revenues from consulting services and management fees of Mutares Holding grow by 12% to EUR 84.3 million in the first nine months of 2024 (previous year: EUR 75.5 million)
• Net income of Mutares Holding reaches EUR 53.5 million after the first nine months of 2024 (previous year: EUR 101.3 million) despite one-off expenses for the bond increase
• Group revenues increase by 14% to EUR 3,892.8 million (previous year: EUR 3,402.5 million); Adjusted EBITDA at EUR -16.5 million (previous year: EUR 19.4 million)
• New bond placed with investors for further growth and international expansion
• Successful IPO of defense subsidiary Steyr Motors in October

Munich, November 7, 2024 – Mutares SE & Co. KGaA (ISIN: DE000A2NB650) ("Mutares" or "Mutares Holding" and, together with its subsidiaries, "Mutares Group") today published its figures for the first nine months of 2024. A further increase in revenues was achieved both at company level ("Mutares Holding") and at Group level ("Mutares Group").

Revenues increase at Holding and Group level due to portfolio growth

Revenues of Mutares Holding, i.e. Mutares SE & Co. KGaA, which result from consulting services and management fees from the portfolio companies, increased by 12% to EUR 84.3 million in the first nine months of 2024 (previous year: EUR 75.5 million). The increase is due to portfolio growth in the fiscal year 2023 and in the first nine months of 2024 as a result of the high level of transaction activity. Portfolio income¹⁾ amounted to EUR 84.6 million for the reporting period (previous year: EUR 76.5 million). The net income of Mutares Holding amounted to EUR 53.5 million in the period from January to September (previous year: EUR 101.3 million), although it should be noted that the prior-year period was exceptionally positively influenced by the record exit of Special Melted Products ("SMP") and already includes the usual market expenses for the increase in the existing 2023/2027 bond in the first quarter 2024 and for the new 2024/2029 bond issued in the third quarter 2024.

At Group level, Mutares generated revenues of EUR 3,892.8 million in the first nine months of 2024 (previous year: EUR 3,402.5 million). The increase is due to the high level of acquisition activity in the fiscal year 2023 and in the reporting period itself. Group EBITDA (earnings before interest, taxes, depreciation and amortization) regularly benefits from gains from bargain purchases of completed acquisitions and amounted to EUR 170.3 million in the first nine months of 2024 (previous year: EUR 528.7 million). Adjusted EBITDA²⁾, adjusted in particular for the effects of the regular changes in the composition of the portfolio due to the business model (gains from favorable acquisitions and deconsolidation effects), amounted to EUR -16.5 million for the first nine months of 2024 (previous year: EUR 19.4 million). This reflects opposing effects from the successfully implemented operational optimization programs in the portfolio and the completed acquisitions of naturally significantly loss-making investments.

Diversification of the financing structure via new bond

The main focus in the third quarter was on diversifying the financing structure. The implementation of the aggressive growth strategy initiated in 2020 as part of the geographical expansion required high investments in the past to expand the portfolio to a critical mass. As a result, Mutares has a balanced and diversified portfolio across four segments in terms of economic cyclicality, which enables steady exit activities in terms of size and maturity.

With the FerrAl United Group and the Amaneos Group, Mutares has created two relevant portfolio groups in the automotive supply market, with which Mutares is actively shaping the concentration process in the industry. Investments will therefore continue to be targeted selectively in the future. However, the focus is particularly on consolidating the market and increasing the utilization of the existing infrastructure as a result. Following the strong growth of recent years, Mutares therefore anticipates a lower average investment requirement for the segments in the context of acquisitions.

The pursuit of this strategy is reflected in the year to date in 2024 in a significantly reduced investment requirement of EUR 3 million on average per acquisition compared to EUR 7 million in the fiscal year 2023. The new bond 2024/2029 with a volume of EUR 135 million placed in September 2024 serves the purpose of further international expansion and, in particular, to finance the further expansion of the portfolio. In addition, the new bond has optimized the financing structure and the cost of debt financing.

Following eleven growth-boosting platform and add-on acquisitions in all four segments that have already been completed, transaction activity is expected to pick up again in the current fourth quarter after a muted third quarter in terms of transactions as planned. Mutares is planning further acquisitions. Mutares has currently signed six transactions with a total sales volume of around EUR 1.3 billion, which are to be completed in the next four months.

The agreed acquisition of Alcura France from Alliance Healthcare Group France is intended to strengthen the Goods & Services segment. The specialist for the distribution and rental of devices and solutions for home care in France is expected to generate revenues of almost EUR 100 million in 2025.

The planned acquisition of the Buderus Edelstahl GmbH business from voestalpine AG serves as a new platform investment to strengthen the Engineering & Technology segment. Upon completion of the transaction, total assets of approximately EUR 200 million will be transferred. The renowned German manufacturer of high-quality special steels generated revenues of approximately EUR 360 million in the business year 2023/2024.

