Mutares SE & Co. KGaA

A very warm and finally, at least in Munich, also sunny welcome to our H1 earnings call 2023. So I will give you a very quick reminder review again of company and business model and outline the key highlights H1 23 before Mark will take over the financials and I will close the session with the outlook. So what do we do as Mutaris? We have a strong European focus, which we recently, as you have also seen, expanded globally. So we went to China, we opened our office in Shanghai there, and we opened a plant of Maltex in Shanghai. So we keep a European focus with 10 countries, and we now go international. We are on four diversified segments. So we added a segment of retail and food where we believe there is a big growth potential for us in the traditional European markets, but also in the overseas market. Target companies and revenues, our sweet spot, somewhere between 100 to 750 million in turnover when it comes to platform investments. in the segments and last but not least one of our motivations one of our decision and makers on transactions are we want to be the operational guys adding value creating value in the companies so we want to be the turnaround heroes when it comes to the operations And by following that strategy of the four pillars, you see a very strong growth path, which has kicked in in 2019. And we do expect this year a group turnover of 4.8 to 5.4 and respectively 92 to 112 million of holding profit. This is strongly driven by acquisitions. This is also strongly driven by organic growth in our portfolio. And we will come to that later. Overall, we have a very, very strong H1 which we see later also in the numbers. When it comes to how do we finally approve and how do we finally go in the investment process of an acquisition? So it has to match, obviously, the four pillars mentioned before. And we start with the acquisition and going into the first phase. And whatever money we spent, and at the moment, by end of June, we had spent 272 million in the portfolios. We want to gain this money seven to ten times back. If in an acquisition phase, we are not sure, we don't know, we don't see a chance to gain the money seven to ten times back, we don't do the acquisition. We will not acquire the business. So we go in in a realignment phase, which is the first phase. We go in with our operational team. Close to 150 people. Roughly 7 to 15 people per portfolio go in day one. And together with the management, we will drive the turnaround process. We will speak with customers. We will speak with suppliers. We will do operational changes and improvements and have the complete tool set available in order to make the company tomorrow better than it is today. The second phase is the optimization phase. Optimization phase, we have done our restructuring program, we have finished our restructuring program, and the company is ready for growth. This is most of the time when also add-on acquisitions pop in. The latest add-on acquisition you might have seen, we just announced a few hours ago, is CIE Automotive, which we acquired. just today. And then last but not least is the harvesting phase. And this is actually the phase where we believe we have done our job and it's now time for the best new owner. It's now time to start a sales process, a divestment process of the asset. Typically, our horizon where we look is three to five years. In fact, there is no push. There is no need to divest within this period. But this is where we believe it's the right horizon when we look at an investment. Looking at our portfolio companies. We have the four segments, automotive and mobility, which is the largest, where we have created the Federal United Group. I will come to that in a bit. And then let me point out another one in the automotive, which is Peugeot Motorcyc. June was the first month since several years that Peugeot Motorcyc contributed a positive operating result. So due to the big, big workload of our operational team, due to important decisions, and due to first restructural measures kicking in, we have contributed here positively in June to the results, which is a great success after that short period of time after acquisition. Engineering technology, let me highlight here the NEM Group. NEM Group together with Balcadero, we see a very, very strong order intake, which is important in the project business. And we see the NEM Group and Balcadero developing to expectation what we believed and what has budgeted. So we are very happy on the development of this group as well. Frigos Gandia, which we have in the harvesting phase also there. We have performed or outperformed even the budget here. And Frigos Gandia is a potential candidate for one of the next exit processes here in this portfolio. And then last but not least, the retail and food one, which is a new segment we have just instated because we believe here of a very strong growth potential in the European market, but also in the overseas market. Basically, we talk here about companies having a brand and having a B2C business. So we have La Paire as the largest one in here, Kieper, Sabo, Fasana, and Gleisen and Molkerei, which we acquired from EMI here in Germany and is supposed to be closed by the end of this month. So overall, a portfolio with annualized sales at the moment of 5.5 billion or above 5.5 billion, consisting of 28 companies, plus three in the closing process with Recover Class and IFASEC. So we believe we can follow here the path of growth and we can also contribute very, very positively to the holding result of 2023 with our portfolio. Overall, We are quite happy with the performance in H1 when it comes to that. And Mark will shortly elaborate a little bit more in detail. Let us have a quick sneak look on Fairly United, which is a group that will be officially launched beginning of next month after everybody is back from vacation. We believe