Duisburg, 31 August 2017. The family-equity company Haniel lifted its revenue significantly in the first half of 2017, with all divisions contributing to this development. The earnings figures also showed encouraging growth. "The positive earnings trend, the acquisition of Rentokil Initial's activities and the further diversification of our portfolio demonstrate the success of our buy & build strategy. We will continue to serve as a value developer by acquiring further divisions and developing the existing portfolio companies," emphasizes CEO Stephan Gemkow.
Portfolio further strengthened and diversified
Together with the CWS-boco division, the Haniel Holding Company acquired key Central European activities from Rentokil Initial as at 30 June 2017. Thereby an innovative and leading European workwear, cleanroom and hygiene services company under the aegis of the CWS-boco Group exists. Following the transaction, the Haniel Holding Company holds 82.19 per cent of shares in the CWS-boco Group, and Rentokil Initial holds 17.81 per cent.
The demerger of the METRO GROUP into the wholesale and food specialist METRO and the consumer electronics Company CECONOMY, which took effect on 12 July 2017, increased the diversification of the Haniel portfolio. This opens up new growth and development opportunities for both financial investments.
Even after the successful portfolio measures, roughly another EUR 1.0 billion remains available for investment. As a family-equity company, Haniel pursues a long-term investment approach to diversify its portfolio, as emphasised by Stephan Gemkow, "We continue to focus on well positioned small and medium-sized enterprises in attractive niches which can build on their market-leading position with our assistance".
Encouraging growth driven by all Divisions
During the first half of 2017, the Haniel Group recorded an 18 per cent increase in revenue, to EUR 2,053 million. This was due primarily to the positive development at ELG. In particular, the significantly higher price of nickel and the increase in output tonnage had a beneficial effect here. The positive contributions by the BekaertDeslee division and growth at CWS-boco and TAKKT also bolstered revenue. Currency translation effects only had a minor positive impact. Adjusted for these effects and for business combinations and disposals, the Haniel Group's revenue was 17 per cent higher than in the prior-year period.
Earnings increase primarily attributable to operational strengths of commodities dealer ELG
The stable economic trend in Europe and in particular the improved market conditions for the ELG division also had a positive impact on earnings. The operating profit of EUR 122 million for the first six months of 2017 was up 6 per cent above the previous year's figure of EUR 115 million. BekaertDeslee - the leading manufacturer of mattress textiles - and CWS-boco also generated slightly higher operating profit. As expected, the costs of implementing the Digital Agenda as well as positive acquisition-related measurement effects in the same period of the previous year resulted in a decrease in the operating profit of TAKKT, the B2B direct marketing specialist.
Haniel investment result increases
The investment result, which essentially comprises the result from the METRO GROUP investment, rose from EUR -30 million in the previous year to EUR 5 million in the first half of 2017. On the one hand, the METRO GROUP's higher operating profit had a proportionate effect on Haniel's Metro investment result and on the other, the METRO GROUP's financial result also improved.
Profit before and after taxes rises significantly
The Haniel Group's profit before taxes increased significantly from EUR 57 million to EUR 105 million. This was attributable in particular to the increased investment result from the METRO GROUP, as well as to the improved operating profit and lower finance costs. With only a slight year-on-year increase in tax expense, profit after taxes was sharply higher, at EUR 71 million. Compared to EUR 25 million in the same period of the previous year, this means that Haniel realised a nearly 200 per cent increase in this figure.
Sound financial position underscores investment potential
The Group's net financial position, i.e., net financial liabilities less the investment position of the Holding Company increased to EUR 1,007 million in the first half of 2017, as compared to EUR 575 million as at 31 December 2016. This increase was attributable primarily to the acquisition of Rentokil Initial's activities. Nonetheless, the Haniel Group still has a solid financial buffer for further acquisitions. At the Holding Company level, Haniel remains essentially debt-free. The Group's equity also increased from EUR 4,248 million as at 31 December 2016 to EUR 4,519 million as at 30 June 2017, also as a result of the positive profit after taxes. With a slight decline in total assets, the equity ratio was 64 per cent as at the reporting date. This further increase also underscores Haniel's investment potential.
Two investment-grade Ratings
In the first half of 2017, the European rating agency Scope confirmed its credit assessment, which it had initially given in February 2016. Scope gave Haniel a BBB- rating with a stable outlook, placing it unchanged in the investment grade category. Back in April 2016, Standard & Poor's had also given Haniel an investment grade rating of BBB-/A-3. As a result of the greater diversification of the portfolio, Moody's raised its outlook for Haniel's rating to "positive" in January 2017, confirming this with a Ba1 rating.
Efforts to systematically implement digital initiative continue
As a family equity company, Haniel also offers added value to its divisions in the context of the digital transformation: Schacht One, Haniel's digital unit, supports the divisions in their efforts to digitise their business models. In addition, Haniel selectively invests in several venture capital funds. This is done less in the interest of achieving short-term return targets and primarily in order to learn about new digital business models and technological trends. The divisions also stepped up their efforts to implement the digital transformation in the first half of 2017, with specific initial milestones achieved.
Haniel expects significant increase in profit before and after taxes in 2017
For the overall financial year 2017, Haniel now expects the improved market environment for ELG to lead to a significant increase in revenue, adjusted for acquisitions and currency translation effects. As expected, operating profit in the second half of 2017 will be weighed down by one-off expenses incurred in the course of integrating the acquired Rentokil Initial activities. Despite this, the Management Board currently assumes that the Haniel Group's operating profit for the overall year will reach the level of the prior-year figure. The investment result is expected to be significantly better than in the previous year. Accordingly, the profit before taxes is also expected to be up significantly year on year. Furthermore, thanks to positive tax effects, the profit after taxes will also rise even more sharply.
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