The agreement to acquire the assets of S.M.A. Metalltechnik GmbH & Co. KG including its subsidiaries, which has also already been concluded, is planned as a further add-on investment to strengthen the SFC Group. The leading manufacturer of high-density aluminium tubes expects revenues of around EUR 160 million in 2025.

The planned acquisition of Natura sp. z o.o. from Pelion S.A. is intended as a new platform investment to strengthen the Retail & Food segment. As one of the leading beauty retailers in Poland, the company generated revenues of EUR 100 million in 2023.

Exits and IPO of the defense subsidiary Steyr Motors

On the exit side, following the five sales of investments in VALTI, Balcke-Dürr Nuklear Service GmbH, iinovis Group, Repartim and Frigoscandia, the largest exit transaction to date in the first nine months, exit activities are expected to intensify further over the course of the year and in the fiscal year 2025. Overall, portfolio companies from all four segments with a cumulative sales volume of EUR 1.85 billion and expected gross proceeds of more than EUR 200 million are in the exit pipeline.

After the reporting date for the first nine months of 2024, Mutares was already able to report completion with the contractually agreed sale of MobiLitas and, in particular, the successful IPO of the defense subsidiary Steyr Motors, which was valued at EUR 82.7 million at the initial share price of EUR 15.90. Following the acquisition of the specialist for tailor-made engines for mission-critical defense and civil applications in the fourth quarter of 2022 for a symbolic purchase price, Mutares achieved a rapid transformation and turnaround with a return to revenue growth and sustainable profitability.

Growth in all segments

Revenues in the Automotive & Mobility segment increased to EUR 1,679.7 million in the reporting period (previous year: EUR 1,357.1 million). In particular, the revenue contribution from the add-on acquisitions made for the FerrAl United Group in the fiscal years 2023 and 2024, as well as the platform and add-on acquisitions made in the current year, especially for the SFC Group and the HILO Group, contributed to an increase in the segment's revenue and compensated in part for organically declining revenue at other investments. The segment's EBITDA amounted to EUR 184.6 million (previous year: EUR 171.3 million) and, in addition to gains from bargain purchases of EUR 195.5 million (previous year: EUR 177.1 million), also benefited from the positive effect of the deconsolidation of iinovis. Adjusted EBITDA amounted to EUR 1.5 million (previous year: EUR 0.8 million). The segment continued to be affected by fluctuating call-offs in the third quarter. The focus is therefore on optimizing locations and increasing capacity utilization, including through M&A activities.

The investments in the Engineering & Technology segment generated revenues of EUR 768.0 million in the first nine months of 2024 (previous year: EUR 714.7 million). This development was offset by the exits of Lacroix + Kress and Special Melted Products ("SMP") in the previous year, VALTI and Balcke-Dürr Nuklear Service GmbH in the current year as well as the additional revenue from Efacec and Byldis, which were acquired in the fourth quarter 2023, and the segment acquisitions in the current year. Segment EBITDA for the reporting period amounted to EUR -31.0 million (previous year: EUR 115.8 million) and adjusted EBITDA to EUR -9.7 million (previous year: EUR 3.4 million). Both key figures are the result of the partly opposing developments mentioned above. The transformation of Efacec has been very promising so far this year, as the supply chain has gradually been revitalized, resulting in a significant increase in sales compared to the previous year. Efacec and Sofinter, which were acquired in the second quarter 2024, contributed a substantial negative adjusted EBITDA in line with the business model.

Revenues in the Goods & Services segment increased to EUR 785.8 million in the first nine months of the fiscal year 2024 (previous year: EUR 713.0 million). This increase was primarily due to the acquisitions of GoCollective, ReloBus and Stuart (SRT Group) in the previous year and the acquisitions of Eltel Networks Energetyka S.A. and Eltel Networks Engineering S.A., FSL Ladenbau GmbH and Wilda Transport och Entreprenad AB and NU Entreprenad in the current year. This compensated for the offsetting effect from the sale of Frigoscandia in the first quarter of the fiscal year 2024. At the same time, Conexus and Terranor Group recorded a pleasing organic increase in revenues. EBITDA of EUR 65.9 million (previous year: EUR 206.6 million) included gains from bargain purchases of EUR 9.7 million in the reporting period. The gains from bargain purchases in the prior-year period (EUR 184.6 million) were attributable in particular to the acquisition of GoCollective, ReloBus and MobiLitas. The Frigoscandia exit resulted in a deconsolidation effect of EUR 56.6 million in the reporting period. Adjusted EBITDA amounted to EUR 10.9 million (previous year: EUR 21.8 million). Thanks to the successful transformation of Terranor, Conexus and Palmia, especially these companies made a positive contribution to EBITDA and adjusted EBITDA, while the new acquisitions from 2023 and 2024 made the initially typical negative contributions to earnings.

