Press Releases

Haniel successfully develops portfolio – New momentum for equity investments

04/11/2016

  • Revenue and profit growth at all Haniel equity investments except for ELG
  • New division Bekaert Textiles acquires DesleeClama
  • CWS-boco, TAKKT and METRO GROUP: buy-and-build activities successful
  • Haniel supports potential METRO GROUP split
  • Schacht One founded as workbench for the digital future
  • Haniel co-initiator of "Wirtschaft Zusammen"

Duisburg, 11 April 2016. Through its purchase of Bekaert Textiles and acquisitions by its equity investments, Haniel has successfully continued to develop its portfolio. "Bekaert Textiles encouragingly positive earnings contribution and our success with attractive acquisitions such as DesleeClama in February 2016 have motivated us to continue to pursue our buy-and-build strategy", said Stephan Gemkow, Haniel CEO.

More than EUR 1 billion available for further diversification
Haniel currently has more than EUR 1 billion, providing it with considerable financial resources to further diversify its portfolio. "For us, social values go hand-in-hand with increasing the Haniel Group's value over the long term", said Gemkow.

Revenue decline at ELG due to business development
The Haniel Group posted an overall decline in revenue of 3 per cent to EUR 3,808 million in 2015. The cause for this decline was the business development at ELG, which was heavily influenced by a decrease in global stainless steel production in tandem with a sharp drop in prices on the international commodities markets. The revenue of all other divisions developed positively compared to the previous year. Of particular mention here is TAKKT's strong revenue growth in the US, where the division benefited from a positive business climate and business models with strong growth.

Successful acquisition activities
In addition to Haniel's acquisition of Bekaert Textiles, business acquisitions at the existing divisions also delivered positive contributions to revenue development: in 2015, TAKKT expanded its portfolio with Post-Up Stand and BiGDUG, while CWS-boco acquired several smaller companies, including some in the cleanroom business.

Haniel continued to pursue this buy-and-build strategy in the first weeks of 2016: following its acquisition of DesleeClama, the world's fourth-largest company in the market for woven and knitted mattress textiles, Bekaert Textiles, which now trades under the name BekaertDeslee, significantly expanded its market-leading position in a highly promising growth sector.

Operating profit down – Profit before taxes up significantly
The Haniel Group's operating profit overall was also characterised by the poor business development of ELG caused by market conditions. The lower output tonnage compared to the previous year and the considerably lower margin in the stainless steel scrap business resulted in a sharply lower operating profit at ELG, which was negative in financial year 2015. TAKKT, however, increased its earnings in particular due to the positive business development in the US; CWS-boco also generated a higher operating profit. Additionally, Bekaert Textiles made a significant positive contribution to consolidated income. In the aggregate, however, ELG's deficit could not be entirely offset so that the 2015 operating profit was EUR 193 million and hence below the previous year's level of EUR 217 million.

By contrast, there was an encouraging increase in profit before taxes from EUR 31 million to EUR 174 million. This is attributable to both a higher investment result from the METRO GROUP and an improved result from financing activities.

METRO GROUP generates greater investment result for Haniel
The investment result increased from EUR 14 million in the previous year to EUR 57 million during the 2015 financial year. As a result of the sale of METRO Cash & Carry Vietnam, the METRO GROUP posted fewer one-offs in total, despite the impairment loss on goodwill at Real Germany. Thanks to that, but also due to the positive growth at METRO Cash & Carry and at Media-Saturn, the METRO GROUP generated a slightly higher operating profit than in the previous year. In addition, the net disposal gain from the sale of Galeria Kaufhof contributed to the increase in the net investment result at Haniel. Haniel's May 2015 decrease in the Metro investment from 30 per cent to 25 per cent reduced earnings.

In addition, Haniel issued a zero-coupon exchangeable bond linked to Metro shares with a term until 2020. Under the current conditions, if all bonds were to be exchanged, Haniel's interest in the METRO GROUP would decrease to approximately 20 per cent.

Haniel views the potential split-up of the Metro Group into two listed companies as an opportunity for the METRO GROUP to better leverage the intrinsic value potential within the various sales lines. Therefore, Haniel expressly welcomes and supports the strategic decision by Metro's management team.