in the automotive sectors, and we have already done it with the Amaneos Group, that there will be a consolidation play coming into the picture, into the market. And the Fairly United Group is a specialized, we call it powerhouse here internally, for metal and aluminium products. So it's a combination of the company's Primatex BW, which we just recently acquired, Rasche, MMTB Bordeaux, which was a magna acquisition, Chimos, Celsa, which was acquired last week, and CIE Fortune Germany, which was just signed off last night and announced today around 12 o'clock. German time here. So overall, and then Valor, where we are in an exclusive negotiation, which we have already announced, and we also do expect here a positive outcome. So overall, next to Amaneos, we have created another brilliant player in the market in the automotive spot, because we believe this will be one of the beneficiaries in this segment for this product in the market. Let us come to the key highlights of H1 2023, where some of that you see here in. So on the buy side transaction in H1, we had the signing of EFESEC and we had the closing of Peugeot-Motorcyc. We had the closing of Magna Bordeaux, MNTP Bordeaux. BW and together with MMTB, they are part of this fairly united group. Palmier and Arriva in Denmark, Poland and Serbia. On the CEL side, we have invested Lacroix, FTT, Chapi and Ganta France. And we have signed the exit of S&P where we had four conditions to fulfill until closing. three of them are fulfilled as we speak today one related to the pensions we get one clearance in italy we get a clearance in taiwan and we are waiting the clearance in the uk which is expected to happen in q3 so the exit process of s p is on the expected timeline pass When we look at the capital markets, we have tapped the bond to 150 million on the holding level, which was a strong, strong performance in a quite agile market, let's call it. And the share price since the beginning of the year has increased by almost 40%. When it comes to our biggest assets, our people, we have in the holding created and grown to more than 200 people. And we have strong expansion plans for the US and China, short-term and mid-term. And I'll come to that later. We have also more expansion plans when it comes to Asia. I'm just returning from a roadshow in Asia. And I think we also see great potential in markets like India, in markets like Japan, in markets like Korea. and in the complete Southeast Asia, Australia region, where we as Mutaris, with our approach, with our operational approach to turnaround improvement cases, we can really, really fill a gap. So I come back very, very energized from this trip, and I believe this is one of our future growth markets, which can tip the strong position in Europe. And with that, I would like to hand over to Marc for more details of H1 on the financials.

Thanks, Johannes. So overall, we saw quite a decent development of the group. You saw that the revenue of the group increased by approximately 30% to now 2.3 billion. So we think that we are quite on track to our guidance of 4.8 to 5.4 billion in the group. More important, what we saw for the first time is the significantly positive adjusted EBITDA that turned around compared to last year by more than 70 million. We ended up the half year with approximately 40 million. And I will go into more detail, explain also a bit the main contributor here. for the turnaround. But today I also want to highlight the EBITDA of more than 400 million. That is also an expression of the confidence that the seller gives into Motaris because they contribute a net worth to the targets that we acquire here. And we obviously are then in the position to take care of that. that asset and work with it and are aware of the responsibility that we have with the assets. Mutaris Holding also is developing quite well. We are on track to more than 100 million in revenues for the full year. You see it here, we reached a bit more than 50 million in the first half of 2023. And also the net income is quite on track with 13 million just from our consulting business. So there are no exceptional income factors in the first half of 23. So also quite sound here. It's a bit less in Q2 compared to Q1 because we had a bit less revenue due to vacation period. But on the other hand, we have also uptaked a bit the provision for variable compensation in the holding. In more detail, the three segments, and I will present here for the last time the three segments compared to the four ones that Johannes mentioned that we will present then also financially wise starting Q3. So here we see the biggest contributor are the automotive and the goods and services segment. And the biggest flip here clearly in the automotive and mobility segment compared to last year of almost 50 million. There are two underlying factors here in the segment. The first one is that the price adjustments and the activity in the segment has picked up compared to last year. And on the other hand, the price pressure on the cost side has diminished a bit and has been less than in last year, especially obviously in energy and raw material. Goods and services, also the segment with a lot of different portfolio companies picked up quite substantially with more than 10 million in adjusted VTA in Q2. And we will see here different developments, but also some nice contributor from everywhere pretty much. The entire group then ended up with a bit more than 40 million. You see it here in adjusted EVTA, quite a substantial positive figure for the first time actually in Mutaira's history that we can present an adjusted EVTA for the first time that is positive. Looking into the segment, starting as always with the automotive and mobility segment, and you see here right away that's the segment there where we invested the most. You see here the M&A activity contribution of more than 400 million to the