Revenues in the Retail & Food segment amounted to EUR 661.2 million in the reporting period (previous year: EUR 617.7 million). The effect of the first-time and pro rata temporis inclusion of the segment's new acquisitions (especially Prénatal, Gläserne Molkerei, Temakinho and Greenview Group) was partially offset by the decline in sales at Lapeyre as a result of a persistently difficult market environment. EBITDA in the Retail & Food segment amounted to EUR -68.8 million (previous year: EUR 28.4 million) and Adjusted EBITDA to EUR -38.6 million (previous year: EUR -14.0 million). Both key figures were significantly impacted by the negative effect on profitability at Lapeyre as a result of the decline in sales.

Adjusted EBITDA fluctuates significantly along the three phases of value creation that investments usually go through during their affiliation with Mutares (Realignment, Optimization and Harvesting).

¹⁾ Revenues and Adj. EBITDA YTD 09/2024 also include the revenues and earnings contributions of VALTI, Balcke-Dürr Nuklear Service, Frigoscandia, iinovis and Repartim.
 

Outlook

At the start of the fourth quarter of 2024, Mutares is on track to achieve the targets formulated as part of the communicated strategy. Following its expansion into China, India and the USA with successfully completed acquisitions in China and the USA, the company is well on track to fulfill its long-term growth ambitions, which envisage growth in Group revenues to EUR 10 billion and a net income of the Mutares Holding of around EUR 200 million by 2028.

The Management Board continues to expect the net income of Mutares SE & Co. KGaA to be in the range of EUR 108 million to EUR 132 million in the fiscal year 2024. All sources from which the net income of Mutares SE & Co. KGaA is generally derived, namely revenues from the advisory business on the one hand and dividends from portfolio companies and, in particular, exit proceeds from the sale of investments on the other, are expected to contribute to this.

Earnings call today at 2:00 pm

A video and telephone conference (webcast) in English will be held today at 2:00 (CET) for analysts, investors and members of the press. Registrations for this are possible by e-mail to [email protected].

The webcast presentation can then be downloaded at https://ir.mutares.com/en/publications/.
 

Company profile of Mutares SE & Co. KGaA

Mutares SE & Co. KGaA, Munich (www.mutares.com), a listed private equity holding company with offices in Munich (HQ), Amsterdam, Bad Wiessee, Chicago, Frankfurt, Helsinki, London, Madrid, Milan, Mumbai, Paris, Shanghai, Stockholm, Vienna and Warsaw, acquires companies in special situations which show significant operational improvement potential and are sold again after undergoing a repositioning and stabilization process. For the fiscal year 2024, consolidated revenues of EUR 5.7 billion to EUR 6.3 billion are expected. Based on this, consolidated revenues are to be expanded to approx. EUR 7 billion by 2025 and EUR 10 billion by 2028. As the portfolio grows, so do consulting revenues, which together with portfolio dividends and exit proceeds accrue to the Mutares Holding. On this basis, the Holding Company is expected to generate a net income of EUR 108 million to EUR 132 million for the fiscal year 2024, EUR 125 million to EUR 150 million for the fiscal year 2025 and EUR 200 million for the fiscal year 2028. The Management Board and Supervisory Board together hold more than one-third of all Mutares shares with voting rights. The shares of Mutares SE & Co. KGaA are traded on the Regulated Market of the Frankfurt Stock Exchange under the symbol "MUX" (ISIN: DE000A2NB650) and have been part of the selection index SDAX since December 2023.

For more information, please contact:

Mutares SE & Co. KGaA
Investor Relations
Phone: +49 89 9292 7760
E-mail: [email protected]
www.mutares.com

Press Contact in Germany
CROSS ALLIANCE communication GmbH
Susan Hoffmeister
Phone: +49 89 125 09 0333
E-mail: [email protected]
www.crossalliance.de

Press Contact in France
CLAI
Matthieu Meunier
Phone: +33 06 26 59 49 05
E-mail: [email protected]

Press Contact in UK
14:46 Consulting
Tom Sutton
Phone: +44 7796 474940
E-mail: [email protected]

¹⁾ Revenues and dividends from the portfolio result in the portfolio income of Mutares Holding.

²⁾ Adjusted EBITDA is an EBITDA key performance indicator adjusted for special effects, in particular due to the effects of regular changes in the composition of the portfolio that are inherent to the business model. The calculation is based on reported Group EBITDA, adjusted for transaction-related effects (gains from favorable acquisitions or deconsolidation effects) as well as restructuring and other one-off expenses and income.