Debt repayment strategy leads to significantly improved net financial income
The result from financing activities amounted to EUR -76 million in the reporting period. In the previous year, it was EUR -200 million due, among other things, to the early redemption of bonds of the Haniel Holding Company and the concomitant extraordinary charge. In addition, finance costs were significantly smaller due to the lower level of debt in the 2015 financial year than in the previous year. Haniel thus benefited from the systematic debt reduction of previous years.

Higher profit after taxes from continuing operations
At a higher profit before taxes, the profit after taxes from continuing operations was also markedly above the previous year's level. Profit after taxes was increased – also supported by a slightly lower tax expense – from EUR -28 million to EUR 120 million in the 2015 financial year.

Equity ratio, improved market value and lower debt underscore the Group's sound financial position
The equity of the Haniel Group increased from just under EUR 4.0 billion as at 31 December 2014 to approximately EUR 4.2 billion as at 31 December 2015. The equity ratio fell slightly from 62 per cent to 61 per cent due to the increase in total assets. In addition to the greater equity ratio, the increased market value of the portfolio and the further reduction in debt characterised an exceptionally sound financial position.

Investment-grade rating by Scope
The European ratings agency Scope evaluated Haniel for the first time in February 2016, classifying it as investment grade at BBB-. This confirms the Haniel Holding Company's goal of a stable investment grade rating by Scope. Standard & Poor’s and Moody's had already raised their ratings to BB+ and Ba1, respectively, in 2013. In 2014, Standard & Poor’s added a positive outlook to its opinion and confirmed it in the first half of 2015.

Digitalisation drive for equity investments
By positioning itself as a family equity company, Haniel clearly sets itself apart from other investors as an investment partner with a long-term orientation. In addition to diversifying its portfolio through acquisitions, it places its focus on the continued development of existing equity investments. "We place a great deal of value in sustainable entrepreneurship", stated Gemkow. "In addition, we view digitalisation as a further opportunity for us and our equity investments." In order to quickly put the digital transformation into practice throughout the Company, Haniel has established Schacht One GmbH, an independent digital unit. There the Haniel Group's divisions can develop digital ideas and implement them in their business processes or bring them to market in a very short time. Schacht One is a digital workbench in that sense. The new company is located at the Zollverein Coal Mine Industrial Complex, representing Haniel's clear commitment to the State of North Rhine-Westphalia. In addition, Haniel will expand and develop its venture capital activities and invest up to EUR 50 million in corresponding funds. These investments will provide Haniel early insights into innovative business models of start-ups. This experience will support not only the innovative process at existing equity investments but also investments in new divisions.

Living corporate responsibility
As a corporate citizen, Haniel has traditionally not only borne responsibility for its equity investments and employees but has also supported and promoted institutions and initiatives in Duisburg, where its headquarters are located. Soon, the Company – together with the two foundations Prof. Otto Beisheim-Stiftung and KfW Stiftung – will open the Social Impact Lab at Franz-Haniel-Platz in Duisburg which will serve as an incubator for start-ups whose business models are geared towards tackling social issues.

Since the autumn of 2015, Haniel has been assisting the city in its efforts to integrate refugees and has helped to carry out these activities as a founding member of the "Wirtschaft zusammen" initiative. The objective of this initiative – which is supported by companies all across Germany – is to highlight the many positive contributions by companies and motivate others to follow suit. Haniel provides emergency assistance at its headquarters in Duisburg in direct consultation with the city, and is helping the city manage its organisational and warehouse logistics. It also provides training in order to facilitate the integration of refugees who have obtained the right to remain in Germany. In addition, the divisions have also assisted with the care and integration of refugees in a variety of ways.

Haniel expects significant increase in operating profit and portfolio changes in 2016
In a volatile economic environment overall, Haniel's Management Board believes that there are political and economic imponderabilities in the current financial year. Nevertheless, Haniel expects to be able to significantly increase its operating profit in financial year 2016 while revenue – adjusted for acquisitions and currency translation effects – remains at the same level as in the previous year. Its profit before taxes and profit after taxes will thus also be appreciably higher. In addition, the Company expects that it will continue to grow in the years to come due to the expansion of its investment portfolio.

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