revenue compared to last year. And I just want to highlight here one company Johannes mentioned already, Ferrell and Peugeot. And I want to highlight here the SFC group as part of the Armanios group that turned around by more than 20 million compared to last year, 2022. Fantastic job by the team here across India and across Europe. And we are quite confident that this progress will continue. The engineering and technology segment, it's quite a robust segment where the movement is not as high as in the other ones. Also here, we see some nice developments, NEM integration with Baikonur, well on track. Johannes mentioned that the order intake, very sound and starting to diversify. And on the other hand, we also see here S&P for the most likely for the last time in the segment and also contributing quite well. On the other hand, we have some progress and some homework to do in ADCOMS and Gemini and also in Guascore. On the other hand, we see that the confidence in the capabilities of Claysteam in the market is quite sound and progressing so that the company is able to also again win bigger contracts, and also quite important, Steyr Motors is developing way ahead of plan and also contributing already positive to the figure. Last segment here, goods and services, also a segment that has more positive contributor in the adjusted EBITDA, you see it here. that the EVTA in Q2 is substantially positive with more than 200 million that is due to Arriva that was consolidated in Q2. But also the adjusted EVTA is quite positive. And here we see, starting with LaPierre, quite a good focus on cost reduction. Arriva, we saw a very promising first meeting with the team. We revisited in September. Frigos Gania, quite stable. And we're confident that the market is is going to be stable also going forward. Terra North profiting from the win of tenders in last year's seasons. Palmyra also quite good start here in the first 100 days from the team, quite convincing turnaround program. We saw some nice activity pickup in Fasana. We see that the integration between XC and 6 is ongoing. well on track and we see that gunter is also doing very well in the segment where they're operating in shop uh refurbishments or building up new stores for apple for example Summing up the financial part with the value cycle of Mutaris, we have here quite a sound development and distribution across the four different stages. You see in the acquisition phase only three because the automotive addition that we communicated today and also the one that we communicated a couple of years ago days ago are add-on acquisitions by Federal United, so they are contributing there. Overall, the acquisitions that are still outstanding currently account for approximately 800 million in revenues. And here you see again that actually for the first time that the realignment segment or realignment bucket is Closing to zero in adjusted dbda. I haven't also seen or not seen this in materials history. Maybe we can also surpass this until Q3 here. And in addition, also optimization and harvesting look really sound in terms of We are above the zero line in the optimization, see some nice progress here and are quite substantially positive in the harvesting phase, which is quite important for us so that we are ready to divest. And with that, I would hand over again to Johannes.

Thank you, Marc. Coming to the outlook and then having an invite at the end. Maybe a quick elaboration on China. So in China, we have opened up the office with a ceremony with close to 100 participants. Just recently, in August this year, we run four portfolio companies in China and employ at the moment 600 people. We already have our own M&A and operations team on the ground. We do see great opportunities in China. We do see, when you look from the outside to China, it's still a huge market. And due to several situations, we see money and we see especially companies leaving China and relocating to somewhere. And this is exactly our market where we go in. And we take the turnaround cases, we take the difficult cases, and we make money with it. So China will be for us an important market for the future, will be another tip on the iceberg of Europe, will be another great upside potential. And also several meetings we hold there with officials, but also with large groups, with banks, with advisors, with lawyers, gives us a very, very strong confidence that the entire China's market, and for the beginning, especially at the automotive sector, looks very, very promising for us in the development of Motaris, in the development of the firm, when it comes to top line and profitability. Again, when you look at the map and the expansion, just to repeat this, the target is still the 7 billion, 125 to 150. You see, we have not changed our guidance for 2023. We will say something to the guidance on an event which will take place in October, which is our Capital Markets Day. So you're all invited on October the 12th, either physically in Frankfurt or virtually there. We have a quite promising agenda. Mutara's introduction, portfolio insights you will get from Arriva and the Federal United Group, which has grown to a billion powerhouse in the automotive, passenger, commercial, truck industry. industrial vehicle, and then we give you Matar's outlook, where we will also then update the guidance for 2023. And then at the end of the day, you also have the chance just for an informal get-together networking, so where you are able to meet Matar's management and Matar's employees. So you're more than welcome in Frankfurt on October the 12th, doesn't matter if you're German or not, if you're tall or small. If you're a professional retail investor, old, young, if you're conservative or crazy, you are more than welcome to join us October 12th, 2023 in Frankfurt. Thank you very much for today. And I will hand back to the moderator for Q&A questions.